A bold strategy to lowering prescription drug costs

At the end of last year, Gov. Gretchen Whitmer and the Michigan Department of Insurance & Financial Services (DIFS) laid the groundwork through Executive Directive 12 of 2022 to take bold action to lower prescription drug prices for Michiganders. This month, the governor’s budget proposal to help lower insulin drug prices is an aggressive sign of leadership that should be commended.

The governor’s willingness to tackle this problem head-on by enticing and spurring competition among drug makers is refreshing and courageous. She is taking on Big Pharma with her open arms invitation to entice any drug manufacturer to Michigan willing to produce insulin at more affordable rates.

When other elected leaders have chosen easier, less complicated roads, our governor has chartered a new path aimed at solving the problem, not politicking with promises that have failed historically to lower insulin costs.

For years, policymakers have attempted to address prescription drug costs by punching at health plans and pharmacy bene t managers (PBMs). But they’re ghting the wrong opponent — we are allies in this battle, not enemies.

Because the U.S. doesn’t regulate drug prices like many other nations, health plans and PBMs have no authority to negotiate drug prices effectively. Drug makers are free to charge PBMs and health plans at whatever prices they deem reasonable for prescription drugs.

According to the U.S. Department of Health and Human Services, Americans pay higher prices for prescription drugs than any other country in the world. Prescription drugs are more than 2.5 times higher than in other similar highincome nations. The median launch price of a new drug in the U.S. increased from $2,115 in 2008 to $180,007 in 2021— a 20% annual increase each year. Researchers report that the percentage of drugs that cost more than $150,000 a year increased by 9% in 2008-2013 and then 47% in 2020-2021.

The Centers for Medicare and Medicaid Services (CMS) has reported that prescription drug spending is projected to outpace growth in all other major healthcare sectors, averaging 6.1% annually through 2027. Insulin and epilepsy drugs have increased by staggering margins over the past few years, forcing Michigan Attorney General Dana Nessel to take action against unsubstantiated insulin drug prices.

The trend in drug prices outpaces growth in prices for all other healthcare services.

According to research conducted by a national healthcare association, nearly a quarter of every premium dollar goes to pay for prescription drugs — an amount higher than any other spending category — more elevated than outpatient and inpatient hospital costs.

To make matters worse, drug manufacturers have successfully convinced policymakers to enshrine state and federal mandates in laws that require certain drugs to be covered by insurance without utilization controls or customers’ out-of-pocket expenses, greatly exacerbating the cost of healthcare premiums.

There is an adage that my dad always told me growing up: “Sometimes, you must ght re with re.” That is precisely what the governor and DIFS are doing, and their actions should be applauded. Not only are they ghting the right opponent, but they’re also throwing creative punches that are rightfully aimed at effectively lowering insulin drug costs for Michiganders.

those areas have the commercial hazards removed.

She said 55 properties are in a bid package that the City Council should vote on soon, though all may not be on the M100 list. Others at imminent risk of collapse will be taken down on an emergency basis, Counts said.

She’s hopeful that the work will move quickly, in line with Duggan’s desires, though the formal procurement process and necessary environmental remediations can take a “signi cant amount of time.” Counts said the department got the OK to move forward with ARPA money just six months ago, one of the reasons that more buildings haven’t been demolished a year after the announcement of the M100.

Progress, Counts said, will be clearly noticeable.

“It would mean we’ve taken a signi cant bite out of the city’s overall blight concerns,” she said. “It’s not having to feel like it’s a weight.”

But demolition isn’t always the right move, even for the demolition director.

“A lot of times, if we encounter a structure we feel like can be saved, we’ll ask,” Counts said. “You can’t demolish your way to the best quality of life.”

Other challenges await those who are working to reoccupy buildings. Some developers have a good idea and good intentions, but can’t nancially support a project, said Solomon, with Detroit’s department of neigh- borhoods. omas Habitz, an urban planning specialist at Henry Ford Health, said he’s been trying to nd a developer partner for a property the hospital system has owned for a decade at 1494 Holden. e building has four storefronts on the rst oor and ve apartments above, and Habitz said he’s considering someone who might develop the property as entirely residential, since he’s not sure if the Elijah McCoy neighborhood can support commercial uses. Henry Ford has maintained the building, Habitz said, boarding up windows and removing re escapes that were in disrepair, but hasn’t done any rehabilitation work.

Even those who have solid backing say the process can be challenging.

He’s hopeful that a recent announcement about the hospital’s plans for a $2.5 billion development project in the area will help spur growth and make it easier to nd a partner. Habitz said he’s getting a lot of interest and wants to have a partner named “in the near future,” hopefully by the end of the year.

A chain reaction

It’s slow going, too, for other developers who have made more progress on some of the iconic properties they hope to save.

David Di Rita, principal of the Roxbury Group, hosted a celebration last January after Detroit’s City Council earmarked $7 million to help him re- develop Lee Plaza into more than 100 apartments for seniors, most of them a ordable. e 15-story building, built in 1927, had been abandoned for decades. It was previously slated for demolition.

Last January, Di Rita said he expected construction to be beginning now, but earlier this month, he said the project’s nancing was still in ux. With high in ation, Di Rita said, there’s about a $10 million gap to make the numbers work. He said he’s “increasingly con dent” nancial closing will happen before the end of this year, but that no physical work has started on the building yet.

Di Rita said he has weekly meetings with the city about his progress, a sign of how high a priority Lee Plaza’s rehabilitation is for the administration.

Lee Plaza remains one of the most prominent buildings on the M100. Di Rita said he thinks it’s a good thing that the city is keeping a “hot list” of properties. He called its existence “evidence of genuine progress.”

It shows, he said, that “substantial blighted buildings like these are not acceptable in Detroit.”

“It’s an unwillingness to accept the unacceptable,” Di Rita said. “If we’re going to be a world-class city, a list like this does not exist.”

Listing out the properties that are in the worst shape, and that need to be dealt with, “forces a community discussion,” Di Rita said.

Hosey, the Fisher Body No. 21 redeveloper, said his own project is working its way down the “traditional Detroit two-year development path” as he seeks nancing. Plans call for more than 400 apartments, coworking space, retail and other uses at the site.

As he moves forward with the project, Hosey said the buildings on the M100 had long been symbolic of what Detroit couldn’t do. As more and more of them see movement, he said, the tide is likely to change. eir successes will o er proof that improvements can be made, leading others who are eyeing di cult projects to take them on.

Changing what buildings like those on the M100 represent is important, Hosey said, especially since Detroit lost other iconic buildings a decade ago. He’s heartened by the fact that there are viable plans for the city to manage much of the blight that’s accumulated over years.

“Optimism is one thing, but you’ve really got to prepare for reality,” Hosey said. “It’ll be very cool to look at that list 10 years from now.”