Democrats’ Long-Sought Plan for Lowering Drug Costs Is at Hand

WASHINGTON — For decades, Democrats have battled the pharmaceutical industry for elusive goals as prescription drug costs skyrocketed. It’s a law that could lower prices by allowing Medicare to negotiate directly with drug companies.

Now they are passing a broad budget bill that will do just that. In the process, it gives President Biden the political victory he and his party can bring to voters in his November.

Authorizing Medicare to initially negotiate the price of up to 10 drugs, along with several other provisions aimed at lowering health care costs, was part of the Affordable Care Act of 2010. It will be the most significant change to health policy since. majority of the population. Some older Americans may save thousands of dollars in drug costs each year.

The law extends for three years the high premium subsidies received by low- and middle-income earners during the coronavirus pandemic, allows them to obtain health insurance under the Affordable Care Act, Pandemic to keep them when income earners are eligible for such subsidies. It also means that pharmaceutical companies will bear some of the costs of drugs whose prices will rise faster than inflation.

Importantly, it would also cap the amount Medicare recipients would have to pay out-of-pocket to buy drugs at a pharmacy to $2,000 a year, which would be a huge boon to the public. 1.4 million beneficiaries We often spend more than that each year on medicines for serious illnesses like cancer and multiple sclerosis.

Lower prices would make a big difference in the lives of people like Catherine Holeen, 67, a retired secretary and lung transplant recipient from Wheeling, Illinois. She lives alone on a fixed income of about $24,000 a year. Her out-of-pocket drug costs are about $6,000 a year. Worried that she will soon run out of money, she is digging into her savings.

“Two years ago I was $8,000,” she said. “Last year I was $15,000 in the hall. I expect it to be more this year because of inflation.”

Average price from 2009 to 2018 more than 2 times The Congressional Budget Office looked at branded prescription drugs in Medicare Part D, a program that covers products dispensed in dispensing pharmacies. Inflation outpaced inflation in 2019-20 half of all drugs It is covered by Medicare, according to an analysis by the Kaiser Family Foundation.

of budget office estimates The bill’s prescription drug provisions could save the federal government $288 billion over 10 years. This may force the pharmaceutical industry to accept lower prices from Medicare for some large sellers.

Opponents argue that the measure stifles innovation, New CBO analysis It predicts that the drug will actually lead to higher prices when it first hits the market.

Drugs for common ailments such as cancer and diabetes that affect the elderly are the most likely targets for negotiations. Eliquis, the anticancer drug Imbruvica, and Ozempic, which is given to manage diabetes and obesity.

Until recently, the idea of ​​Medicare was about 64 million It was inconceivable that a beneficiary would use that power to enter into a contract with a pharmaceutical company. Democrats have pushed for it since President Bill Clinton proposed a health care overhaul in his 1993. The pharmaceutical industry’s heavy lobbying against it has become Washington lore.

“This is like breaking a curse,” Oregon Democrat and billmaker Sen. Ron Wyden said of Medicare’s bargaining provisions. I’ve protected you like this.”

David Mitchell, 72, is among those who can help. A retired Washington, D.C. spokesman, he learned in 2010 that he had multiple myeloma, an incurable blood cancer. I knew. He copays $16,000 each year for just one of his four medications he takes. He also founded a patient advocacy group for affordable drugs.

“If people can’t afford drugs, drugs don’t work. Too many people in this country can’t afford drugs,” Mitchell said. “Americans are angry and taken advantage of. They know it.”

Still, the bill doesn’t provide all the tools Democrats want to keep prescription drug costs down. It only applies to a small percentage of prescription drugs that you take. Pharmaceutical companies can still charge Medicare exorbitant fees for new drugs.

This is a disappointment for the progressives of the party. The liberal magazine American Prospect dismissed the action, stating: “Very humble.”

Prescription drug prices in the United States are much higher than in other countries. 2021 Report from RAND Corporation For example, we found that drug prices in this country are more than seven times higher than in Turkey.

The pharmaceutical industry spends far more than any other sector to drive its profits in Washington. Since 1998, he has spent $5.2 billion on lobbying, according to Reuters. public secret, track money in politics. The insurance industry, the second largest spender, spends $3.3 billion. Pharmaceutical companies spread their funds, donating roughly equal amounts to Democrats and Republicans.

and media briefing last week. Stephen J. Ubl, chief executive of the pharmaceutical industry’s main lobbying group, PhRMA, warned that the bill would upend the frontlines of treatment, especially in cancer treatment. .

“Democrats are about to make a historic mistake of crushing patients desperate for new treatments.”

But Dr. Aaron S. Kesselheim, a professor of medicine at Harvard Medical School and Brigham and Women’s Hospital, said he believes the move will foster innovation. It is to delay the entry of generic drugs as long as possible. ”

In 1999, after his health care plan failed, Mr. Clinton revived the idea of ​​Medicare’s prescription drug coverage. But this time, instead of suggesting that Medicare negotiate with corporations, he suggested leaving it to the private sector.

“At that point, what we were trying to do was respond to perceptions that Republicans would oppose any kind of government role,” said former Senate Democratic leader Tom Daschle.

But it took Republican President George W. Bush and the Republican Congress to push prescription drug interests to the finish line.

Known as Merit, Medicare Part D was favored by the pharmaceutical industry for two reasons. Pharmaceutical companies believed they could win millions of new customers, and the bill contained a “non-interference clause” that explicitly prohibited Medicare from negotiating directly. with pharmaceutical companies. Repealing that provision is central to the current law.

The architect of the profit was the colorful Louisiana Republican Rep. Billy Torgin, who was then head of the House Energy and Commerce Committee. In Washington, Tozin is best known as an example of the influence of the pharmaceutical industry. Mr Tozin said he left Congress in January 2005 to run his PhRMA. A fake “narrative” he created to paint Republicans as corrupt by Democrats.

Joel White, a Republican health policy consultant who helped draft the 2003 law that created Medicare Part D, said the program already provides rebates for private insurers, pharmacy benefit administrators, and Medicare plan sponsors. I said it was designed for companies that are negotiating. .

“The whole model was designed to encourage private competition,” he said.

In the years since Medicare Part D was introduced, polls consistently found A majority of Americans in both parties want the federal government to be allowed to negotiate drug prices. Donald J. Trump It was only during his campaign that he embraced the idea.

The new law targets drugs that are in widespread use at a specific stage of their existence – those that have been on the market for years but have yet to compete with generic drugs. The industry has been criticized for developing strategies to extend patent terms. For example, fine-tuning drug formulations or entering into “delay compensation” agreements with competitors to delay the introduction of cheaper generics or “biosimilars” as generic versions of biotech medicines. called.

For example, drug maker AbbVie has racked up new patents to maintain its monopoly on its blockbuster anti-inflammatory drug, Humira, and since the main patent expired in 2016, about $20 billion a year from the drug. earning dollars

In 2026, 10 drugs will be negotiated, with more to come. The bill outlines the criteria by which drugs will be selected, but the final decision rests with the Secretary of Health. warned that it will lead to ‘lobbying’. Or keep them away from it.

Analysts say the bill would hurt pharmaceutical companies’ profits. Analysts at RBC Capital Markets, an investment bank, estimate that most companies affected by the measures will see a 10-15% decline in annual revenues by the end of the decade.

But while PhRMA warns that declining revenues will force pharmaceutical companies to invest less in research and development, the Congressional Budget Office predicts: Only 15 fewer drugs on the market Over the next 30 years, out of an estimated 1,300 expected in the meantime.

The Senate will take up the bill as early as Saturday and then send it to the House of Representatives. The bill, if passed, would predictably pierce the aura of power in Washington’s pharmaceutical industry and pave the way for more drugs to be negotiated, said the founder of the advocacy group Protect Our Care. said Leslie Duck.

“When people lose their invincibility, it’s much easier for people to take the next step,” he said.