Democrats’ long-awaited plan to reduce the cost of drugs is ready

WASHINGTON. For decades, as the cost of prescription drugs skyrocketed, Democrats have battled the pharmaceutical industry with the elusive goal of passing legislation that could lower prices by allowing Medicare to negotiate directly with drug manufacturers.

Now they are on the cusp of passing a sweeping budget bill that will do just that and in the process give President Biden the political victory he and his party can bring to voters in November.

Allowing Medicare to negotiate prices for 10 drugs initially—and more later—along with several other provisions designed to reduce health care costs, will be the most significant change in health care policy since 2010. mainstream population. This could save older Americans thousands of dollars in drug costs each year.

The legislation will extend by three years the larger premium subsidies that low- and middle-income people received during the coronavirus pandemic to receive health insurance under the Affordable Care Act, and will also allow higher-income individuals who qualify to on such subsidies during the pandemic to keep them. It will also force drug manufacturers to take on some of the cost of medicines whose prices are rising faster than inflation.

Notably, it would also limit the amount that Medicare recipients have to pay out of pocket for drugs at the pharmacy to $2,000 a year—a huge benefit for 1.4 million beneficiaries who spend more each year, often on drugs for serious illnesses such as cancer and multiple sclerosis.

Lower prices would make a huge difference in the lives of people like Katherine Horin, 67, a former secretary and lung recipient in 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. She digs through her savings, fearing that she will soon run out of money.

“Two years ago I had $8,000 in my pocket,” she said. “Last year I lost $15,000. I expect there will be more this year due to inflation.”

Between 2009 and 2018, the average price more than double The Congressional Budget Office found that for a brand-name prescription drug in Medicare Part D, a program that covers pharmacy-filled products. Between 2019 and 2020, price growth outpaced inflation half of all drugs covered by Medicare, according to an analysis by the Kaiser Family Foundation.

budget management estimates that the provisions of the prescription drug bill would save the federal government $288 billion over 10 years, in part by getting the pharmaceutical industry to accept lower prices from Medicare for some of its big sellers.

Opponents argue that this measure will hinder innovation and cite new analysis from the budget office, which predicts that this will actually drive up prices when the drugs first hit the market.

Medicines for common diseases such as cancer and diabetes, which affect the elderly, are likely to be negotiated. Analysts at investment bank SVB Securities pointed to the blood thinner Eliquis, the cancer drug Imbruvica and the diabetes and obesity drug Ozempic as the top three likely targets for the talks.

Until recently, the idea that Medicare, about 64 million beneficiaries being able to use their powers to make deals with drug manufacturers was unthinkable. Democrats have been pushing for this ever since President Bill Clinton proposed his controversial health care reform in 1993. The pharmaceutical industry’s fierce lobbying against this has become common knowledge in Washington.

“It’s like lifting a curse,” Senator Ron Wyden, an Oregon Democrat and author of the measure, said of Medicare’s negotiating position. “Big Pharma defended the negotiation ban as if it were the Holy Grail.”

David Mitchell, 72, is among those who will be assisted. A Washington, D.C. retired public relations professional found out in 2010 that he had multiple myeloma, an incurable blood cancer. He pays $16,000 out of pocket each year for just one of the four drugs he takes. He also founded the advocacy group Patients for Affordable Medicines.

“Drugs don’t work if people can’t afford them, and too many people in this country can’t afford them,” Mitchell said. “Americans are evil and they are being taken advantage of. They know it.

However, the measure would not provide all the tools that Democrats would like to curb the cost of prescription drugs. The harmonized prices won’t go into effect until 2026, and even then they will only apply to a small fraction of the prescription drugs taken by Medicare recipients. Pharmaceutical companies will still be able to charge Medicare high prices for new drugs.

This is a disappointment for the progressive wing of the party; The liberal magazine American Prospect rejected the measure as “extremely humble.”

Prescription drug prices are much higher in the United States than in other countries. A 2021 RAND report found that drug prices in that country were more than seven times higher than, for example, in Turkey.

The pharmaceutical industry spends far more than any other sector to advance its interests in Washington. Since 1998, $5.2 billion has been spent on lobbying, according to the agency. Open Secrets, which tracks money in politics. The insurance industry, the next biggest spender, spent $3.3 billion. Drug makers distribute their money, giving Democrats and Republicans roughly equal amounts.

AT media briefing Last week, Stephen J. Wobble, chief executive of PhRMA, the pharmaceutical industry’s main lobbying group, warned that the bill would reverse progress in the field of medicine, especially in cancer treatment, a high priority for Mr. Wilson. Biden, whose son died of a brain tumor.

“Democrats are about to make a historic mistake that will devastate patients desperate for new drugs,” he said. Ubl said, adding, “Fewer new drugs is a high price tag that doesn’t do enough to make drugs more affordable.”

But dr. Aaron S. Kesselheim, a professor of medicine at Harvard Medical School and Brigham and Women’s Hospital, said he believes the measure will encourage innovation by “encouraging investment in important new products rather than encouraging drug companies to keep pushing the same product.” and delay general input as long as possible.”

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

“At that point, we were trying to adjust to recognizing that Republicans were at a point blank range against any role for government,” said Tom Daschle, a former Democratic leader in the Senate.

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

Medicare Part D famously received support from the pharmaceutical industry for two reasons: the companies were convinced they would get millions of new customers, and the bill contained a “non-intervention clause” that explicitly forbade Medicare from negotiating. directly with drug manufacturers. The abolition of this paragraph lies at the heart of the current legislation.

The author of the manual was a colorful Republican congressman from Louisiana, Billy Tauzin, who chaired the House Energy and Commerce Committee at the time. In Washington, Mr. Tauzin is best remembered as an example of the pharmaceutical industry’s influence: he left Congress in January 2005 to head PhRMA, sparking accusations that he was being rewarded for taking orders from companies. Tauzin insists this is a false “narrative” created by Democrats to portray Republicans as corrupt.

Joel White, a Republican health policy consultant who helped write the 2003 law creating Medicare Part D, said the program was designed for private insurance companies, drugstore operators, and companies already negotiating discounts for Medicare plan sponsors. to use their leverage to lower prices. .

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

In the years since the introduction of Medicare Part D, poll consistently finds that the vast majority of Americans from both parties want the federal government to be allowed to negotiate drug prices. Previous President Donald J. Trump accepted the ideahowever, only during his campaign.

The new legislation targets commonly used medicines at a certain stage in their life – when they have been on the market for several years, but still have no competition from generics. The industry has been criticized for deploying patent life extension strategies, such as making small adjustments to drug formulations or entering into “delay payment” deals with competing manufacturers to delay the availability of cheap generics and “bio-similars” such as generic biotech drugs. are called.

Drug maker AbbVie, for example, has amassed new patents to maintain a monopoly on its blockbuster anti-inflammatory drug Humira, and has earned an estimated $20 billion a year since its flagship patent expired in 2016.

In 2026, ten drugs will be eligible for negotiations, with more to be added in subsequent years. The bill sets out the criteria by which drugs will be selected, but the final decision will be made by the Secretary of Health – a provision that Mr. White, a Republican consultant, warned would lead to an “incredible lobbying campaign” to list drugs or delist them. them from the list.

Analysts say the bill will hurt drug makers. Analysts at investment bank RBC Capital Markets have calculated that most companies affected by the measure will see 10% to 15% less revenue per year by the end of the decade.

But while the PhRMA has warned that declining revenues will force drug makers to invest less in research and development, the Congressional Budget Office predicts that only 15 fewer drugs to enter the market over the next 30 years out of about 1,300 expected in that time.

The Senate is expected to consider the bill as early as Saturday and then send it to the House of Representatives. If it passes as expected, it will shatter the drug industry’s aura of power in Washington, opening the door for more drugs to be negotiated, said Leslie Duch, founder of advocacy group Protect Our Care.

“Once you lose invincibility,” he said, “it becomes much easier for people to take the next step.”