Democrats’ long-term plan to reduce drug costs is within reach

WASHINGTON — For decades, as prescription drug costs have skyrocketed, Democrats have battled the pharmaceutical industry in pursuit of an elusive goal: legislation that could bring prices down by allowing Medicare to negotiate directly with drug manufacturers.

Now, they’re on track to pass a broad budget bill that will do just that, and in the process, President Biden will give President Biden a political victory he and his party have. can be given to voters in November.

Empowering Medicare to negotiate prices for up to 10 initial drugs – and many later – along with several other provisions aimed at reducing health care costs, would be the most significant policy change healthcare since the Affordable Care Act became law in 2010, affecting large populations. It could save some older Americans thousands of dollars in drug bills each year.

The act would expand, over three years, larger premium subsidies received by low- and moderate-income people during the coronavirus pandemic for health insurance coverage under the Affordable Care Act. affordable, and allow higher earners who qualify for those benefits during the pandemic to keep them. It will also make drug manufacturers bear a portion of the cost of drugs whose prices rise faster than inflation.

Significantly, it would also limit the amount Medicare recipients have to pay out-of-pocket for pharmacy drugs to $2,000 annually — a huge boon for 1.4 million beneficiaries people who spend more than that amount each year, often on drugs to treat serious illnesses like cancer and multiple sclerosis.

Lower prices will make a big difference in the lives of people like Catherine Horine, 67, a retired secretary and lung recipient from Wheeling, Hospital. She lives alone with a fixed income of about $24,000 a year. Her out-of-pocket drug costs are about $6,000 a year. She is digging up her savings, worried that she will run out of money in the long run.

“Two years ago, I lost $8,000,” she said. “Last year, I lost $15,000. I expected more this year, because of inflation. “

From 2009 to 2018, the average price more than doubled for a brand-name prescription drug in Medicare Part D, the program includes products dispensed at a pharmacy, the Congressional Budget Office said. From 2019 to 2020, prices rise above inflation for half of all drugs covered by Medicare, according to an analysis from the Kaiser Family Foundation.

The office budget estimates that the bill’s prescription drug regulations would save the federal government $288 billion over 10 years, in part by forcing the drug industry to accept lower rates from Medicare for some Its great seller.

Opponents argue that the measure will discourage innovation and cite a new analysis from the budget office predicts that it will actually lead to higher prices when the drug is first put on the market.

Drugs that treat common conditions like cancer and diabetes that affect older adults are more likely to be selected for negotiation. Analysts at investment bank SVB Securities pointed out that blood thinner Eliquis, cancer drug Imbruvica and drug Ozempic, which is supposed to control diabetes and obesity, are three of the targets. The first likely target to negotiate.

Until recently, the idea that Medicare, about 64 million beneficiaries, will be able to use their muscles to cut deals with drug manufacturers is unthinkable. Democrats have been pushing it since President Bill Clinton proposed his controversial healthcare overhaul in 1993. Aggressive lobbying by the pharmaceutical industry against it has become Washington legend.

“This is like lifting a curse,” Senator Ron Wyden, a Democrat of Oregon and architect of the measure, said of the Medicare bargaining clause. “Big Pharma has defended the ban on negotiations like it was the Holy Grail.”

David Mitchell, 72, is among those who will be helped. A retired public relations officer in Washington, DC, he learned 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 an advocacy group, Patients for Affordable Medicine.

“The drug doesn’t work if people can’t afford it and too many people in this country can’t afford it,” Mitchell said. “Americans are angry and they are being taken advantage of. They know that.”

However, the measure won’t provide every tool Democrats want to control prescription drug costs. Negotiated prices won’t go into effect until 2026, and even then will only apply to a small fraction of prescription drugs used by Medicare beneficiaries. Drug companies can still charge high Medicare prices for new drugs.

It was a disappointment to the party’s progressive wing; American Prospect, a free magazine, dismissed this measure as “Extremely modest.”

Prescription drug prices in the United States are much higher than in other countries. One year 2021 report from RAND Corporation for example, drug prices in this country are 7 times higher than in Turkey.

The pharmaceutical industry spends more than any other sector promoting its interests in Washington. Since 1998, it has spent $5.2 billion on lobbying, according to Open secret, track money in politics. The insurance industry, the next largest spender, spent $3.3 billion. The drugmakers spread their money around, dividing it roughly equally between Democrats and Republicans.

At a media press conference Last week, Stephen J. Ubl, executive director of PhRMA, the pharmaceutical industry’s main lobbying group, warned that the bill would reverse progress in the treatment sector, particularly in the care sector. cancer care – a high priority for Mr. Biden, whose son died of a brain tumor.

“Democrats are about to make a historic mistake that will devastate patients desperate for new treatments,” said Ubl, adding, “Less new drugs are a hefty price to pay.” for a single bill is not enough to make drugs more affordable . “

But Dr. Aaron S. Kesselheim, professor of medicine at Harvard Medical School and Brigham and Women’s Hospital, said he believes the measure will spur innovation, by “encouraging investment in new products.” more important is to encourage pharmaceutical companies to try to keep promoting the same product and delay the general importation 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 offered to leave it to the private sector.

“At the time, what we were trying to do was meet the recognition that Republicans were deadlocked in opposition to any kind of role,” said Tom Daschle, a former Democratic leader in the Senate. which of the government”.

But it took a Republican president, George W. Bush, and a Republican Congress to push the prescription drug interest to the finish line.

Medicare Part D, as the interest is known, has the support of the pharmaceutical industry for two reasons: Companies believe they will gain millions of new customers, and the bill has a “non-intervention provision.” ”, which explicitly prohibits Medicare from negotiating directly with apothecaries. Repeal of that provision is central to current legislation.

The architect of interest is a colorful Louisiana Republican congressman, Billy Tauzin, leader of the House Energy and Commerce Committee at the time. In Washington, Mr. Tauzin is best remembered as an example of drug industry influence: He left Congress in January 2005 to run the PhRMA, alleging that he was rewarded for his performance. tenders by companies — an allegation that Mr. Tauzin insists is a false “narrative” created by Democrats to paint Republicans as corrupt.

Joel White, a Republican health policy consultant who helped write the 2003 law that created Medicare Part D, says the program is designed for private insurers, rights managers pharmaceutical benefits and companies that have negotiated discounts for Medicare program sponsors use their leverage to lower prices. .

“The whole model is designed to promote private competition,” he said.

In the years since Medicare Part D was introduced, polls have been consistently found that the vast majority of Americans from both parties want the federal government to be allowed to negotiate drug prices. Former President Donald J. Trump accept the ideaalthough only during his campaign.

The new law targets drugs that are widely used during a specific period of their existence – when they have been on the market for a number of years but still lack general competition. The industry has been criticized for deploying strategies to extend patent life, such as tweaking drug formulations slightly or striking “pay-for-delay” agreements with manufacturers. rivals to delay the arrival of cheap generics and “biosimilars,” as generic versions of biotech drugs are called.

For example, drug maker AbbVie has amassed new patents to maintain a monopoly on its blockbuster anti-inflammatory drug Humira — and it has raked in about $20 billion a year from the drug since when the main patent expired in 2016.

Ten drugs will be eligible for negotiation by 2026, and more drugs will be added in the following years. The bill sets out criteria by which drugs will be selected, but the final decision will rest with the health secretary – a provision that Mr. White, the Republican adviser, warned would lead to “an incredible lobbying campaign” to get the drug on the list. or keep them from it.

Analysts say the bill will hurt the profits of drug makers. Analysts at investment bank RBC Capital Markets estimate that most companies affected by the measure will bring in 10 to 15 percent less annual revenue by the end of the decade.

But while the PhRMA has warned that the drop in revenue will make drugmakers less willing to invest in research and development, the Congressional Budget Office projects that there are less than 15 drugs on the market over the next 30 years, out of an estimated 1,300 projected during that time.

The Senate is expected to consider the bill as early as Saturday, then send it to the House of Representatives. Leslie Dach, founder of Protect Our Care, an advocacy group, said if it passed, as predicted, it would pierce the aura of power in Washington’s drug industry, opening the door to more drugs become the subject of negotiation.

“Once you lose invincibility,” he says, “it’s a lot easier for people to take the next step.”