By Trudy Lieberman
In the next few weeks we’ll find out if Congress has the chops to lower the price of prescription drugs paid by Medicare beneficiaries. Patients in the U.S. pay on average about 2.5 times more for their medicines than those in 32 other nations, according to a study from the RAND Corporation released earlier this year.
Although less costly generic drugs account for 84 percent of drugs sold in the U.S., they make up only 12 percent of the country’s spending on pharmaceuticals. So it’s hardly surprising that brand-name drugs are the primary drivers of high prescription drug prices.
You need look no further than the recently approved drug Adulhelm to treat Alzheimer’s disease to understand the impact of the problem illustrated by the RAND study, which I discussed in a previous column. That drug is projected to bring in some $56 billion for treating 1 million Alzheimer’s patients in the first year alone. The FDA approved the drug despite serious scientific pushback about its effectiveness. What’s more, the FDA gave the drug manufacturer nine years to do further research to see if the drug really works.
In the meantime, public spending on pharmaceuticals and personal spending from consumers continues to rise.
The federal government’s hands are tied thanks to drug industry lobbying in 2003 when Congress authorized Medicare’s drug benefit. The law providing for the benefit prohibited Medicare from negotiating prices on behalf of beneficiaries, giving rise to the mess we’re in today.
In late 2019, the House of Representatives passed legislation that would begin to give Medicare some power to negotiate drug prices, but the bill went nowhere in the Senate. This year, proposed legislation calling for Medicare price negotiations and the creation of an out-of-pocket cap on spending for each beneficiary are part of a budget reconciliation bill that will soon be brought up for a vote in Congress. At this point it is not clear what will pass both chambers and be sent to President Joe Biden to sign.
Given the gobs of money the drug industry is spending, along with its hundreds of lobbyists trying to make sure that no negotiations will ever take place, it’s fair to say that the route to a drug benefit is littered with mines that can explode at any point in the legislative process.
“There is nobody that doesn’t want this to happen except pharma and its allies,” says Steve Knievel, an advocate for Public Citizen’s Global Access to Medicines Program. “The popular outrage is immense. People desperately want drug pricing reform.”
A new poll just released by the Kaiser Family Foundation found a whopping 83 percent of Americans support the federal government negotiating drug prices even after they heard arguments against it. “We didn’t poll on baseball, motherhood, and apple pie, but I’m not sure they would score much higher,” Larry Levitt, an executive vice president at the foundation, said in a tweet.
Despite the popularity of drug price negotiations, passing a bill to authorize price negotiations is hardly a cakewalk. The drug industry and its allies are in full attack mode. Over the past few months, pharma’s allies have been running TV ads supporting the drug industry’s position. One such group, the Partnership for Chronic Disease, has spent more than $5 million on ads in selected states. In one ad, a young woman with cystic fibrosis tells viewers that the disease has been part of her life for as long as she can remember but new life-changing medication has made a big difference. “I wish our policymakers in Washington would help us fight our disease instead of fighting our ability to access medicines and find cures,” she says.
One proposal from members of Congress who have received megabucks from drug makers would cap out-of-pocket prescription drug expenditures only “for those who need assistance most,” preserving a large chunk of the market for industry profits. The suggestion would fundamentally change Medicare — bringing it far away from the principle of social insurance that everyone who paid into the program earns the right to the same benefits when they turn 65.
Trudy Lieberman, a journalist for 40 years, is a fellow at the Center for Advancing Health. Should Medicare negotiate with drug companies to lower prices of prescription drugs? Write to Trudy at trudy.[email protected]. Send comments to [email protected].