Democrats’ long-sought plan to lower drug costs is at hand

Written by Javed Iqbal

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

Now they are on the verge of passing a broad fiscal bill that would do just that, and in the process deliver President Biden a political victory that he and his party can take to the voters in November.

Authorizing Medicare to negotiate prices for up to 10 drugs initially — and more later — along with several other provisions aimed at lowering health care costs would be the most significant change to health care policy since the Affordable Care Act became law in 2010, which affects a large part of the population. That could save some older Americans thousands of dollars in drug costs each year.

The legislation would extend for three years the larger premium subsidies that low- and middle-income earners received during the coronavirus pandemic to get health coverage under the Affordable Care Act, and allow those with higher incomes who became eligible for such subsidies during the pandemic to keep them. It would also make drugmakers absorb some of the costs of drugs whose prices rise faster than inflation.

Significantly, it would also cap how much Medicare beneficiaries have to pay out-of-pocket for pharmacy drugs at $2,000 annually — a major benefit for 1.4 million recipients who spend more than that each year, often on drugs for serious diseases such as cancer and multiple sclerosis.

Lower prices would make a huge difference in the lives of people like Catherine Horine, 67, a retired secretary and lung recipient from Wheeling, Ill. She lives alone on a fixed income of about $24,000 a year. The cost of drugs is about $6,000 a year. She digs into her savings, worried that she will run out of money before long.

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

Between 2009 and 2018, the average price more than doubled for a brand-name prescription drug in Medicare Part D, the program that covers products dispensed at the pharmacy, the Congressional Budget Office found. Between 2019 and 2020, price increases exceeded inflation for half of all substances covered by Medicare, according to an analysis by the Kaiser Family Foundation.

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

Opponents argue that the measure would discourage innovation and cite a new CBO analysis who estimate that it will actually lead to higher prices when medicines first come to market.

Drugs for common conditions such as cancer and diabetes that affect older people are most likely to be selected for negotiations. Analysts at investment bank SVB Securities pointed to the blood thinner Eliquis, the cancer drug Imbruvica and the drug Ozempic, given to manage diabetes and obesity, as three of the first likely targets for negotiation.

Until recently, the idea was that Medicare, which has around 64 million beneficiaries, would be able to use its muscle to make deals with drug manufacturers, was unthinkable. Democrats have been pushing for it since President Bill Clinton proposed his controversial health care overhaul in 1993. The pharmaceutical industry’s fierce lobbying against it has become Washington lore.

“This is like lifting a curse,” Sen. Ron Wyden, Democrat of Oregon and the architect of the measure, said of the Medicare negotiation provision. “Big Pharma has protected the ban on negotiation as if it were the Holy Grail.”

David Mitchell, 72, is among those who would be helped. A retired PR man 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 out of four medications he takes. He also founded an advocacy group, Patients for Affordable Drugs.

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

Still, the measure wouldn’t provide every tool Democrats want to contain prescription drug costs. The negotiated prices won’t go into effect until 2026, and even then they will only apply to a small portion of the prescription drugs Medicare beneficiaries take. Pharmaceutical companies will still be able to charge Medicare high prices for new drugs.

It is a disappointment to the progressive wing of the party; The American Prospect, a liberal magazine, has dismissed the measure as “exceedingly modest.”

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

The pharmaceutical industry spends far more than any other sector to advance its interests in Washington. Since 1998, it has spent $5.2 billion on lobbying, according to the Open secrets, which tracks money in politics. The insurance industry, the second largest spender, has spent $3.3 billion. Drug makers spread their money around, giving to Democrats and Republicans in roughly equal amounts.

At a media briefing last week. Stephen J. Ubl, executive director of PhRMA, the drug industry’s main lobbying group, warned that the bill would reverse progress on the treatment front, particularly in cancer treatment — 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 cures,” Mr. Ubl said, adding: “Fewer new drugs is a high price to pay for a bill that does not do enough to make medicine more affordable.”

But Dr. Aaron S. Kesselheim, a professor of medicine at Harvard Medical School and Brigham and Women’s Hospital, said he believed the measure would spur innovation by “encouraging investment in important new products rather than encouraging pharmaceutical companies to try to keep pushing the same product and delay generic access as long as possible.”

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

“At that point, what we were trying to do was meet the realization that Republicans were locked in opposition to any kind of government role,” said Tom Daschle, the former Senate Democratic leader.

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

Medicare Part D, as the benefit is known, had the drug industry’s backing for two reasons: The companies were convinced they would gain millions of new customers, and the bill included a “non-interference clause” that explicitly prevented Medicare from negotiating directly with drug manufacturers . Repeal of this clause is at the heart of the current legislation.

The architect of the benefit was a colorful Louisiana Republican congressman, 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 drug industry’s influence: He left Congress in January 2005 to lead PhRMA, raising accusations that he was rewarded for doing the companies’ bidding — a charge Mr. Tauzin insists is a false one. 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, said the program was designed for private insurers, pharmacy operators and businesses that already negotiate discounts for Medicare plan sponsors to use their leverage to push prices down. .

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

In the years since Medicare Part D was introduced, polling has consistently found that a large majority of Americans from both parties want the federal government to be allowed to negotiate drug prices. Former President Donald J. Trump embraced the ideathough only during his campaign.

The new legislation targets widely used drugs at a certain stage of their existence – when they have been on the market for a number of years but still lack generic competition. The industry has been criticized for implementing strategies to extend the patent term, such as slightly tweaking drug formulas or entering into “pay-for-delay” deals with rival manufacturers to delay the arrival of cheap generics and “biosimilars,” as the generic versions of biotech drugs are called.

Drugmaker AbbVie, for example, piled on new patents to maintain a monopoly on its blockbuster anti-inflammatory drug Humira — and it has reaped about $20 billion a year from the drug since its main patent expired in 2016.

Ten drugs would qualify for negotiation in 2026, with more added in subsequent years. The bill outlines criteria by which the drugs will be chosen, but the final decision will rest with the Minister of Health – a provision that Mr. White, the Republican consultant, warned it would lead to “an incredible lobbying campaign” to get drugs on the list or keep them off.

Analysts say the bill would hurt drugmakers’ bottom lines. Analysts at investment bank RBC Capital Markets estimated that most companies affected by the measure would bring in 10 to 15 percent less revenue annually by the end of the decade.

But while PhRMA has warned that a drop in revenue will make drugmakers less willing to invest in research and development, the Congressional Budget Office predicted that only 15 fewer drugs would reach the market over the next 30 years, out of an estimated 1,300 expected during that time.

The Senate is expected to take up the bill as early as Saturday and then send it to the House. If it passes, as expected, it would puncture the drug industry’s aura of power in Washington and open the door for more drugs to be subject to negotiations, said Leslie Dach, founder of Protect Our Care, an advocacy group.

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

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Javed Iqbal

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