The Medicare prescription drug pricing plan Democrats unveiled is not nearly as ambitious as many lawmakers sought, but they and drug policy experts say the provisions crack open the door to reforms that could have dramatic effects. More changes are coming as consumers are tired of high drug prices while pharma reports record profits.
The plan would also place inflation caps on prescription drug prices for all insurance plans, restrict copays for insulin to no more than $35, and limit Medicare beneficiaries’ annual out-of-pocket drug costs to $2,000. Currently, drug costs for people in the Part D prescription drug plans are calculated with a complicated formula that features the infamous “doughnut hole,” but there is no limit to how much they might spend.
Rather than having a bill at the end of the year, like over $10,000, maybe their bill at the end of that year for that very expensive multiple myeloma treatment is $2,000.
The list would also be limited to drugs that have been on the market beyond the period of exclusivity the government grants them to be free from competition and recoup costs. So, for example, the negotiated price for a non-biologic drug that has been available for less than 12 years would be 75% of the average manufacturer price.
Under the bill, manufacturers would have to report their prices to the HHS secretary, and if the prices increase faster than inflation, the drugmakers would have to pay a rebate to the government.
Pharma breaking records with lobbying money
Pharma’s effort to fight back drug-price increases is huge and will stand out because of the enormous scope of the campaign waged by the pharmaceutical industry and its allies, which have derailed similar proposals for the past two decades, despite how popular many of the changes are with voters, according to polling data.
The industry had spent more than any other by a wide margin so far this year, deploying so many lobbyists — 1,600 — that they outnumber members of Congress 3 to 1.
While the industry lobbies on many different issues in a given year, the Democratic bill H.R. 3 that would have given the government more expansive power to negotiate drug prices was the bill PhRMA cited most often for lobbying; the bill appeared in its reports 35 times so far this year, OpenSecrets found.
Research by Patients for Affordable Drugs Now, which advocates for lower prices, found that PhRMA and its allies spent at least $26.5 million on television and digital ads attacking proposals on price negotiations between July and early November. That included $2.7 million spent by PhRMA, but also $4.5 million in ads by the 60 Plus Association, which bills itself as a conservative version of AARP and did not respond to a request for comment.
Even though Congressional Democrats’ slimmed-down drug pricing plan may not lower spending on drugs by nearly as much as their most ambitious proposal would have, it could still have a substantial effect on some of the industry’s top-selling products.
Pfizer, Bristol Myers Squibb, AbbVie, and Regeneron, for instance, could potentially be impacted by the legislation, which emerged this week after the Biden administration had seemingly given up on securing a place for drug pricing policy in its sweeping “Build Back Better” spending plan.
The drug price regulation Congress has passed would limit the amount that Medicare patients can be asked to pay for drugs out-of-pocket. It would restrict how much drugmakers can increase their prices each year. And, for the first time, it would allow Medicare to negotiate directly with drugmakers on prices for their medications. It’s a great first step but you can bet with so many voters angry over drug prices more aggressive steps will be taken very soon.