The Battle for Lower Drug Costs Continues
You may remember our Most Favored Nation article regarding the Trump Administration's attempt to lower drug prices. This policy was preceded in 2019 by Speaker of the House Nancy Pelosi’s bill that would have allowed drug prices to be negotiated globally between economically advanced nations, setting the global rate for medications. Any drug maker who hiked prices above the negotiated rate would need to pay a rebate to Medicare. It’s important to note that this primary is focused on the top most expensive drugs, which are predominantly skewed towards those most prescribed in the US for older adults, affecting Medicare directly. If this bill passed, it could have saved Medicare millions of dollars that could be redirected to healthcare spending.
In 2019 the Ways and Means committee in Congress conducted a deep dive into US drug prices and their historic increase, comparing them to other Western nations. The findings are in the box below:
As seen, the U.S. pays not only more for drugs in comparison to other countries, but four times as more! The estimated savings to the U.S. is $49 billion per year, if we were to lower only Medicare Part D drug prices to the equivalent of other Western countries.
Both of the attempts to regulate drug prices were thwarted by the Pharmaceutical Industry and it’s lobbying arm PhRMA, known among the most politically skilled operators in Washington. But their stronghold started long ago in 2003 where with a law that barred the government from interfering between pharmaceutical companies and insurers. Today, PhRMA is building it’s arsenal and is prepared for another battle, determined to maintain the 2003 law and not allow any negotiations on lowering drug prices. Their argument: the government doesn’t have the right to intervene in an independent market and reduce competition and stifle innovation. PhRMA is among the top 5 lobby group spenders in Washington.
The Biden administration and Democrats say differently. We heard Biden openly advocate for drug price negotiation in his first address to the Nation last week, saying “The money we save, which is billions of dollars, can go to strengthening the Affordable Care Act and expand Medicare benefits without costing taxpayers an additional penny. It is within our power to do it. Let's do it now. We’ve talked about it long enough.” With a very narrow senate majority, the Democrats will need all their blue votes in order to pass this legislation, fighting against the extremely strong private interests of big pharma. If not now, the issue will most likely continue into the 2022 midterm elections.
Sources:
Alonso-zaldivar, R. (2021, May 03). Democrats must find narrow path to curb high medicine prices. Retrieved May 03, 2021, from https://apnews.com/article/business-health-government-and-politics-60bea362fb02501c933e913375f920b7?utm_source=Sailthru&utm_medium=email&utm_campaign=May3_Morning_Wire&utm_term=Morning+Wire+Subscribers
H.R. Rep. No. A Painful Pill to Swallow: U.S. vs. International Prescription Drug Prices-1789 at 4 (2019).