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

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

Now they are about to pass a sweeping budget bill that would do just that, and in the process hand President Biden a political victory that he and his party can take to voters in November.

Allowing Medicare to negotiate the prices of up to 10 drugs initially, and later, along with several other provisions aimed at lowering health care costs, would be the most substantial change in health policy since the Affordable Care Act Price became law in 2010, affecting a significant segment of the population. It could save some older Americans thousands of dollars in drug costs each year.

The legislation would extend, for three years, the higher premium subsidies that low- and middle-income people have received during the coronavirus pandemic to obtain health coverage under the Affordable Care Act, and allow those with higher income that became eligible for such subsidies during the pandemic to support them. It would also cause drugmakers to absorb some of the cost of drugs whose prices rise faster than inflation.

Significantly, it would also limit how much Medicare beneficiaries have to pay out-of-pocket for drugs at the pharmacy to $2,000 a year, a huge benefit for the 1.4 million beneficiaries who spend more than that each year, often on drugs for serious illnesses like cancer and multiple sclerosis.

Lower prices would make a big difference in the lives of people like Catherine Horine, 67, a retired secretary and lung recipient from Wheeling, Illinois. She lives alone on a fixed income of around $24,000 a year. Her out-of-pocket drug costs are about $6,000 a year. She is rummaging through her savings, worried that she will run out of money in no time.

“Two years ago, I had $8,000 in the hole,” he said. “Last year, she had $15,000 in the hole. I hope to be more this year, due to inflation.”

Between 2009 and 2018, the average price more than double 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 drugs covered by Medicare, according to an analysis by the Kaiser Family Foundation.

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

Opponents argue that the measure would discourage innovation and cite a new CBO analysis which he projects would actually lead to higher prices when the drugs first hit the market.

Medicines for common conditions such as cancer and diabetes that affect older people are more likely to be chosen for negotiations. Analysts at investment bank SVB Securities pointed to the blood thinner Eliquis, the cancer drug Imbruvica and the drug Ozempic, which is given to control diabetes and obesity, as three of the first possible targets for negotiation.

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

“This is like lifting a curse,” Sen. Ron Wyden, a Democrat from Oregon and the bill’s architect, said of the Medicare bargain provision. “Big Pharma has been protecting the trading ban like it was the Holy Grail.”

David Mitchell, 72, is among those who would receive help. A retired public relations man from Washington, DC, learned in 2010 that he had multiple myeloma, an incurable blood cancer. He pays $16,000 out of pocket for him each year for just one of the four drugs he takes. He also founded an advocacy group, Patients for Affordable Medicine.

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

Still, the measure would not offer all the tools Democrats would like to control prescription drug costs. Negotiated prices would not take effect until 2026, and even then they would apply to only a small fraction of prescription drugs taken by Medicare beneficiaries. Pharmaceutical companies could still charge Medicare high prices for new drugs.

That is a disappointment for the progressive wing of the party; The American Prospect, a liberal magazine, has dismissed the measure as “extremely modest”.

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

The pharmaceutical industry spends much more than any other sector to promote its interests in Washington. Since 1998, it has spent $5.2 billion on lobbying, according to open secrets, which tracks money in politics. The insurance industry, the next largest spender, has spent $3.3 billion. Drugmakers split their money between Democrats and Republicans in roughly equal amounts.

in a Press conference In the past week. Stephen J. Ubl, executive director of PhRMA, the pharmaceutical industry’s leading lobbying group, warned that the bill would reverse progress on the treatment front, especially in cancer care, a top priority for Biden, whose son He died of a brain tumor. .

“Democrats are about to make a historic mistake that will devastate patients desperate for new cures,” Ubl said, adding: “Fewer new drugs is a high price to pay for a bill that does not do enough to make medicines 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 move would spur innovation, by “encouraging investment in major new products rather than encouraging pharmaceutical companies to try to continue promoting the same product and delay the entry of generics as much as possible”.

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

“At the time, what we were trying to do was accommodate the recognition that Republicans were opposed to any kind of role in government,” 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 through to the end.

Medicare Part D, as the benefit is known, had the backing of the pharmaceutical industry for two reasons: the companies were convinced they would gain millions of new customers, and the bill contained a “non-interference clause” that explicitly prohibited Medicare from doing business directly with drug manufacturers. The repeal of that clause is at the heart of the current legislation.

The architect of the charity event was a colorful Republican congressman from Louisiana, billy Tauzin, who headed the House Energy and Commerce committee at the time. In Washington, Mr. Tauzin is best remembered as an exemplar of pharmaceutical industry influence: He left Congress in January 2005 to run PhRMA, prompting accusations that he was being rewarded for doing company bidding, a charge 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, said the program was designed for private insurers, pharmacy benefit managers and companies that already negotiate reimbursements so that sponsors of Medicare plans use their influence to lower prices. .

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

In the years since Medicare Part D was introduced, surveys have 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 ideaalthough only during his campaign.

The new legislation focuses on drugs widely used during a specific phase of their existence, when they have been on the market for several years but still lack generic competition. The industry has been criticized for implementing strategies to extend the patent period, such as slightly modifying drug formulas or entering into “pay-for-delay” agreements with rival manufacturers to postpone the arrival of cheap generics and “biosimilars,” such as generic versions of biotech drugs. They are called.

Drugmaker AbbVie, for example, racked up new patents to maintain a monopoly on its blockbuster anti-inflammatory drug Humira, and has made an estimated $20 billion a year from the drug since its core patent expired in 2016.

Ten drugs would qualify for trading in 2026, with more to be added in subsequent years. The bill outlines the criteria by which the drugs would be chosen, but the final decision would rest with the health secretary, a provision that White, the Republican consultant, warned would lead to “an incredible lobbying campaign” to include drugs in the list. Or keep them away.

Analysts say the bill would hurt drugmakers’ bottom lines. Analysts at investment bank RBC Capital Markets estimated that most companies hit by the move would generate 10 to 15 percent less annual revenue by the end of the decade.

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

If the bill passes, as expected, it will pierce the pharmaceutical industry’s aura of power in Washington, opening 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 much easier for people to take the next step.”

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