Democrats still looking for a balance to curb drug prices
Democrats have pledged to pass legislation this year to lower prescription drug prices, but they still disagree on how to cut costs for patients and taxpayers while preserving the profits that make investors support potentially promising treatments.
It’s about finding a balance: How big should Medicare be to negotiate prices with pharmaceutical companies?
With hundreds of billions of dollars in potential savings, the stakes are high. Medicare spends more than $ 200 billion a year on prescription drugs, a category that continues to grow as new, expensive drugs hit the market. An Alzheimer’s drug approved last week, for example, comes with a price tag of $ 56,000 per year, and user fees could skyrocket for patients who use it.
A successful bill would advance a key part of President Joe Biden’s national agenda, even as Democrats struggle to advance on other fronts. Allowing Medicare to negotiate drug prices has consistently garnered strong public support in opinion polls.
In the House, Speaker Nancy Pelosi, D-Calif., Is leading legislation that imposes a high tax on drugmakers who refuse to deal with Medicare, while using an average of prices in other economically advanced countries as the point of reference for fair rates here. His bill would limit price increases and allow private health plans to benefit from negotiated Medicare rates.
In the Senate, Finance Committee Chairman Ron Wyden, D-Ore, is also working on drafting legislation. Its starting point is a less ambitious bipartisan bill from a previous congress. It would have limited the price increases for drugs already on the market, but not the initial prices. It would have capped the reimbursable costs of Medicare beneficiaries for pharmacy drugs, which are included in the Pelosi bill.
Wyden said he is personally convinced that “it is high time that Medicare was empowered to negotiate better prices for prescription drugs.” But cajoling enough votes in the Senate is another matter. It’s unclear whether Wyden can even count on all Democrats in the divided chamber or whether any Republicans would sign.
Progressives like Sen. Bernie Sanders, I-Vt., Want to use Medicare savings to create new benefits for dental, vision and hearing coverage. This would represent a historic expansion of a program that is under an increasingly long financial shadow, its giant inpatient trust fund is expected to be in the red by 2026.
Democrats talk privately among themselves and organize coalitions around different approaches. In public, they always seem able to overcome their differences.
“Democrats are going to pass Medicare prescription drug reform and I’m going to be a part of it,” Rep. Jake Auchincloss, D-Mass., Told The Associated Press. The first-term lawmaker has voiced concerns that Pelosi’s approach is not a negotiation but a system of price controls. His voice matters because Auchincloss is helping lead a group of like-minded Democrats, and Pelosi can’t afford to lose many votes.
The powerful and deep-pocketed lobby of the pharmaceutical industry is closely engaged. Already, the advertisements raise fears that the price controls by the government are slowing down the development of revolutionary treatments.
Stephen Ubl, CEO of Pharmaceutical Research and Manufacturers of America, said the industry wants to reduce out-of-pocket costs for patients and believes that insurers and companies that administer prescription benefits also need to be scrutinized.
“We would like to see a balanced drug pricing bill emerge from Congress this year,” Ubl told AP in a recent interview. He later added that “our industry understands that the process is going to be painful.”
But so far, the industry has given no indication that it is ready to agree to negotiations over Medicare or significant restrictions on its pricing power.
Health economist Len Nichols, who has advised Democrats in debates over health care policy, said there was logic behind the basic elements of Pelosi’s approach.
“You have to have this benchmark price which is somewhat objective as a basis for negotiation, and then you have to have a way of getting the drug companies to come to the table,” he said. “It’s directional correct.”
Having said that, finding the right balance would be essential.
“We have just experienced an incredible example of incredibly effective innovation,” said Nichols, referring to the COVID-19 vaccines that have fought back a deadly pandemic in this country. “Innovation is important, and the structure of any negotiating agreement must balance the need for affordability with the need to encourage innovation. “
The industry’s success with COVID-19 vaccines is marked with a large asterisk: Taxpayers have invested around $ 20 billion in research and development, manufacturing and supply of candidate vaccines. This is according to the estimates of the Non-partisan Committee for a Responsible Federal Budget, which advocates reducing federal deficits. Yet the money went to companies that knew what they were doing and kept their promises.
Joshua Gordon, director of health policy for the budget group, said there is a clear trade-off between restricting drug prices and reducing incentives for innovation. But that doesn’t mean that a better balance can’t be found.
“Obviously, the government is creating a market for drugs through patents and exclusivity (Food and Drug Administration), and there are clearly areas where companies are profiting,” he said.
Lawmakers are not necessarily tied to the approaches currently on the table, Gordon added. They could follow the lead of Germany, where drug makers set the initial price of a drug, but then a review process determines whether it’s worth continuing to pay for that.
One of Pelosi’s senior lieutenants recently said he was open to discussing different approaches, but they needed to include bargaining power for Medicare.
“We cannot get away from the basic idea that the government… should have the right to negotiate prices,” said Representative Frank Pallone, DN.J., on a call sponsored by the group of Protect Our Care defense. “I think Democrats as a whole and some Republicans in the Senate will vote for this.”