Biden Lobbying to End Ban on Negotiating Medicare Drug Prices; Big Pharma pushes back

As a participant in Medicare’s prescription drug program, Florida retiree Donna Weiner would like to pay less for her medications, which cost her around $ 6,000 a year.

And as a retired accountant who has spent 50 years managing corporate books, she sees a way to make it happen.

“You know, working in a business, it doesn’t make sense for a plan or business administrator not to be involved in what they have to pay,” said Weiner, who lives at Longwood, Florida, near Orlando.

For Medicare, “negotiating these prices down would net me thousands of dollars every year,” she said.

Negotiating the prices of Medicare drugs is the keystone of President Joe Biden’s ambitious health care program. Not only would retirees like Weiner see lower costs, the savings would be spent on other priorities, such as dental coverage for them and lower premiums for people on plans under the Health Care Act. Obama era.

To do so, however, Congress would have to amend an unusual arrangement enshrined in law that prohibits Medicare from negotiating prices.

When lawmakers created Medicare’s Part D ambulatory prescription drug program in 2003, Republicans controlling Congress wanted the insurers that administer drug plans to bargain, not the government. So Medicare has been sidelined despite decades of experience in setting prices for hospitals, doctors, and nursing homes.

“I don’t know of any other situation where the government has a hand tied behind its back when dealing with people like the big pharmaceutical companies,” said Sen. Ron Wyden, D-Ore., Who is leading the effort to draft the Democratic plan in the Senate.

Known as the “non-interference clause,” the ban has been adamant.

The pharmaceutical industry wants it to be that way.

Former Medicare administrator Andy Slavitt recalls coming up with a “modest experiment” on pricing.

“You would have thought we hit the nuclear button and the country was going to explode,” he said.

Drugs costing tens of thousands of dollars a month were scarce when the prescription benefit was first enacted nearly 20 years ago. Now they have become more common. And Democrats want to allow Medicare to negotiate high-priced brand name drugs with little to no competition, as well as insulin.

Their legislation would also limit price increases for established drugs and cap annual out-of-pocket expenses for Medicare beneficiaries such as Weiner.

Another part would be to overhaul the inner workings of the nearly $ 100 billion a year drug program in an attempt to reduce costs to taxpayers.

Politicians, including former President Donald Trump and House Speaker Nancy Pelosi, D-Calif., Have supported medicare negotiations. But it’s Biden, with Pelosi doing much of the lifting, who’s closest to doing it.

Evan Vucci / AP

And that still might not happen. Similar to the rest of Biden’s massive agenda, allowing Medicare to negotiate hinges on some Democratic reluctance. During committee deliberations in the House, three Democrats opposed it. In the Senate, a couple is seen as unconvinced.

Amid a furious lobbying and advertising campaign, AARP, consumer groups and health insurers are pushing for negotiations over Medicare.

Business groups and the pharmaceutical industry oppose it. Pharmaceutical companies have spent $ 171 million so far this year on lobbying, far above any other industry, according to watchdog group OpenSecrets.

The industry says weakening the ban on negotiations would stifle investment in innovative ideas that can lead to life-saving treatments.

“The United States is quite simply the biopharmaceutical engine of the world,” said Lisa Joldersma, senior executive at the lobbying group Pharmaceutical Research and Manufacturers of America, or PhRMA. “The investments our companies are making are what are allowing things like several vaccines and therapies to deal with a global pandemic to hit the market in an unprecedented time frame. “

PhRMA opposes constraints on introductory prices for new drugs, as well as limitations on price increases for existing drugs. He says the government has other ways to protect Medicare beneficiaries from high out-of-pocket costs and criticizes insurers for not passing manufacturer rebates directly to patients.

Joldersma points to research conducted by the non-partisan Congressional Budget Office to support the industry’s argument that fewer drugs are coming to market. The CBO found that an approach similar to legislation would lead to a slight reduction in new drugs in the first 10 years, increasing over time to 8% fewer new drugs in the third decade.

PhRMA says the cooling effect would be deeper.

“If you’re the patient… it’s definitely not a marginal problem,” Joldersma said.

Others say drug development is unlikely to shrivel. Valuable drugs would progress, but those with fewer benefits would have a more difficult path, said the biotethicist, said Dr. Steven Pearson, director of the Institute for Clinical and Economic Review in Boston. The research organization, known as ICER, recommends prices based on efficacy.

“The big point is that if the government gets its finger on the process, it will somehow stifle innovation,” Pearson said. “We can achieve even better innovation by being smart about the way we pay. “

To this, Joldersma said: “I am not aware that Steve Pearson of ICER has ever been in the business of discovering or bringing to market a treatment or a cure.”

Juliette Cubanski, a health insurance expert from the Kaiser Family Foundation, a non-partisan organization, said that “the level of hyperbole we are hearing in this current drug debate suggests that the industry is very concerned.” .

One of the industry’s biggest objections is that the House bill would use lower prices in other advanced counties as a measure of medicare. The Trump administration has tried a similar idea with a different set of Medicare drugs. Drugmakers say U.S. patients may have to wait longer than usual for new drugs if this happens.

A recent study by the RAND Corporation found that linking the cost of major U.S. drugs and insulin to overseas prices could cut spending here for those drugs by about half. Other countries are trying to balance incentives for research and development with prices that reflect value to patients and society, according to study author Andrew Mulcahy.

“If we just wrote a huge check to the drug companies, would they do more research? Mulcahy said. “Probably some. But is it the socially optimal thing to do? Probably not.”