WASHINGTON – Democrats are committed to passing legislation to curb drug prices this year, but they still disagree on how to cut costs for patients and taxpayers, while preserving profits that Allure investors to back potentially promising treatments.
It boils down to finding balance: How big of a stick should Medicare have to negotiate prices with drug companies?
With hundreds of billions of dollars in potential savings, the stakes are huge. Medicare spends more than $200 billion a year on prescription drugs, a category that continues to grow as expensive new drugs enter the market. For example, an Alzheimer’s drug approved last week costs $56,000 a year, and the co-pay could skyrocket for patients using it.
A successful bill would advance a key issue on President Joe Biden’s domestic agenda, while Democrats are struggling to make progress on other fronts. Allowing Medicare to negotiate drug prices consistently garners strong public support in opinion polls.
In the Senate, the chairman of the Finance Committee, Ron Wyden, D-Ore., is also working to draft legislation. His starting point is a less ambitious bipartisan bill than the previous Congress. There will be a limited increase in its prices for the drugs already in the market, but not in the initial prices. This would have limited Medicare recipients’ out-of-pocket costs for pharmacy drugs, which is in the Pelosi bill.
Wyden said he is personally convinced that “it is high time to give Medicare the right to negotiate better prices for prescription drugs.” But getting enough votes in the Senate is another matter. It is unclear whether Wyden can count on all Democrats in the divided chamber or whether any Republicans will sign.
Bernie Sanders wants to use Medicare’s savings to create new benefits for progressives, dental, vision, and hearing coverage, like I-VT. It would represent a historic expansion of a program that is under a long financial shadow, with its massive inpatient trust fund projected to turn red in 2026.
Democrats are talking privately and forming coalitions in different ways. In public, they still sound like they can work out their differences.
“Democrats are going to pass Medicare Prescription Drug Reform and I’m going to be part of it,” D-Mass representative Jake Auchinkloss told the Associated Press. The first-term lawmaker has expressed concern that Pelosi’s approach is not a negotiation but a price control system. His voice matters because Auchinclos is helping lead a group of like-minded Democrats, and Pelosi can’t afford to lose many votes.
The pharmaceutical industry lobby with powerful and deep pockets is closely linked. Already, advertisements are fueling fears that government price controls will stifle the development of successful treatments.
Stephen Uble, CEO of Pharmaceutical Research and Manufacturers of America, said the industry wants to see lower out-of-pocket costs for patients, and believes insurance companies and companies need to examine the benefits of prescriptions as well. needed.
“We want to see a balanced drug pricing bill from Congress this year,” UBL told the AP in a recent interview. He later added that “our industry understands that there is going to be some pain involved in this process.”
But so far the industry has given no indication that it is willing to accept Medicare negotiations or significant restrictions to its pricing power.
“You have to have that reference value that’s somewhat objective as a basis for negotiation, and then you have to have a way to force drug companies to come to the table,” he said. “It’s just plain right.”
That said, getting the balance right will be important.
The industry’s success with COVID-19 vaccines comes with a big asterisk: Taxpayers have invested nearly $20 billion in research and development, manufacturing, and supply of vaccine candidates. This is in line with estimates from the Nonpartisan Committee for a Responsible Federal Budget, which advocates for reducing the federal deficit. Still, the money went to companies that knew what they were doing and delivered.
Joshua Gordon, director of health policy for the budget group, said there is a clear trade-off between reining in drug prices and reducing the incentive for innovation. But that doesn’t mean a better balance can’t be found.
“Obviously the government creates a market for drugs through patents and (Food and Drug Administration) exclusivity, and clearly there are areas where companies are taking advantage,” he said.
Gordon said lawmakers are no longer bound by the perspectives on the table. They can follow the example of Germany, where drugmakers set a drug’s initial price, but then a review process determines whether it’s worth paying for.
One of Pelosi’s top lieutenants recently said she was open to discussing the different approaches, but they would have to engage the negotiating authority for Medicare.
“We can’t get away from the basic idea that the government … should have the right to negotiate prices,” Representative Frank Palone, DN J, said on a call sponsored by the advocacy group Protect Our Care. “I believe that the Democrats as a whole and some Republicans in the Senate will vote for it.”