Democrats’ long-sought plan to cut drug costs is within reach

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WASHINGTON — For decades, as the cost of prescription drugs has risen, Democrats have battled with the pharmaceutical industry to pursue an elusive goal: legislation that could lower prices by allowing Medicare to negotiate directly with drug manufacturers.

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

Allowing Medicare to initially — and more later — negotiate prices for up to 10 drugs, along with several other provisions aimed at lowering health care costs, would be the most substantial health policy change since the Affordable Care Act came into effect in 2010. large part of the population. It could save some older Americans thousands of dollars in medication costs each year.

The legislation would extend by three years the larger premium subsidies that low- and middle-income people received during the coronavirus pandemic to receive health insurance under the Affordable Care Act, and higher-income people who were eligible for such subsidies during the pandemic to get them. preserve. It would also cause drug manufacturers to shoulder some of the costs of drugs whose prices are rising faster than inflation.

Significantly, it would also limit how much Medicare recipients 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 each year, often on drugs for serious illnesses. such as cancer and multiple sclerosis.

Lower prices would make a huge difference in the lives of people like Catherine Horine, 67, a retired secretary and lung recipient from Wheeling, Illinois. She lives alone on a steady income of about $24,000 a year. Her out-of-pocket drug costs are about $6,000 per year. She digs into her savings, fearing she may soon run out of money.

“Two years ago I was in the hole for $8,000,” she said. “Last year I was in the hole for $15,000. I expect more this year because of inflation.”

Between 2009 and 2018, the average price more than doubled for a brand-name prescription drug in Medicare Part D, the program that covers products delivered to pharmacies, the Congressional Budget Office found. According to an analysis by the Kaiser Family Foundation, price increases between 2019 and 2020 exceeded inflation for half of all drugs covered by Medicare.

Opponents argue the measure would discourage innovation, citing a new CBO analysis that predicts it would actually lead to higher prices when drugs first hit the market.

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

Until recently, the idea that Medicare, which has about 64 million beneficiaries, could use its muscle power to make deals with drug manufacturers was unimaginable. Democrats have been pushing for it since President Bill Clinton proposed his controversial health care reform in 1993. The fierce lobby of the pharmaceutical industry against it has become the lore of Washington.

“This is like lifting a curse,” Oregon Democrat Ron Wyden, the architect of the measure, said of the Medicare negotiating clause. “Big Pharma has protected the bargaining ban as if it were the holy grail.”

David Mitchell, 72, is one of those who would be helped. 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 each year for just one of the four drugs he takes. He also founded an advocacy group, Patients for Affordable Medicines.

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

Still, the measure would not provide all the tools Democrats would like to cut the cost of prescription drugs. The negotiated prices wouldn’t take effect until 2026, and even then they would only apply to a small fraction of prescription drugs taken by Medicare beneficiaries. Pharmaceutical companies could still charge high Medicare prices for new drugs.

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

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

The pharmaceutical industry spends far more than any other sector to advance 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 second largest spender, has spent $3.3 billion. Drug makers scattered their money and gave in roughly equal amounts to Democrats and Republicans.

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During a media briefing last week. Stephen J. Ubl, the chief executive of PhRMA, the drug industry’s main lobbying group, warned that the bill would reverse advances in treatment, especially in cancer care — a high priority for Mr. Biden, whose son died of cancer. a brain tumor.

“Democrats are about to make a historic mistake that will devastate patients desperate for new treatments,” said Mr Ubl, adding: “Fewer new drugs is a high price for a bill that doesn’t 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 measure would spur innovation by “encouraging investment in key new products rather than encouraging pharmaceutical companies.” to try to put off the same product and the introduction of generic drugs as long as possible.”

In 1999, after his health plan failed, Clinton revived the idea of ​​Medicare prescription medication. But this time, he suggested that Medicare negotiate with companies, but leave that to the private sector.

“At that time, we were trying to meet the recognition that Republicans were in a revolt against any kind of government role,” said Tom Daschle, the former Senate Democratic leader.

But it took a Republican president, George W. Bush, and a Republican Congress to get the prescription drug benefit across the finish line.

Medicare Part D, as the benefit is known, had the backing of the drug industry for two reasons: The companies became convinced they would gain millions of new customers, and the bill included a “non-interference clause,” which explicitly prohibits Medicare from directly to negotiate. with medicine makers. Repealing that clause is at the heart of current legislation.

The benefit’s architect 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 example of the drug industry’s influence: He left Congress in January 2005 to lead PhRMA, making allegations that he was rewarded for doing the companies’ bids – a charge that Mr. Tauzin says is a false “story” made by Democrats to portray Republicans as corrupt.

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

In the years since Medicare Part D was introduced, polls have consistently shown that a vast majority of Americans on both sides want the federal government to be allowed to negotiate drug prices. Former President Donald J. Trump embraced the idea, albeit only during his campaign.

The new legislation targets commonly used drugs during a specific stage of their existence – when they’ve been on the market for several years but still don’t have generic competition. The industry has been criticized for using strategies to extend the patent period, such as slightly modifying drug formulations or entering into “pay for delay” agreements with rival manufacturers to delay the arrival of low-cost generics and “biosimilars”. as the generic versions of biotech drugs are called.

The drugmaker AbbVie, for example, has been piling up new patents to maintain a monopoly on its blockbuster anti-inflammatory drug Humira — and it has reaped about $20 billion a year from the drug since its main patent expired in 2016.

Ten drugs would be under negotiation in 2026, with more to come in subsequent years. The bill outlines criteria by which the drugs would be chosen, but the final decision would rest with the health secretary — a provision that Republican adviser Mr. White warned would lead to “an incredible lobbying campaign” to put drugs on the list. get them or keep them out of it.

Analysts say the bill would hurt drug makers’ results. Analysts at investment bank RBC Capital Markets estimate that most companies affected by the measure will see 10 to 15 percent less annual revenue by the end of the decade.

But while PhRMA has warned that a drop in revenues will make drug makers less willing to invest in research and development, the Congressional Budget Office predicted only 15 fewer drugs would hit the market in the next 30 years, from the estimated 1,300 made at the time.

If passed, as expected, the bill will break the power of the drug industry in Washington and open the door for more drugs to become the subject of negotiations, said Leslie Dach, founder of Protect Our Care, an advocacy group.

“Once you lose your invincibility,” he said, “it’s a lot easier for people to take the next step.”

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