What you should know about drug pricing reform : Vaccines

Demonstrators outside PhRMA headquarters in Washington, DC, are protesting pharmaceutical companies’ lobbying to prevent Medicare from negotiating lower prescription drug prices.

Saul Loeb/AFP via Getty Images

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Saul Loeb/AFP via Getty Images

Demonstrators outside PhRMA headquarters in Washington, DC, are protesting pharmaceutical companies’ lobbying to prevent Medicare from negotiating lower prescription drug prices.

Saul Loeb/AFP via Getty Images

Americans pay much more than people in other countries for prescription drugs. This drives voters crazy, and while lawmakers have vowed to do something about it for decades, they haven’t made much progress.

That could change as soon as this week. The Inflation Reduction Act, authored by Senate Majority Leader Chuck Schumer, DN.Y., and Sen. Joe Manchin, DW.V. – includes various provisions on drug prices and health insurance. The Senate plans to bring the bill to a vote on Saturday, and it appears to be on track to be passed by Congress and signed into law by President Biden.

All of this is music to the ears of patients who have been burdened by high-priced drugs for years.

“The out-of-pocket cap proposal that’s on the table right now would make a big difference in my life,” says Medicare beneficiary Bob Parant, 69, of Westbury, New York. He has type 1 diabetes and pays about $5,000 out of pocket for insulin each year, plus thousands more for heart medication.

Here are details about that proposal and others in the bill, and answers to some frequently asked questions.

What exactly is Congress changing about drug prices?

For the first time, the federal health secretary could directly negotiate the prices of certain expensive drugs each year for Medicare. This starts in 2026 with 10 drugs and increases to 20 drugs by 2029. To qualify for trading, the drugs would have to be on the market for several years.

Then there’s the proposal that Parant is most excited about: People with Medicare won’t have to pay more than $2,000 a year in out-of-pocket costs for prescription drugs, which will make a big difference for seniors with certain conditions like cancer and multiple sclerosis. This would take effect in 2025.

And, starting next year, if drug companies raise their drug prices faster than inflation, they’ll have to pay a refund to Medicare. That could affect many drugs, according to an analysis by the Kaiser Family Foundation; in 2019-20, half of all prescriptions covered by Medicare increased in price faster than inflation. This provision could help deter pharmaceutical companies from constantly raising prices.

Do the experts think it will make a difference?

In fact, many health policy experts think these changes are significant.

“This is a big step forward,” says Tricia Neuman, who directs the Medicare Policy Program at KFF. “Congress has been talking about doing something about drug prices for decades. [This] It may not be all that everyone wants, but it really is a big deal and it will bring significant help to literally millions of people who need it.”

“It’s a big deal,” agrees Stacie Dusetzina, a professor of health policy at Vanderbilt University. “It really breaks a lot of new ground and solves a lot of problems.”

The Congressional Budget Office, which reviewed an earlier version of the bill, estimates that these changes will save the government $288 billion through 2031.

Why do many of these things take so long to kick in?

For someone who has Medicare and spends $10,000 a year on cancer treatment, like Neuman’s friend, the timing of these changes can be difficult to accept.

“Clearly, she’ll be wondering next year, ‘Why do I keep paying so much money?'” says Neuman. “Some things just can’t happen fast enough just because it takes a while to get going.” Much work will be required by federal health agencies and industry groups to prepare for these provisions to go into effect.

Neuman says he understands people are hungry for relief, but once provisions like the out-of-pocket cap in Medicare go into effect, “this is really going to be a big deal for people who rely on expensive drugs and other people who have seen your drug. Prices go up every year.”

I heard the bill will lead to fewer new drugs. That’s right?

This is an argument by drug manufacturers to try to scare people into opposing these changes. The pharmaceutical and health products industry has spent more lobbying Congress in 2022 than any other industry, according to Open Secrets, a nonprofit organization. He is fighting hard to prevent these changes from becoming law because they would reduce his profits.

For example, PhRMA, Pharmaceutical Research and Manufacturers of America, is making its case in an advertising campaign that drug pricing provisions in the bill could lead to fewer new drugs coming to market by “cooling off research and developing”. The trade association also pointed to NPR this industry-funded analysis by Avalere, which estimates the bill could cut drugmaker revenues by $450 billion by 2032.

But an analysis by the Congressional Budget Office estimates the effect on drug development would be fairly modest. About 15 of 1,300 drugs won’t hit the market over the next 30 years, that’s about 1% of new drugs. Also, most big pharmaceutical companies spend more on marketing than on research and development.

Some ads claim that Medicare would be cut. Is this true?

These ads are misleading. For example, a project called Commitment to Seniors launched a seven-figure ad campaign claiming the Senate bill would “divert nearly $300 billion from Medicare.” In fact, that amount of money is what the government is expected to save because Medicare won’t have to pay as much for expensive drugs—it’s not money that’s being taken out of the Medicare budget. So, more importantly, the benefits of the elderly would not be reduced.

“When people see an ad on TV from a group called Senior Engagement, that sounds pretty innocuous,” says Michael Beckel of Issue One, which tracks dark money. It turns out that Commitment to Seniors is a project of another group, American Commitment, which has given PhRMA more than a million dollars, including $325,000 in 2020.

Beckel says it’s not unusual to see the industry engage in such tactics. “The pharmaceutical industry is a major lobbying force and a major dark money player.”

What about insulin? Would people with diabetes get help with those prices?

Insulin is often the drug of the cartel when it comes to runaway prices and life-and-death stakes. Insulin prices in the US are four times higher after rebates, on average, compared to other countries, and about 1 in 4 diabetes patients have reported using less insulin than prescribed because they can’t pay it. At this point, it is unclear whether any of the proposed insulin price reforms, or at least the out-of-pocket costs to patients, will be included in the final bill.

A provision to cap copays at $35 per month for people with insurance who take insulin has bipartisan support, but may not be included in the final bill.

What else is in the health bill?

The other big thing in the bill protects consumers from potentially disastrous change that would happen without new legislation.

People who buy insurance on Affordable Care Act marketplaces like Healthcare.gov and state marketplaces will be able to keep generous premium subsidies for three more years. After these additional subsidies went into effect with the approval of the American Rescue Plan, the government estimated that 4 out of 5 enrollees qualified for a plan with a premium of $10 or less per month.

Krutika Amin, who works with Neuman at KFF, says it’s important for lawmakers to put in place this extension now, as insurance companies are setting their rates for next year’s plans ahead of open enrollment in the fall.

“If Congress can extend the additional subsidies before the August recess, it will help provide certainty to both insurance companies and the state and federal agencies that are running [the marketplaces] to be able to implement it in a way that is transparent to consumers,” she says.

The extra discounts on the plans have made the difference. Last year, 14.5 million people, more than ever, signed up for insurance on Healthcare.gov, and an initial HHS analysis suggests the total number of uninsured people in the US hit an all-time low in the first months of this year.

NPR Pharmaceuticals correspondent Sydney Lupkin contributed to this report..

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