Comment Year after year, for more than two decades, proposals that would have allowed the government to negotiate lower prices from drug companies for Medicare recipients have died in Congress, defeated by the powerful pharmaceutical industry and its allies. Now the Washington drug lobby is on the brink of a rare political loss. After winning the support of Sen. Joe Manchin III (DW.Va.), Senate Democrats say they will pass a sweeping bill as early as next week that, along with climate and deficit reduction measures, would give in Medicare powers to negotiate prices pick numbers from the most expensive drugs for the first time since Congress approved the prescription drug benefit for seniors in 2003. Although limited in scope and not taking effect until 2026, the measure, if enacted, would represent a significant step away from the government’s approach to drug pricing that has fueled drug company profits while fueling popular anger. Polling has shown for years that overwhelming majorities of Americans in both parties support Medicare negotiating drug prices. “Now, finally, like every other country in the world, we will be able to negotiate with drug companies for expensive drugs. It’s a truly historic breakthrough many, many years in the making,” said David Mitchell, president and founder of Patients for Affordable Drugs, one of the advocacy groups that pushed Congress to act. Fact Check: Biden Claims Drug Price Bill Will ‘Help Fight Inflation’ Seniors with high drug costs will get significant relief from another part of the bill. By 2025, it would cap the cost of Medicare Part D (the pharmacy prescription drug benefit) at $2,000. By 2024, it would eliminate the 5% copayment on drugs for catastrophic coverage, saving thousands of dollars for patients with serious illnesses like cancer that require very expensive drugs. These are not the controversial parts. The industry’s fight over pricing is what drew the most heat. Pharmaceutical companies have exerted great pressure to avoid anything resembling government price controls on their products. They are poised to break records in 2022 with $187 million in lobbying activity reported so far, with an army of 1,587 registered lobbyists (57 percent of them former government officials), according to Open Secrets, a nonprofit group that monitors political spending. The industry argues that price caps, bargaining or other government restrictions on profits will reduce the industry’s willingness to pursue new innovations. But the Congressional Budget Office, an official rater of the legislation’s impact, said the impact on industry innovation would be moderate: a reduction of 15 drugs on the market from an expected 1,300 within 30 years, based on the limited range of negotiations proposed. That hasn’t stopped the industry from upgrading dire warnings. “This bill will decimate the hope of curing cancer and other deadly diseases,” Stephen Ubl, president and CEO of PhRMA, the industry’s largest lobbying group, said at a forum Wednesday. Faced with diminishing returns, pharmaceutical companies will have no incentive to seek new uses for approved drugs, Ubl said. He added that “negotiation” is a misnomer in the bill because the “deck is stacked” in the government’s favor with a proposed tax on the sale of drugs if manufacturers refused the government’s price. Michelle McMurry-Heath, president and CEO of the Biotechnology Innovation Agency, said in a press release this month that the legislation “could push us light years back into the dark ages of biomedical research.” How the White House Lost Joe Manchin and His Plan to Transform America The industry received a public relations boost during the coronavirus pandemic, when Pfizer and Moderna introduced effective vaccines, using new technology discovered in government-sponsored research, in record time. But frustration has continued to build in recent years as drug companies have fought hard to protect practices that critics have called abusive: strategic to avoid competition by paying generic manufacturers to delay their products, filing multiple patents to extend monopolies, and launching improved versions of drugs just as generic competition is about to emerge. Democrats and Republicans, including former President Donald Trump, have railed against the drug companies’ behavior. “I’m not sure we’d be here if the industry hadn’t fought so hard for more moderate reform bills,” said Rachel Sachs, a law professor at Washington University in St. Louis and not a resident of the Brookings Institution. studies the pharmaceutical industry. However, the Senate’s Medicare bill has significant limitations. Bargaining prices will only apply to a narrow class of expensive drugs without generic competition, and then only to a relatively small number. The first negotiated prices will apply to 10 drugs in 2026, 15 more drugs in 2027, 15 more in 2028 and 20 more in 2029, according to a detailed explanation of their content by the Kaiser Family Foundation. Through negotiations and other provisions, the bill is expected to equal $288 billion in net revenue for the government over 10 years. In addition, negotiated prices will not be allowed until nine to 13 years after a new drug is introduced, so the launch price of new drugs will remain unlimited. After the launch, pharmaceutical companies will face financial penalties if they continue to raise prices faster than the rate of inflation. Pharmaceutical companies are motivated to make as much profit as possible in those early years. “It is clear that if this legislation passes, it will lead to higher drug prices at the time drugs are first on the market,” investment firm Raymond James wrote this month in an analysis. Another point of contention: Insulin would not be covered by the bargaining provisions because the drugs would face generic competition. Also omitted is a proposed $35 copayment cap on consumer insulin purchases. Groups including Public Citizen this week continued to push the Senate to restore the insulin provisions, which were included in previous versions. A separate bipartisan insulin effort led by Sens. Jeanne Shaheen (DN.H.) and Susan Collins (R-Maine) appears to have precedent in the Senate strategy, although the outcome of that measure remains uncertain, said Peter Maybarduk, director of the Access to Medicines Project at Public Citizen. Democratic leaders were considering adding an insulin provision back to the reconciliation bill. Public Citizen is among those pushing Senate Majority Leader Charles E. Schumer (DN.Y.) to restore insulin delivery in the reconciliation bill, which will not require 60 votes to pass. The excessive pricing of insulin is causing a “rationing crisis that has killed several people in the United States and is a needless cause of suffering because we are talking about a 100-year-old medical technology,” Maybarduk said.
