New Administration, New Democratic Majority, New Progress on Drug Prices?
By Colleen Kenny LaRocque, Prescription Justice Board Member
In the world of prescription drug prices, it's a new dawn, it's a new day, it's a new life - or is it? President Biden campaigned on the promise of lowering drug prices by up to 60%. When she was in the Senate, Vice President Kamala Harris had a distinguished record of supporting lower drug prices. But the Covid 19 crisis and vexatious vaccine rollout continue to dominate headlines and priorities.
But at long last, cases are falling across the country, and preliminary discussions suggest that Congress may consider drug pricing legislation more fully in late spring or early summer. For the millions of Americans rationing insulin or choosing whether to "treat or eat, "… making the impossible decision between paying for their life-saving medications or food and rent, Covid aid and drug pricing relief are not mutually exclusive forms of succor.
Foremost among the Biden Administration's proposed methods of achieving prescription drug cost savings is to allow Medicare to negotiate drug prices. A study released by the Government Accountability Office (GAO) last month shows just how useful such a change could be. Veterans Affairs, a different but similar federal health care services program, paid 54 percent less per unit for brand name and generic prescription drugs than Medicare Part D. "If the V.A. can negotiate with the pharmaceutical companies to substantially reduce the price of prescription drugs, we must empower Medicare to do so as well," said Senator Bernie Sanders, who commissioned the study.
Bernie's got a point. Since the passage of the Medicare Modernization Act in 2003, which prohibited Medicare from negotiating prescription drug prices, the pharmaceutical lobby and divided government have impeded all progress on this front. With Democrats leading the White House, House, and Senate for the first time since 2010, it's possible to use Medicare's immense purchasing power, which accounts for one-third of the nation's retail prescription drug spending, to bring relief to seniors.
To put things in perspective, Big Pharma raised the prices for hundreds of prescription drugs at the beginning of the year by an average of 3.3 percent (with some as high as 15%) — more than double this year's meager Social Security cost-of-living adjustment (COLA). It's craven and unjustified at a time when so many are suffering.
It's Time For Legislative Action
Yet, bad actors in the pharmaceutical space have been able to take cover behind arcane laws, obtuse patent gamesmanship, clever and relentless salesmanship and lobbying, and the public's malaise, fatigue, and lack of visibility into how the system works. For real change to happen, naming and shaming are not enough. Those in power have shown, time and time again, that they are impervious to the call of conscience. It's time for Democrats to seize the moment and focus on improving public health rather than placating donors or Republican colleagues like Senator Mitch McConnell (R-KY) and Representative Kevin McCarthy (R-CA), both of whom earned F’s on their drug pricing report cards and accepted over $200,000 in donations each from big pharma in the 2020 election cycle.
Legislative efforts will likely start from the Senate Finance Committee bipartisan drug pricing package introduced in the previous Congress by Chairman Ron Wyden (D-OR) and Senator Chuck Grassley (R-IA). The Prescription Drug Pricing Reduction and Health and Human Services Improvements Act calls for restructuring Medicare Part D and capping drug price increases to the rate of inflation. Wyden has also expressed his interest in crafting a package that would permit Medicare to negotiate drug prices with manufacturers, similar to H.R. 3, the Lower Drug Costs Now Act, passed by House Democrats in 2019.
He indicated that Democrats are open to using the fast-track budget reconciliation process to pass a drug pricing measure and avoid potential negotiating delays with Republicans. However, he has been non-committal on whether reconciliation is his preferred approach. The topic of reconciliation has already been raised within the context of a COVID 19 relief bill, and how things shake out there will undoubtedly inform the next steps on drug pricing legislation.
The pharma lobby and its sympathizers have already begun fretting over what they label as "price controls," a favorite boogieman of self-proclaimed free-market capitalists. However, the pharmaceutical drug market in the United States is neither free nor fair to begin with. In a competitive marketplace, consumer prices are forced down to cost plus a reasonable profit. Yet, in the U.S., drug patents give pharmaceutical companies carte blanche to charge extraordinary sums for life-saving medications. Patent protection effectively grants the pharmaceutical industry a monopoly - human consequences be damned.
They argue that skyrocketing costs are the price of being a leader in drug innovation. However, fully a third of our national investment in new drugs is underwritten by American taxpayers through the National Institutes of Health. That public investment, dedicated to basic biomedical research, has laid the groundwork for many of today's miracle drugs. Yet, the same taxpayers who funded the research are getting charged far more than patients in any other part of the world.
Any way you look at it, Democrats must seize the moment and lead. Now is the time to enact legislation that will begin to bring transparency and fairness to the system and rapid relief to millions of American citizens.