You win some, you lose some.
Big pharma won a huge government windfall with the addition of a prescription drug program to Medicare back in 2003.
Until Congress approved the Inflation Reduction Act last August, Medicare and Medicaid were barred from negotiating prices with the drug manufacturers.
Beginning in 2026, the Centers for Medicare & Medicaid Services will be able to offer negotiated prices for the 65.7 million citizens covered by Medicare and the 94.1 million on Medicaid. The Biden Administration announced the first 10 prescription drugs selected for price negotiation Tuesday.
According to national health expenditure data from CMS the two federal insurance programs spent more than $1.6 trillion in 2021, with $378 billion of that spent on prescription drugs.
The buying power of Medicare and Medicaid will allow them to make take it or leave it deals with drugmakers, which the Congressional Budget Office projects will save more than $100 billion over a decade.
Furthermore, the cost savings negotiated by the federal insurance programs will spread to private insurance or self-paid prescription prices, saving everyone money.
The drugmakers and the U.S. Chamber of Commerce have lawsuits filed in courts across the country, challenging the government’s legal authority to force negotiated prices through access to the massive Medicare and Medicaid insurance programs.
There are claims that reduced profits will be counterproductive to U.S. health through reductions in drug research and fewer lifesaving products being developed.
But in reality, many of the newly developed drugs CMS has targeted for negotiation are available only to high-income seniors with the financial means to pay their share of the cost.
Name-brand drugs that treat diabetes, heart disease, cancer, and autoimmune disease cost seniors $3.4 billion for their share of the bill in 2022.
Seniors without supplemental Medicare insurance paid out-of-pocket costs averaging nearly $6,500 in 2022. Medicare spent more than $50 billion on these same 10 drugs last year.
Theoretically, the drug companies can opt out of the federal insurance programs if CMS cuts a one-sided deal, but the biggest users of prescription drugs are seniors covered by Medicare, so in reality, quitting the program is not an option.
Drugmakers’ protection from negotiated prices by their biggest customer has become an unsustainable burden on the taxpayers and a hindrance to the health of millions of Americans who cannot afford artificially maintained prices for drugs.
The 20 years of protection from negotiation have gone on long enough. It’s time to stop making the taxpayer inflate the profits of the drug companies.
First Published August 30, 2023, 4:00 a.m.
