Ban on negotiating Medicare drug prices facing pressure
WASHINGTON — Donna Weiner looks at Medicare’s prescription drug program from two different points of view.
As a participant, she wants to pay less for her medicines, which cost her about $6,000 a year. As a retired accountant who spent 50 years handling the books for companies, she sees a way to get there.
“You know from working in a business that it makes no sense for an administrator of a plan or a company not to be involved in what they have to pay out,” said Weiner, who lives near Orlando, Florida. For Medicare “to negotiate those prices down would be thousands of dollars back in my pocket every year,” she said.
Negotiating Medicare drug prices is the linchpin of President Joe Biden’s health care agenda. Not only would consumers see lower costs, but savings would be plowed into other priorities such as dental coverage for retirees and lower premiums for people with plans under the Obama-era health law.
To do that, Congress would have to change an unusual arrangement that’s written into law.
When lawmakers created Medicare’s Part D outpatient prescription drug program in 2003, they barred Medicare from negotiating prices. Republicans who controlled Congress at the time wanted insurers that administer drug plans to do the haggling despite Medicare having decades of experience setting prices for hospitals, doctors and nursing homes.
Known as the “noninterference clause,” the ban has been unbendable. Drugs costing tens of thousands of dollars a month were rare when the prescription benefit was enacted nearly 20 years ago. Now they have become more common, and Democrats want to allow Medicare to negotiate over high cost brand-name drugs with little or no competition, as well as insulins.
Their legislation also would limit price increases for established drugs and cap annual out-of-pocket costs for Medicare recipients. Another part would overhaul the inner workings of the nearly $100 billion-a-year drug program to try to reduce costs for taxpayers.
Business groups and the pharmaceutical industry are opposed. Drug companies have spent $171 million so far this year on lobbying, far above any other industry, according to the watchdog group OpenSecrets.
The industry says weakening the ban on negotiations would stifle investment in innovative ideas that can lead to lifesaving cures.
“The United States simply put is the bio-pharmaceutical engine for the world,” said Lisa Joldersma, a top executive of the lobbying group Pharmaceutical Research and Manufacturers of America, or PhRMA. “The investments that our companies make are what allow things like multiple vaccines and therapies to address a global pandemic to come to market in an unprecedented amount of time.”
PhRMA opposes constraints on launch prices for new drugs, as well as limitations on price increases for existing medicines.