Ban on negotiating drug prices for Medicare under 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 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. Medicare was sidelined despite decades of experience setting prices for hospitals, doctors and nursing homes.
“I don’t know of any other situation where the government has one hand tied behind its back when dealing with people like big pharma,” said Sen. Ron Wyden, D-ore., who is leading efforts to draft the Democratic plan in the Senate.
Known as the “noninterference clause,” the ban has been unbendable. That’s the way the pharmaceutical industry wants to keep it.
Former Medicare administrator Andy Slavitt recalls proposing a “modest experiment” on pricing. “You would have thought we had pressed the nuclear button and the country was going to blow up,” he said.
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 would limit price increases for established drugs and cap annual out-of-pocket costs for Medicare recipients such as Weiner. Another part would overhaul the inner workings of the nearly $100 billion-a-year drug program to try to reduce costs for taxpayers.
Politicians including former President Donald Trump and House Speaker Nancy Pelosi, D-calif., have supported Medicare negotiations. But it’s Biden, with Pelosi doing much of the lifting, who has come closest to getting it done.
And it still might not happen. Similar to the rest of Biden’s agenda, authorizing Medicare to negotiate hinges on a few Democratic holdouts. During committee deliberations in the House, three Democrats were opposed. In the Senate, a couple are seen as unconvinced.
Amid a lobbying and advertising campaign, the AARP, consumer groups, and health insurers are pressing for Medicare negotiations.
Business groups and the pharmaceutical industry are opposed. Drug companies have spent $171 million 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.
Lobbying group Pharmaceutical Research and Manufacturers of America opposes constraints on launch prices for new drugs and limitations on price increases for existing medicines. It argues that the government has other ways to shield Medicare recipients from high outof-pocket costs.
One of the biggest industry objections is that the House bill would use lower prices in other advanced countries as a yardstick for Medicare. The Trump administration tried a similar idea with a different set of Medicare medications. Drugmakers say U.S. patients may have to wait longer for new medications if that goes through.