YES: Changing rebate structure would shift, not lower, drug costs
AARP is fiercely fighting for lower prescription drug costs, not just for seniors, but for everyone. We have pursued new laws that would get generic drugs to market faster, allow the safe importation of medicines from Canada and permit Medicare to negotiate drug prices for seniors. We are advocating for an outof-pocket cap, too, to improve the Medicare Part D drug benefit we helped pass in 2003.
Further, we strongly support President Trump’s Transparency Rule – the requirement for Big Pharma to state its drug prices in TV ads, ending the cloud of secrecy – while Merck, Lilly and Amgen sued to block it.
This February, Senate Finance Committee members, including Ohio’s Rob Portman and Sherrod Brown, grilled pharmaceutical CEOS on skyrocketing drug prices. What have we learned at that hearing and since?:
• Americans pay the highest prescription drug prices in the world, frequently triple what people in Canada pay.
• The average cost of a brand name medicine in the U.S. more than tripled over the last decade;
• And list prices for specialty drugs have exploded. The average annual cost in 2018 was $79,000, more than most people’s yearly incomes.
Meanwhile, Big Pharma is prospering:
• The companies that testified before Congress have a collective market value of $1.13 trillion;
• The pharmaceutical industry is the top spender on lobbying in D.C.;
• And many pharma CEOS have pay packages of $25-$30 million annually.
With so much to gain or lose, Big Pharma is on the attack, and AARP was its most recent target, for our opposition to a proposed Health and Human Services rule designed to direct drug rebates into price reductions at the pharmacy counter.
The plan has since been withdrawn.
Now, Big Pharma is using its war chest to fuel distractions. A favorite topic of theirs is the pharmacy benefit manager, or PBM — the part of insurance that negotiates your drug prices and may decide your copay — because it keeps attention off the root cause: the list prices of medicines, which Big Pharma sets.
Let’s be clear on some things. One: There are no angels in the multi-billiondollar prescription drug supply chain, and AARP has supported drug cost reduction laws in other states where PBM reform is included. Two: Well-meaning policymakers can get caught up when Big Pharma spends millions to deflect and cherrypick facts. Three: When Big Pharma claims it has a moneysaving “reform,” don’t look only at some patients at the pharmacy counter, but also at everyone’s premiums and taxes.
What do independent voices say? The nonpartisan Congressional Budget Office has predicted that this PBM reform would raise all seniors’ Part D premiums, cost Medicare nearly $200 billion and have no impact on drug prices. Medicare’s Office of the Actuary has predicted that “The pharmaceutical manufacturers would benefit from the proposed rule overall, even as list prices were reduced.” So the PBM rule mainly would shift costs within the system, to the benefit of Big Pharma.
AARP has stood up to Big Pharma and insurance companies alike. For example, we have fought for health insurance reform, against the Age Tax (where older people could pay up to five times what younger people pay for insurance), and for pre-existingcondition protections. The wellbeing of Americans age 50-plus is our focus.
Meanwhile, Big Pharma self-servingly seeks to preserve the status quo, hurting seniors, everyone who pays into health insurance, and all who pay taxes – since we all bear the costs of today’s system through premiums, out-of-pocket costs, and so on.
AARP is fighting for change: So far this year, there are 27 new laws across 16 states to help reduce drug costs, and federal action is brewing. We look forward to working with our national and state leaders to address the root of the problem. If that makes Big Pharma attack us, we will wear it as a badge of honor.