Ban on Negotiating Medicare Drug Prices Under Pressure | Business News

By RICARDO ALONSO-ZALDIVAR, Associated Press

WASHINGTON (AP) – Donna Weiner looks at Medicare’s prescription drug program from two different angles.

As a participant, she wants to pay less for her medication, which costs her about $ 6,000 annually. As a retired accountant who has spent 50 years managing the books for companies, she sees a way to get there.

“From working for a company, you know that it doesn’t make sense for a plan administrator or a corporation not to partake in what they have to pay out,” said Weiner, who lives near Orlando, Florida. For Medicare, “I would get thousands of dollars back every year just to bring those prices down,” she said.

Negotiating Medicare drug prices is at the heart of President Joe Biden’s ambitious healthcare agenda. Not only would consumers see lower costs, but savings would be put into other priorities such as dental insurance for retirees and lower premiums for those with plans under the Obama-era health law.

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To do this, Congress would have to change an unusual regulation that is enshrined in law.

When lawmakers launched Medicare’s Part D Outpatient Prescription Drug Program in 2003, it prevented Medicare from negotiating prices. Republicans, who controlled Congress at the time, wanted insurers managing drug plans to do the haggling. Medicare has been sidelined despite decades of pricing experience for hospitals, doctors, and nursing homes.

“I don’t know of any other situation where the government has tied a hand behind its back when dealing with people like big drug companies,” said Senator Ron Wyden, Senate D-Ore.

Known as the “no-interference clause”, the ban was adamant. The pharmaceutical industry wants to keep it that way.

Former Medicare administrator Andy Slavitt recalls suggesting a “humble experiment” in pricing. “You would have thought we would have pressed the atomic button and the country would explode,” he said.

Drugs costing tens of thousands of dollars a month were rare when the prescription benefit was introduced nearly 20 years ago. Now they’re more common, and Democrats want Medicare to be able to negotiate expensive branded drugs with little or no competition, as well as insulins.

Their legislation would also limit price increases on mainstream drugs and cap annual out-of-pocket expenses for Medicare beneficiaries like Weiner. Another part would redesign the insides of the nearly $ 100 billion drug program to try to cut costs for taxpayers.

Politicians, including former President Donald Trump and House Speaker Nancy Pelosi, D-California, have supported the Medicare negotiations. But it’s Biden that Pelosi does a lot of the lifting with that comes closest to that.

And it still can’t happen.

Much like the rest of Biden’s massive agenda, Medicare’s authorization to negotiate depends on a few Democratic objectors. During the deliberations of the committee in the House of Representatives, three Democrats opposed it. In the Senate, a couple is not considered convinced.

Amid an angry lobbying and advertising campaign, the AARP, consumer groups and health insurers are pushing for Medicare negotiations.

Corporations and the pharmaceutical industry are against it. Pharmaceutical companies have spent $ 171 million on lobbying so far this year, far more than any other industry, according to watchdog group OpenSecrets.

The industry says relaxing the no-bargaining ban would stifle investment in innovative ideas that can lead to life-saving medicines.

“The United States is, quite simply, the biopharmaceutical engine of the world,” said Lisa Joldersma, a senior executive at the Pharmaceutical Research and Manufacturers of America (PhRMA) lobby group. “For example, the investments our companies are making make it possible to bring multiple vaccines and therapies to combat a global pandemic to market in an unprecedented time.”

PhRMA opposes restrictions on launch prices for new drugs and restrictions on price increases for existing drugs. It is said the government has other ways to protect Medicare beneficiaries from high outlays and is accusing insurers of not passing manufacturer discounts directly on to patients.

Joldersma referred to research by the impartial Congressional Budget Office to back up the industry’s argument that fewer drugs would hit the market. The CBO noted that a legislative-like approach would result in a slight decrease in new drugs in the first 10 years, which would grow to 8% fewer new drugs over time in the third decade.

PhRMA says the deterrent effect would be deeper.

“If you are the patient … this is certainly not a marginal issue,” said Joldersma.

Others say drug development is unlikely to shrink. Valuable drugs would move forward, but those with less benefits would have a more difficult path, said biotechnologist Dr. Steven Pearson, director of the nonprofit Institute for Clinical and Economic Review (ICER) in Boston. The research organization recommends prices based on effectiveness.

“The big argument is that if the government puts a finger on the process, it’s going to kind of stifle innovation,” Pearson said. “We can achieve even better innovations by paying intelligently.”

Industry representative Joldersma replied, “I am not aware that ICER’s Steve Pearson has ever been in the business of discovering or commercializing a treatment or cure.”

Juliette Cubanski, Medicare expert at the non-partisan Kaiser Family Foundation, said: “The level of exaggeration we are hearing in this current drug debate suggests that the industry is quite concerned.”

One of the industry’s biggest objections is that the House bill would use lower prices in other advanced counties as a benchmark for Medicare. The Trump administration tried a similar idea with a different set of Medicare drugs. Drug makers say U.S. patients may have to wait longer than usual for new drugs if they go through.

A recent study by RAND Corporation found that linking the cost of the best US drugs and insulins to overseas prices could cut spending on those drugs here by about half.

Other countries are trying to balance research and development incentives with prices that reflect value to patients and society, said study author Andrew Mulcahy.

“If we wrote just one giant check to the drug companies, would they do more research?” Mulcahy asked. “Probably some. But is that the socially optimal approach? Probably not.”

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