lower drug prices Archives

Will Medicare Be Able To Negotiate Lower Drug Prices?

It’s no secret that the cost of prescription drugs has been steadily rising, with prices going up each year for the past two decades. In fact, people in the U.S. pay significantly more than people in other countries for the same drugs, leading many Americans to shop abroad for necessary medications like insulin. In an attempt to keep drug prices under control for seniors, the House of Representatives passed the Elijah E. Cummings Lower Drug Costs Now Act in 2019, which if passed by the Senate will give Medicare the power to negotiate drug prices. The bill has recently been reintroduced in Congress, and President Biden has signaled his support for lowering prescription drug prices for seniors through Medicare negotiation, but so far it is unclear whether it will become law.

The Elijah E. Cummings Lower Drug Costs Now Act (H.R. 3 Bill)

In 2019, the U.S. House of Representatives passed the H.R. 3 bill, which includes a provision that would allow Medicare to directly negotiate drug prices with drugmakers in order to keep prices under control. The bill has been stalled in the Senate since passing in the House, but it has now been reintroduced.

H.R. 3 would:

Authorize the Secretary of Health and Human Services (HHS) to negotiate directly with drugmakers in the Medicare program in order to lower prices for up to 250 prescription drugs each year.
Limit the annual out-of-pocket costs for Medicare beneficiaries to no more than $2,000.
Require manufacturers to give the federal government a rebate for any drug prices that increase faster than the rate of inflation.
Establish a top negotiated price for drugs of no more than 120% of the average of 5 other wealthy nations.
Support research and development for new drugs by investing some of the savings into the National Institutes of Health.

Agreement On The Negotiations

shopping cart on a computer screen. — *Drug prices have left many Americans to shop online and abroad, which can be dangerous.*

President Biden is supportive of legislation to lower drug prices, bringing the subject up in his speech announcing his American Families Plan. “Let’s give Medicare the power to save hundreds of billions of dollars by negotiating lower drug prescription prices,” he said. “Let’s do it now.”

Roughly 93% of Americans agree that Medicare should be able to negotiate with pharmaceutical companies for lower prices. This is not surprising, since some Americans are forced to look for cheaper ways to fill their prescriptions, including shopping for them abroad or buying questionable drugs online; others are being forced to forgo their medications altogether, which can be deadly, especially for older adults.

As of the writing of this, the bill has yet to pass in the Senate. The Democrats control the Senate by a 50-50 split (with the tie vote given to Vice President Harris), but so far it is unclear if enough Republicans will support the legislation to give it the 60 votes necessary to overcome a legislative filibuster.

Federal Drug Rule Directs Insurers to Reveal What They Pay for Prescription Drugs

Prescription drugs have become so expensive that one in ten Americans opts not to get a prescription filled because of its cost. In an effort to help control the cost of prescription medications, the Trump administration issued a rule last year that will force health insurance companies to give customers estimated out-of-pocket costs for prescription drugs. Not only that, but insurance companies will also have to provide the negotiated prices that they pay for prescription drugs. The hope is that this will create more competition and help customers make better medical decisions that will save them money.

a crack in the ground dividing different colored groups — *There is a division between groups on whether it will drive costs down or disrupt the market.*

Division

There is some division among policy experts about how much this rule will actually save people; in fact, many groups who represent drug manufacturers argue it will decrease market competition and raise the prices of drugs. Commercial insurers and pharmacy benefit managers are also not in favor of the new rule.

“This rule will disrupt the marketplace dynamics and undermine the highly competitive negotiations that kept net prices for brand medicines at a growth rate of just 1.7% in 2019,” said Katie Koziara, a spokesperson for the Pharmaceutical Research and Manufacturers of America. She wouldn’t say whether her group would sue to block the rule.

But advocates for the new rule say it will help patients with private health plans save on prescription drugs. According to them, the rule will allow doctors to choose less expensive medications, and help health plans buy drugs more cheaply.

When the New Rule Goes Into Effect

These new drug price provisions are not estimated to go into effect until 2022 at the earliest. In 2022, private plans will have to publish online the prices that drug companies and benefit management companies negotiate with each other. And then, starting in 2024, insurance plan members will be able to request and receive estimates for out-of-pocket costs of medications.

The rule will not apply to Medicare or Medicaid. In addition, it will not require plans to disclose rebates and other discounts negotiated with drugmakers. That’s a disappointment to employers who provide health insurance for their workers. “We’d like a much clearer idea of how much we’re paying for every drug every time it’s dispensed,” said James Gelfand, senior vice president for health policy at the ERISA Industry Committee, which represents large self-insured employers. “We want to know where every cent in rebates and discounts is going. We’ll at least begin peeling back the onion. You have to start somewhere.”

The reason that manufacturers will not disclose the discount information is that other health plans will then ask for the same rebates. “Insurers and pharmacy benefit managers currently use rebates that are hidden from view to drive prices lower,” said Dr. Aaron Kesselheim, a professor of medicine at Harvard University who studies prescription drug policy. “If you make that transparent, you kind of reduce the main strategy payers have to lower drug prices.”

The Biden administration favors increased price transparency and therefore plans to keep the new price disclosure rule in place.