When it comes to paying for prescriptions, Americans have been taking it on the chin for years. We pay nearly three times as much per capita as citizens of other developed countries, for example, and since older Americans tend to need more medications than younger people, this is a significant financial burden on them.
For the first time — thanks to the Inflation Reduction Act, a key plank of the Biden administration's domestic agenda — the federal government will begin negotiating the prices of 10 expensive drugs covered by Medicare on February 1.
“Medicare will no longer accept the prices charged by pharmaceutical companies for these drugs,” President Joe Biden said.
Let the bargaining begin.
Lower drug prices, which have been vigorously challenged in court by the pharmaceutical industry, can't come soon enough for seniors. The Commonwealth Fund, a health care advocacy group, said that in 2022, high drug costs forced “one in five American adults 65 or older to skip or delay a prescription, miss or reduce doses, or use someone else’s medication.” “. More than half “turn to cost-coping strategies such as coupons or free samples so they can get medications they need but can't afford,” she added.
Imagine being 75 years old and having to skip your medications because you can't afford them. Or engage in one-time experiences such as free samples to treat a chronic condition. This is clearly no way to run a railway. This is the case for tens of millions of Americans, the Commonwealth said.
We've already seen how management has beaten Big Pharma in one big area: insulin.
Since Jan. 1, Medicare enrollees have had to pay no more than $35 per month for each insulin prescription. That's a huge deal, given that the inflation-adjusted cost of life-saving medications tripled between 2012 and 2022, according to the American Diabetes Association. The ADA added that before the cost reduction, as many as 1 in 4 patients were unable to afford insulin, leading them to ration doses — sometimes with fatal results.
Talks between Medicare and drug makers are scheduled to continue until August. Starting on September 1, we won't know how much prices could drop until September 1 — cuts that won't take effect until 2026. But these are the 10 drugs eyeing potential price cuts — and they're big, including: So many manufacturers of anti-diabetes drugs:
• Eliquis (blood thinner, produced by Bristol Myers Squibb BMY,
Pfizer PFE,
)
• Enbrel (rheumatoid arthritis, produced by AMGN,
)
• Entresto (heart failure, produced by Novartis NVS,
)
• Farxiga (diabetes, heart failure, chronic kidney disease, produced by AstraZeneca AZN,
)
• Fiasp and NovoLog (diabetes, produced by Novo Nordisk NVO,
)
• Imbruvica (Leukemia, produced by AbbVie ABBV,
and Johnson & Johnson JNJ,
)
• Januvia (diabetes, manufactured by Merck MRK,
)
• Jardiance (Diabetes, Heart Failure and Chronic Kidney Disease, produced by Boehringer Ingelheim and Eli Lilly LLY,
)
• Stelara (psoriasis and Crohn's disease, produced by Johnson & Johnson)
• Xarelto (blood thinner, produced by Johnson & Johnson)
So, how much will people end up saving? This depends on a variety of factors, such as the age of the drug, how many competing products are on the market, and how much discounts are currently available to them from pharmacy benefit managers, Dr. Stacey B. Dositzyna, a professor of health policy and cancer research at Vanderbilt University Medical Center, told MarketWatch. (PBM). Obviously the numbers will vary.
For example, Dusetzina said the inflation control law set a minimum price discount of 25% for a drug that is nine to 12 years old. For older drugs, minimum discounts can be much larger: “Up to 60%. So, yes, people will save money.”
It's not just ordinary people who can save significant amounts. The federal government — currently grappling with rising Medicare and Medicaid costs — is also expected to benefit. Let's use Imbruvica as our example. Here, a 25% discount would save Uncle Sam about $560 million a year, according to an analysis published in the journal Managed Care & Specialty Pharmacy.
Multiply that by the number of drugs being discussed (in this round of negotiations alone) and we're talking several billion dollars. Even in Washington, where $1 billion is not what it used to be, that is a lot of money.
Pharmaceutical companies have argued that all of this harms consumers' long-term interests. “Government bureaucrats have been working behind closed doors to set drug prices without revealing for months how they arrived at the price,” Alex Shriver, a spokesman for the Pharmaceutical Research and Manufacturers of America (PhRMA), a lobbying arm of the drug industry, told NBC. Or the amount of patient and provider input that was used. “This lack of transparency and unchecked power will have lasting consequences for patients long after this administration is gone,” he added.
One of the arguments put forward by the industry was that the inflation control law and the pressure it imposed on prices would hinder innovation and thus the number of new medicines that might be brought to market in the future. However, the nonpartisan Congressional Budget Office told Congress in November that the administration's actions would result in one fewer drug reaching the U.S. market over the 2023-2032 period, about five in the following decade, and about seven over the following decade, bringing A grand total of 13 fewer drugs will be on the market in the next 30 years.
“This is a very small share of the 1,300 new drugs expected in that period,” wrote Larry Levitt, executive vice president for health policy at KFF (formerly the Kaiser Family Foundation).
But will there be savings for consumers, who pay nearly three times more for medicines than citizens of other developed countries? This is probably a small thing.
