What to know about drug pricing reform: Shots


Demonstrators outside the PhRMA headquarters in Washington, DC, protest drug company lobbying to prevent Medicare from negotiating lower prescription drug prices.

Saul Loeb/AFP via Getty Images

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Saul Loeb/AFP via Getty Images

Demonstrators outside the PhRMA headquarters in Washington, DC, protest drug company lobbying to prevent Medicare from negotiating lower prescription drug prices.

Saul Loeb/AFP via Getty Images

Americans pay significantly more than other countries for prescription drugs. It’s driving voters crazy, and although lawmakers have been promising to do something for decades, they haven’t made much headway.

That could change as early as this week. The Inflation Reduction Act — authored by Senate Majority Leader Chuck Schumer, DN.Y., and Sen. Joe Manchin, DW.V. – includes several provisions concerning drug prices and health insurance. The Senate plans to put the bill to a vote on Saturday, and it appears on track to pass Congress and be signed into law by President Biden.

All of this is music to the ears of patients who have been burdened with expensive drugs for years.

“The personal spending limit proposal that’s on the table right now would absolutely make a huge difference in my life,” said Medicare beneficiary Bob Parant, 69, of Westbury, New York. He has type 1 diabetes and pays about $5,000 out of pocket for insulin each year, in addition to thousands more for heart medication.

Here are details about this proposal and others in the bill, along with answers to some frequently asked questions.

What exactly is Congress changing about drug prices?

For the first time, the federal health secretary would be able to directly negotiate the prices of certain expensive drugs each year for Medicare. It starts in 2026 with 10 drugs and grows to 20 drugs by 2029. To be tradeable, the drugs should have been on the market for several years.

Then there’s the proposal that Parant is most excited about: people on Medicare won’t have to pay more than $2,000 a year in out-of-pocket costs for prescription drugs, which will make a big difference. for the elderly with certain diseases such as cancer and multiple diseases. sclerosis. It would start in 2025.

And, starting next year, if drug companies raise their drug prices faster than inflation, they will have to pay a rebate to Medicare. It could affect a lot of drugs – according to an analysis by the Kaiser Family Foundation; in 2019-20, half of all prescriptions covered by Medicare rose in price faster than inflation. This provision could help discourage pharmaceutical companies from constantly raising prices.

Do the experts think it will make a difference?

In fact, many health policy experts think these changes are important.

“It’s a huge breakthrough,” says Tricia Neuman, who leads the health insurance policy program at KFF. “Congress has been talking for decades about doing something about drug prices. [This] It may not be all that everyone wants, but it really is a big deal and it will bring significant help to millions of people who need it.”

“It’s a huge deal,” agrees Stacie Dusetzina, professor of health policy at Vanderbilt University. “It really opens up a lot of new horizons and solves a lot of problems.”

The Congressional Budget Office, which analyzed an earlier version of the bill, estimates that these changes will save the government $288 billion through 2031.

Why does it take so long for many of these things to fall into place?

For someone on Medicare who spends $10,000 a year on cancer treatment, like Neuman’s friend, the timing of these changes might be hard to accept.

“Clearly she’ll be thinking next year, ‘Why am I still paying so much money?'” Neuman said. “Some things just can’t happen fast enough simply because it takes time to get things moving.” It will take a lot of work for federal health agencies and industry groups to prepare for when these provisions come into force.

Neuman says she understands people are eager for relief, but once provisions like Medicare’s reimbursement cap kick in, “it’s going to be a really big deal for people who are dependent on expensive drugs and for others who have seen their drug prices increase every year.”

I heard that the bill would lead to fewer new drugs. Is it true?

This is an argument made by drug manufacturers to try to scare people into opposing these changes. The pharmaceutical and health products industry spent more lobbying Congress in 2022 than any other industry, according to the nonprofit Open Secrets. It is fighting hard to prevent these changes from becoming law because they would reduce their profits.

For example, PhRMA, Pharmaceutical Research and Manufacturers of America, argues in an ad campaign that the drug pricing provisions in the bill could reduce the number of new drugs coming to market by “chilling research and development “. The trade association also pointed NPR to this industry-funded analysis of Avalere, which estimates the bill could cut drugmaker revenues by $450 billion by 2032.

But an analysis by the Congressional Budget Office estimates that the effect on drug development would be quite modest. About 15 out of 1,300 drugs would not be marketed in the next 30 years, or about 1% of new drugs. Also, most large pharmaceutical companies spend more on marketing than on research and development.

Some advertisements claim that health insurance would be cut. Is it true?

These advertisements are misleading. For example, a project called Commitment to Seniors launched a seven-figure ad campaign claiming that the Senate bill would “sip nearly $300 billion from Medicare.” In fact, that amount of money is what the government should be saving because Medicare won’t have to pay that much for expensive drugs, it’s not money that’s being taken out of the Medicare budget. So, importantly, seniors’ benefits would not be reduced.

“When people see a commercial on TV from a group called Commitment to Seniors, it seems pretty innocuous,” says Michael Beckel of Issue One, which tracks black money. It turns out that Commitment to Seniors is a project by another group, American Commitment, which has given PhRMA over $1 million, including $325,000 in 2020.

Beckel says it’s not unusual to see the industry engage in such tactics. “The pharmaceutical industry is a major lobbying force and a major player in black money.”

What about insulin? Would people with diabetes get help with these awards?

Insulin is often the go-to drug for kids when it comes to runaway prices and life-or-death stakes. Insulin prices in the United States are four times higher after discounts, on average, than in other countries, and about 1 in 4 diabetic patients reported taking less insulin than prescribed because they don’t couldn’t afford it. At this point, it’s unclear whether any of the proposed insulin price reforms — or at least patients’ out-of-pocket expenses — will make it into the final bill.

A provision to cap copayments at $35 a month for insured people who take insulin has bipartisan support, but may not be included in the final bill.

What else in the health bill?

The other important element of the bill protects consumers from a potentially disastrous change that would occur without new legislation.

People who buy insurance through Affordable Care Act marketplaces — like Healthcare.gov and state marketplaces — will be able to retain generous premium subsidies for an additional three years. After these additional subsidies came into effect with the passage of the US bailout, the government estimated that 4 out of 5 enrollees qualified for a plan with a premium of $10 or less per month.

Krutika Amin, who works with Neuman at KFF, says it’s important lawmakers set this extension now, as insurance companies are currently setting their rates for next year’s plans ahead of open enrollment at the fall.

“If Congress is able to extend additional subsidies before the August recess, it will help provide certainty for insurance companies and state and federal agencies that administer [the marketplaces] to be able to implement it in a transparent way for consumers,” she says.

The additional package discounts made the difference. Last year, 14.5 million people – more than ever – purchased insurance on Healthcare.gov, and an early HHS analysis suggests that the total number of uninsured people in the United States has reached an all-time high in the during the first months of this year.

NPR Pharmaceuticals correspondent Sydney Lupkin contributed reporting.


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