Back in 2003, with drug prices soaring, placing some pharmaceuticals out of the reach of many retirees, Congress finally got around to passing Medicare Part D, a plan that allows enrollees to purchase their prescriptions through private insurers at a reduced cost with Medicare picking up a portion of the tab.
The program has worked pretty well but it is costing the federal government a lot of money at a time when Medicare in its entirety is facing financial stress. Studies show that, from 2007 to 2018, brand-name prescription drug prices rose three times faster than inflation. Prescription drug spending reached $369.7 billion in 2019.
According to the medical journal Health Affairs, the average list price for brand-name oral drugs – those remaining under patent and not subject to generics – rose 9 percent annually from 2008 to 20016, a pace greater than five times the rate of inflation. Injectables, meanwhile, increased 15 percent annually during the same time period — eight times the inflation rate.
And it’s going to get worse. Estimates show, as a result of ever-increasing prescription prices, combined with more individuals entering the program, that total annual spending on Medicare Part D will likely jump from $116 billion in 2021 to $190 billion in 2029.
Just why pharmaceutical costs have soared appears lost in the ozone, although it’s probably a good bet that Big Pharma, consisting of companies like Merck and Pfizer, simply wanted to fill its already bloated billfold with as many greenbacks as it could stuff in.
The NKyTribune’s Washington columnist Bill Straub served 11 years as the Frankfort Bureau chief for The Kentucky Post. He also is the former White House/political correspondent for Scripps Howard News Service. A member of the Kentucky Journalism Hall of Fame, he currently resides in Silver Spring, Maryland, and writes frequently about the federal government and politics. Email him at williamgstraub@gmail.comKentucky suffers as a result of rising drug prices. As of September 2020, about 21 percent of the state’s total population, 943,466 people enrolled in Medicare. About half that total, 433,240, were enrolled in stand-alone Part D plans. Another 304,582 had Part D incorporated with their Medicare Advantage coverage, with the Advantage plan providing coverage for their prescription drugs.
Part of the Medicare cost problem is, under law, the program is prohibited from negotiating pharmaceutical prices with the manufacturers, which means the government and enrollees are paying Cadillac prices for drugs that oftentimes are needed to keep folks hopping. There are, according to a Kaiser Family Foundation estimate, about 46 million seniors enrolled in the Part D prescription drug Medicare plan, and they are essentially banned from trying to convince Big Pharma to lower its prices.
Just why the negotiation prohibition was included in the 2003 Medicare bill is open to speculation, but the bottom line is, you guessed it, money. Pharmaceutical industry lobbyists launched a full-court press to kill all prospects for negotiations, spending millions of dollars to protect their inflated prices, leaving others holding the bag.
It’s proven that drug price negotiations work in reducing costs. Unlike Medicare, the Department of Veterans Affairs, charged with providing life-long healthcare services to eligible military veterans, can haggle to get its costs down. The Government Accountability Officei has determined that in 2017 Medicare paid twice as much for the same prescription drugs as the VA. One estimate concluded that the federal government could save between $15.2 billion and $16 billion a year if Medicare Part D paid the same prices as the VA.
According to the Congressional Budget Office, a Medicare price negotiation provision would lower federal spending by about $456 billion over 10 years.
Now one might think, if one were of at least basically modest intelligence with just a little common sense, that this issue could easily be resolved if you just let Medicare negotiate drug prices with Big Pharma, no muss, no fuss.
But, to steal a line from Lee Corso, not so fast, my friend.
President Biden and Democratic congressional leaders have included a negotiating provision in the $3.5 trillion spending package being debated on Capitol Hill at this moment. Under the plan, the money saved through negotiation would be used to offset at least a part of the $3.5 trillion proposal. But the fate of the entire package is unclear and, for some unfathomable reason, the Medicare provision is on shaky ground.
It should come as no surprise. Big Pharma is rolling out the big guns to maintain the status to which it has become accustomed. And members of Congress who are so deep in the industry’s pocket that their ears are full of lint are obligingly going along and cashing those campaign contribution checks with grins on their faces.
The industry has produced and aired a number of television ads stressing the evil of price negotiations. The Pharmaceutical Research and Manufacturers of America, the primary trade group, maintains negotiations will “lead to less research and development of new drugs.”
“Patients face a future with less hope under Congress’ current drug pricing plan,’’ said PhARMA president and CEO Stephen J. Ubl, noting that even under CBO’s conservative assumptions at least 60 new treatments and cures will be sacrificed if this proposal becomes a reality. The CBO offers further proof that “patients with devastating disease could be denied access to medicines today and in the future.”
And, of course, carrying the water for Big Pharma is, to no one’s surprise, Senate Republican Leader Mitch McConnell, of Louisville, who is simultaneously working to plunge the nation into default and kill dead the Biden administration spending package.
McConnell has been down this road before. Back in September 2019, while serving as majority leader, he made it clear he would deep six any legislation then under consideration in the Democrat-controlled House to permit Medicare price negotiations with drug manufacturers, asserting the proposal “will do a lot of left-wing damage to the healthcare system. And, of course, we’re not going to be calling up a bill like that.”
A month thereafter, according to The American Independent Foundation, a liberal policy group, McConnell received a $2,500 check from Takeda Pharmaceuticals’ political action committee. Campaign finance filings further show that a few weeks after that, multinational pharmaceutical company Novartis’ PAC also sent a $2,500 check to the McConnell campaign. Soon thereafter, a PAC for another pharma company, Emergent BioSolutions, pitched in with its own $2,500 check.
By the end of December, McConnell’s campaign reported, he had collected at least $30,000 more from the corporate political action committees of five additional pharmaceutical companies. American Independent further determined, according to filings from McConnell’s Bluegrass Committee leadership PAC, Merck & Co. tossed in $5,000 to show its support while Sanofi kicked in $2,500.
It didn’t end there. American Independent further reported that McConnell’s campaign also received $5,000 from Gilead Sciences CEO Daniel O’Day, $2,000 from Amgen lobbyist Helen Rhee, and $5,600 from his former policy director and PhARMA registered lobbyist Hazen Marshall.
Nice work if you can get it.
According to Open Secrets, McConnell received $1,056,628 in contributions to his campaign and leadership PAC from the pharmaceutical/health products industry from 2017 to July 31 of this year.
Our boy is, of course, still out there plugging for the benefit of his true masters, taking to the Senate floor on Sept. 12 to warn that Democrats “want to impose Socialist price controls on Americans’ medicine that would leave us with fewer new treatments and new cures in the future.”
Now, it’s true that the CBO determined it’s likely that some new drugs won’t hit the market as quickly as in the past as a result of negotiations. It should be noted for the record that the office is an honorable outfit.
Still, it’s hard to see. That would mean industry cuts in research and development to compensate for any monetary loss, a maneuver that makes no sense. Big Pharma desperately needs R&D. Drug patents last 20 years. Thereafter they’re available for competitors to produce less costly generic forms of the drug. That can be devastating to the original producer’s bottom line, an occurrence they might hope to avoid.
Manufacturers often get around that barrier by making minor changes in the product’s formula, thus resetting the patent clock. That requires R&D.
And the big bucks are in new products. Does anyone really believe Big Pharma is going to slow down research and development of new drugs when that’s where the money is? If they don’t come up with something new, they’ll go broke. It makes no sense to assert otherwise. Heck, they may have to develop even more products to make up for any lost profit.
Nope. They’re playing a game here. They’re just trying to line their pockets and Mitch is always there to help his sugar daddies in any way he can.
