What You Should Know About Drug Price Reform: Shots

What You Should Know About Drug Price Reform: Shots

Protesters outside PhRMA headquarters in Washington, DC, protest against drug company lobbies to stop Medicare from negotiating lower prices for prescription drugs.

Saul Loeb / AFP via Getty Images

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Saul Loeb / AFP via Getty Images

Protesters outside PhRMA headquarters in Washington, DC, protest against drug company lobbies to stop Medicare from negotiating lower prices for prescription drugs.

Saul Loeb / AFP via Getty Images

Americans pay far more than people in other countries pay for prescription drugs. This drives voters crazy, and while lawmakers have promised to do something for decades, they haven’t made much progress.

This may change as soon as this week. The Inflation Reduction Act – published by Senate Majority Leader Chuck Schumer, DN.Y., and Senator Joe Manchin, DW.V. – includes several provisions on drug pricing and health insurance. The Senate plans to bring the bill to a vote on Saturday, and it looks on track to pass Congress and be signed into law by President Biden.

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

“The proposal to limit out-of-pocket expenses that is on the table right now would absolutely make a huge difference in my life,” says Medicare beneficiary Bob Parant, 69, of Westbury, New York. He has type 1 diabetes and pays about $ 5,000 out of his own pocket each year for insulin, as well as thousands of others for heart medicine.

Here are the details on that proposal and others in the bill and the answers to some frequently asked questions.

What exactly is Congress changing on drug prices?

For the first time, the federal health secretary would be able to directly negotiate the prices of some expensive drugs each year for Medicare. This starts in 2026 with 10 drugs and will increase to 20 drugs by 2029. To qualify for trading, the drugs would have to be on the market for several years.

Then there’s the proposal Parant is most excited about: People on Medicare won’t have to pay more than $ 2,000 a year in out-of-pocket expenses for prescription drugs, which will make a big difference for seniors with certain conditions like cancer. and multiple diseases. sclerosis. This will take effect in 2025.

And, starting next year, if drug companies raise their drug prices faster than inflation, they’ll have to pay Medicare a discount. This could affect many drugs, according to an analysis by the Kaiser Family Foundation; in 2019-20, half of all Medicare-covered prescriptions increased in price faster than inflation. This provision could help dissuade pharmaceutical companies from steadily rising prices.

Do the experts think it will make a difference?

In fact, many health policy experts believe these changes are significant.

“This is a huge step forward,” says Tricia Neuman, who heads the Medicare policy program at KFF. “Congress has been talking for decades about doing something about drug prices. [This] it may not be all everyone wants, but it is a really big deal and will provide significant help to literally millions of people who need it. “

“It’s a big deal,” agrees Stacie Dusetzina, a professor of health policy at Vanderbilt University. “It really opens many new avenues and solves many problems”.

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

Why does it take so long for many of these things to come into play?

For someone who is on Medicare and spends $ 10,000 a year on cancer treatment, such as Neuman’s friend, the timeline of these changes may be difficult to take.

“Clearly, next year he will ask himself, ‘Why am I still paying a lot of money?'” Says Neuman. “Some things can’t happen fast enough just because it takes a while to get things going.” It will take a lot of work on the part of federal health agencies and industry groups to prepare for these provisions to come into effect.

Neuman says he understands that people are anxious for relief, but once provisions such as Medicare’s own pocket limit come into effect, “this is going to be a really big deal for people who rely on expensive drugs and for others who have seen their drug prices rise every year. “

I’ve heard the bill will lead to fewer new drugs. It’s true?

This is an argument put forward by drug manufacturers to try to scare people into opposing these changes. The pharmaceutical and healthcare industry has 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 it would cut their profits.

For example, PhRMA, Pharmaceutical Research and Manufacturers of America, is arguing in an advertising campaign that the drug pricing provisions in the bill could lead to fewer new drugs coming to market “by cooling research and development.” The trade association also pointed to NPR in this industry-funded analysis by Avalere, which estimates the bill could reduce drug makers’ revenues by $ 450 billion by 2032.

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

Some ads claim Medicare would be cut. It’s true?

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

“When people see an ad on TV from a group called Commitment to Seniors, it looks pretty harmless,” says Michael Beckel of Issue One who tracks dark money. It turns out that Commitment to Seniors is a project of another group, American Commitment, which has given PhRMA more than $ 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 dark money player.”

What about insulin? Would people with diabetes get help with those prices?

Insulin is often the poster child when it comes to out-of-control pricing and life-or-death stakes. Insulin prices in the United States are on average four times higher after discounts than in other countries, and about 1 in 4 diabetic patients reported taking less insulin than prescribed because they can’t afford it. At this point, it’s unclear whether any of the proposed insulin price reforms – or at least patient out-of-pocket costs – will go into the final bill.

A provision to limit the copay to $ 35 per month for insured people taking insulin has bipartisan support, but may not be included in the final bill.

What else is in the health bill?

The other important thing in the bill protects consumers from a potentially disastrous change that would happen without new legislation.

People who buy insurance on Affordable Care Act markets, such as Healthcare.gov and state markets, will be able to maintain generous premium subsidies for an additional three years. After these extra benefits went into effect with the approval of the American Rescue Plan, 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 for lawmakers to define this extension now, as insurance companies are currently setting rates for next year’s plans before enrollments open in the fall.

“If Congress is able to extend the extra benefits before the August recess, it will help provide certainty to both insurance companies and the state and federal agencies that are operating. [the marketplaces] to be able to implement it in a way that is perfect for consumers, “he says.

The extra discounts on the plans made all the difference. Last year 14.5 million people – more than ever – took out insurance on Healthcare.gov and an initial analysis by HHS suggests that the overall number of uninsured people in the United States hit an all-time low in the first few months. of this year.

NPR Pharmaceuticals correspondent Sydney Lupkin contributed to the report.

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