September 17, 2015
The Honorable Bernard Sanders
332 Dirksen Office Building
United States Senate
Washington, DC 20510
Dear Senator Sanders:
On behalf of the millions of members and supporters of the National Committee to Preserve Social Security and Medicare, I write to endorse S. 2023, “The Prescription Drug Affordability Act.” The National Committee thanks you for your leadership in introducing this legislation. This bill offers a comprehensive response to the pressing issue of sharply rising drug costs, which threatens consumer access to affordable medicines and strains the financing of Medicare and Medicaid.
Rising drug costs pose serious threats to the sustainability of Medicare and Medicaid. According to the Centers for Medicare and Medicaid Services, total Medicare Part D costs per capita grew by almost 11 percent in 2014, driven mostly by high-cost specialty drugs. Spending for specialty prescription drugs rose 30 percent in 2014. Approximately half of all specialty spending occurs under the medical benefit rather than the pharmacy benefit because many specialty drugs are administered by physicians. As a result, this hike in specialty drug spending threatens to drive up Medicare part B as well as Part D spending.
States are already struggling to deal with the costs of just one highly priced treatment. For Medicaid patients with hepatitis C, the therapies—Sovaldi or its next generation successor, Harvoni—will cost state Medicaid budgets more than $55 billion. In response, many states have put restrictions in place that limit access to these drugs. Without action, drug prices will continue to rise as hundreds of new expensive drugs estimated to be in the development pipeline hit the market.
To make matters even worse, generic drug prices are rising as well. Many drugs that have been historically inexpensive have seen sharp price increases in recent years. According to an analysis by pharmaceutical economics blog Drug Channels, nearly half of all retail generic drugs became more expensive from November 2013 to November 2014. Some generic prices increased tenfold during this period.
To address rising prescription drug prices, your bill:
- instructs the Secretary of Health and Human Services to negotiate drug prices under the Medicare Part D prescription drug program. According to one estimate this could save the federal government as much as $541 billion;
- allows individuals, pharmacists, and wholesalers to import prescription drugs from licensed Canadian pharmacies;
- requires manufactures to provide a rebate to the federal government for drugs covered under Medicare Part D for low-income Medicare beneficiaries;
- requires generic drug manufacturers to pay an additional rebate to Medicaid if their drug prices rise faster than inflation;
- closes the Medicare Part D donut hole for brand and generic drugs by 2017, three years earlier than under current law; and
- prohibits anti-competitive arrangements between brand and generic drug makers where the brand name drug manufacturers pays the generic manufacturer to delay bringing their generic alternative to market.
By allowing Medicare to negotiate directly with manufacturers and requiring additional rebates from brand and generic manufacturers to the government, your bill arms Medicare and Medicaid with powerful tools get a better deal from pharmaceutical manufacturers. Importantly, your bill also provides relief directly to seniors by closing the donut hole earlier than required under current law.
Together with Social Security, Medicare and Medicaid create economic security and health security for today’s seniors and for tomorrow’s retirees as well as for individuals who become disabled. The National Committee therefore enthusiastically endorses this comprehensive approach to bringing down drug costs, particularly for Medicare and Medicaid.
President and CEO