Hill article on How to Reduce Drug Costs

Legislation that seniors’ advocates have been fighting for since the Medicare Part D drug benefit was created in 2003 has finally passed the House. The Lower Drug Costs Now Act (H.R. 3) would empower Medicare to negotiate drug prices with pharmaceutical companies — dramatically reducing consumers’ costs at the pharmacy counter. Unfortunately, the bill has been given long odds for passage in the U.S. Senate. Senators are mulling a drug pricing bill that doesn’t include Medicare negotiation — and Majority Leader Mitch McConnell (R-Ky.) may not even bring that legislation to the floor.

On the chance that the Senate does pass a prescription pricing bill, it would have to be reconciled with the House legislation. Medicare price negotiation likely wouldn’t survive a conference committee deal. Meanwhile, President Trump, who endorsed price negotiation during the 2016 campaign, has turned his back on the idea. That is a loss for seniors.

The Congressional Budget Office estimates that H.R. 3 would save more than $450 billion in drug costs over ten years, delivering sorely needed relief to millions of struggling seniors. (The lower negotiated prices would also be available to most Americans covered by private insurance). The House bill would leverage some of these enormous savings to expand Medicare to include dental, vision, and hearing care.

More than 90 percent of the public across party lines supports Medicare price negotiation. Still, this robust, common-sense policy seems unlikely to be enacted during the current Congress — thanks to recalcitrant senators and Big Pharma, which would instead retain its exorbitant pricing system than negotiate with Medicare.

Big Pharma lobbyists helped write the 2003 law that created the Medicare Part D drug benefit but banned price negotiation. In other words, the industry was happy to rake-in billions of dollars every year from the federal government for prescription drugs, so long as it could raise Americans’ prices at its whim and with impunity.

As USA Today noted this week, “the prices for scores of top drugs have shot up nearly nine times faster than inflation over the past dozen years.”

The drug industry and its apologists in Congress offer plenty of reasons for opposing Medicare price negotiation — all of them spurious They say that lower drug prices would cut into pharmaceutical research and development (R&D). But drug R&D is already generously subsidized by the federal government, and Big Pharma spends nearly 20 times more on advertising and lobbying than developing new medications. Some of the $456 billion in savings from H.R. 3 would be re-invested in federal drug research).

Opponents claim that the proposal is “socialism” and would interfere with the “free market,” seemingly denying that price negotiation is part of a free market system — or capitalism. They claim that price negotiation is unwieldy and won’t produce lower costs, even though the U.S. Veterans administration has been negotiating prices with drug makers for years, paying some 40 percent less than Medicare does.

The industry shares some of this windfall with CEOs, who earn an average of $18 million per year but spends even more on lobbying.  In 2018, Big Pharma paid more to lobbyists — roughly $280 million — than any other industry. Every election cycle, drug makers and their political action committees shower Congressional candidates with millions of dollars in campaign contributions.

Perhaps unsurprisingly, McConnell is one of the top beneficiaries of Big Pharma’s largesse, receiving $479,000 in contributions over the past five years.

Meanwhile, during a series of town halls this fall, we heard heart-rending stories from seniors who can’t afford prescriptions for conditions including diabetes, heart disease, and cancer.

“I am a diabetic and struggle to afford insulin,” said an elderly woman from Oregon.  “Because of the high price of prescription drugs, I am worried about a lien being placed on our home,” said another. “A medicine that helps me with chronic pain is unaffordable. On a Social Security income, I can’t pay for it,” a senior from Milwaukee, Wisc. told us.  But, of course, the human cost can often be much higher. At an event on Capitol Hill in 2018, I heard a Minnesota woman relate how her 26-year-old son died of diabetic ketoacidosis because he was rationing insulin.

Individually, of course, older Americans suffering from high prescription drug prices do not have much power. Collectively, though, they make up the nation’s 45 million Medicare Part D beneficiaries. That’s double the number when the program first began — providing a formidable amount of bargaining power if Medicare is allowed to sit down at the negotiating table with drug makers.

The fight for Medicare price negotiation has been a long one, and it is unlikely to end in the 116th Congress. We got this far by mobilizing seniors and their families to support this common-sense policy. The public is behind us. The time has come for Medicare to leverage its power to alleviate the financial pain of punishing drug prices. If the Senate and the president won’t act in 2020, expect voters to elect leaders who will.

Max Richtman is president and CEO of the National Committee to Preserve Social Security and Medicare, a membership organization that promotes the financial security, health, and well being of current and future generations of maturing Americans. He also chairs the board of the National Committee’s Political Action Committee, a PAC that endorses candidates for federal office.

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