Title: “The Little Ol’ Bill with a Big Story to Tell” aka “Lowering Rx Drug Costs With the Inflation Reduction Act”
Announcer: It’s You Earned This, the Social Security and Medicare podcast, brought to you by the National Committee to Preserve Social Security and Medicare, and now your host, Walter Gottlieb.
WALTER: Rationing medicine, cutting pills in half, not filling prescriptions. That is what too many Americans, including seniors, have been forced to do because of the soaring cost of prescription drugs. Big Pharma claims it can’t afford to lower drug prices, but spends billions on advertising and marketing. Then they jack up prices faster than you can say, O-O-O Ozempic. But help is on the way. The Inflation Reduction Act is already lowering Americans’ drug costs. It isn’t a panacea, but it’s a little old bill with a big story to tell.
Here to fill in the details, or dare we say, refill them, is Hazel Law, Policy Analyst at Families USA — a nonpartisan voice for healthcare consumers. Hello, Hazel. How are you doing this morning?
HAZEL: I’m good. Thanks for having me.
WALTER: It’s not even morning.
HAZEL: It’s not. We’re close.
WALTER: We’re close. Close enough. So how did you get involved in this issue of prescription drug pricing reform? And what is Families USA’s role in this issue?
HAZEL: Well, Families USA is a consumer advocacy organization. And we’ve been involved in the prescription drug reform space for many, many, many years. We worked with a bunch of great partners and some other advocacy organizations in the issue, you know, even before H.R. 3 was started to be formed, which became the Inflation Reduction Act, and have continued that work through the implementation of that bill. And sort of what I, the belief that I bring to this, the passion that I bring to this, which is reflected in a lot of our work, I think, is this idea that nobody should ever be forced to make a choice between their health and their financial well- being, that we all really deserve this access to healthcare that’s going to allow us to live our healthiest life. And that access to your life-saving, your life-sustaining medication is really at the core of that.
WALTER: And of course, we have heard some really sad stories about seniors having to choose between paying for prescription drugs, or groceries, or rent, or utilities, and oftentimes cutting pills in half to try to save money, or just not filling their medications altogether, which is very dangerous. So I was going to ask you: we have all heard anecdotes like that. What kind of data do we have about the impact of soaring drug prices and price gouging on American workers and families?
HAZEL: We know that just about a third of adults who take a medication have said they’ve done something like that in the past year, because of cost.
WALTER: One third?
HAZEL: One third. And that’s, you know, maybe skipping a dose, cutting a pill in half, rationing, taking something that’s over the counter instead of something that’s prescription, or just simply not filling their prescription at all.
WALTER: Boy, as we say in Yiddish, oy vey, that’s not good. So talking about the roots of this problem, at the beginning of the year, Big Pharma jacked up the price of hundreds of medications, like they do every year, beyond the rate of inflation. What is the root of this problem? Is it simply Big Pharma greed? Is it patent reform? What is going on?
HAZEL: Well, it’s a good question. It is a complicated question. I mean, I think it’s sort of the thousand foot level. Big drug companies are companies, and so they have a goal of making a profit. And the important thing is that that goal of profit doesn’t come at the expense of people’s access to their health care. But there’s a lot of things that go into what creates a drug price. And over the past 15 years, on average, the launch price of drugs has gone up more than 20% every year. And that is far outpacing inflation.
So we know that drugs are starting at a baseline to be more and more and more and more expensive. Then when a drug is on the market, it receives a period of patent and market exclusivity by law that was designed to reward innovation and incentivize research and development.
But what we see happening more and more often is drug companies implementing tactics like pay for delay, where they’re trying to keep other generics off of the market, or patent thickets, where they’re layering patents on top of each other for one drug to extend their exclusivity as long as possible and keep other competition off the market.
WALTER: A patent thicket?
HAZEL: Yeah. So that’s where maybe you have multiple patents overlapping on one drug, and it makes the exclusivity period longer. And what that allows drug companies to do is price gouge, and as you said, raise the price year after year on a drug that they’ve already released.
WALTER: Above any reasonable justifiable rate. So high drug prices don’t just affect consumers at the pharmacy counter, you say they affect us in other ways too.
HAZEL: Yeah, I mean I think the way we’re all most familiar with a drug price cost is when you walk into the pharmacy to pay for your medication.
WALTER: And you go, “Holy cow!”
HAZEL: Yeah, you see the number on the on the screen. But high drug prices can filter into the healthcare system in a myriad of ways. I think very simply if you look at employee sponsored insurance, for example, the high and rising price of prescription drugs are directly impacting the high and rising prices of premiums. 20% of premiums are now driven by high and rising drug prices. And so then everybody is paying for the high drug price, not just the people who are taking a medication. But also, I think like your question around the effect of what a drug price is outside of just standing at that pharmacy counter and not really knowing what to do with the price on the screen. We have to think back to sort of like how we started this conversation, which is around the choices that it forces people to make. The choices around rationing, the choices around not taking a medication, you know, being forced to choose between filling a prescription and filling your fridge. And that has financial impacts, but it also has health impacts. And I think, you know, the number that I always go back to, which is so heartbreaking, is that every year in this country, we have approximately 125, 000 medication non-adherence deaths. And those are people who are dying because they cannot take their prescription the way that it was prescribed.
WALTER: And that does include some of our senior citizens also, correct?
HAZEL: Yes.
WALTER: They’re in even more dire straits probably because they’re medically more vulnerable. Yeah. They’re probably on more life-saving medications.
HAZEL: Absolutely. Older adults, you know, are disproportionately managing chronic conditions. They’re also, you know, more likely to be on a fixed income. So this sort of really fluctuating drug prices can become a huge burden.
WALTER: President Biden and the Democrats in Congress really took a major stride, a historic step really, toward lowering prescription drug prices with the enactment of the Inflation Reduction Act. What major improvements, in your view, did the Inflation Reduction Act make?
HAZEL: It was major. It was a huge win, a huge win for people and for the administration. I think, you know, people are maybe most familiar with the $35 insulin cap. They might not know, but it’s just as important, the $2,000 out-of-pocket spending cap in Medicare Part D. And then there are things like the inflationary rebates, which are going to disincentivize drug companies from raising that price year after year after year at such high levels. And certainly, last but certainly not least, is the drug negotiation program.
WALTER: Certainly not least. In fact, that’s something that we advocated for for 20 years before it became law, the ability of Medicare to negotiate drug prices with drug makers, just like the VA has been doing for years. And recently, the administration announced the first 10 drugs, which is very exciting, that will be negotiated. And they were all life-saving, brand name drugs that everybody’s seen on TV. Why is it so important for Medicare to be able to negotiate drug prices with big pharma?
HAZEL: Well, first, I think, you know, this is historic. Medicare has never been able to do this before. And so this offers them the opportunity to really bring the price of drugs in Medicare down. You know, some of the first 10 drugs treat things like blood clots, blood cancer, diabetes, Crohn’s disease. These are things that, you know, so many people are dealing with. And I think, you know, it’s also important to note that this is ongoing. We’re negotiating right now for the first 10 drugs.
WALTER: Oh, they’ve already begun?
HAZEL: Yes.
WALTER: Okay. If the new prices take effect in 2025, is that how it works?
HAZEL: They take effect in 2026.
WALTER: So Big Pharma is not going along with this quietly. They have sued and already lost some of those cases to block drug price negotiation. One of the things they’re saying is that research and development of new drugs would be stifled if they lower prices. Why is that just a completely bogus argument?
HAZEL: Drug companies have just shown us time and time and time again that it is easier and more profitable for them to extend their exclusivities on drugs they’ve already released, keep competition off the market and raise the price on existing drugs than it is for them to truly invest in new and innovative treatments. And this is an argument that’s coming up again in these lawsuits that we have across the country right now. I think it’s also important to note that these lawsuits were not unexpected.
WALTER: I think part of it is that if you look at how much Pharma spends on advertising and marketing; it’s probably billions per year as an industry. And then if you look at executive compensation, stock buybacks, those sort of things, doesn’t it become pretty clear that they could afford to lower prices and still do research and development, which the federal government pays for largely anyway?
HAZEL: I mean, the federal government, they do give a lot of funding to universities and some drug companies in order to start development. And that’s the taxpayers starting to pay for some of that. I think it is important to look at sort of CEO pay, stock buybacks, and the other ways that they’re spending money. At the end of the day, they’re very, very, very successful corporations.
WALTER: And profitable. I mean, to me, if I know the jingle for Jardiance by heart, then that means they can afford to lower prices a little. Wouldn’t you say?
WALTER: Okay. So one of the provisions of the IRA that you touched on before was the $2,000 cap on out-of-pocket drug costs for seniors in Medicare Part D. Some seniors have been paying, what, like tens of thousands of dollars in out-of-pocket costs for the medications up to now?
HAZEL: Can definitely get up there, for sure. Especially if you’re taking more than one medication, you have multiple conditions that you’re trying to treat.
WALTER: So isn’t that a rather significant reform in and of itself?
HAZEL: It’s huge. And it’s gonna, I think, go so far in limiting how much people are forced to spend every year on their medications, yeah.
WALTER: Now, Families USA has a storytelling project to collect people’s experiences with high drug prices. What kind of stories have you been collecting and how can our listeners contribute to the storytelling bank if they want to?
HAZEL: Yeah, thank you for bringing it up. This is like, the storytelling work is a huge part of the work we do and is a big part of sort of the advocacy community in general because at the root of the prescription drug affordability issue is our real people. And so we want to hear from anybody and everybody who has an experience trying to access their medications or afford their medications that they want to share with us. We definitely specifically want to hear from people who are taking one of the first 10 drugs that are being negotiated. We have a website, which hopefully we can maybe put in the description or something somewhere for people. It’s called Pay Less for Our Rx and it has a lot of resources if you want to learn more about anything we’ve talked about today. It has stories from people already so you can really see what does being a storyteller mean or look like. And then it has a super simple form where you can introduce yourself to us and tell us a little bit about what your story, what your experience is. And we just really want to encourage people to reach out and help to use their voice to implement the change that we’re trying to make here.
WALTER: So why don’t we go ahead and give the URL if it’s not too complicated. Is it paylessforrx.org or something like that?
HAZEL: Yes.
WALTER: Dot org. Pay Less for Rx and it’s the word for F-O-R. Yes. Okay, well, that’s cool. First of all, I want to check that out because we’re always looking for stories that we can publicize. And second of all, that’s great that you’re accumulating real world stories to show how Big Pharma price gouging affects regular everyday people.
HAZEL: Yeah. Your grandmother, your neighbor, you, your friend. I think we’d be hard pressed to find somebody who doesn’t know someone who has a story that would be impactful here.
WALTER: Absolutely. Well, you’re doing great work over there at Families USA. Thank you. Thank you for coming. Might you come back and see us again?
HAZEL: Absolutely.
WALTER: In the studio?
HAZEL: Yeah.
WALTER: Okay, fantastic. And I hope we can get you a bagel next time.
HAZEL: That’d be great. In the real morning.
WALTER: In the real morning, as opposed to the fake morning.
HAZEL: Yeah.
WALTER: Okay, Hazel, thanks a lot.
HAZEL: Thank you so much.
WALTER: If you’d like to support our fight against Big Pharma price gouging, become a member of the National Committee to Preserve Social Security and Medicare today. Visit ncpssm.org. That’s ncpssm.org. Our engineer is Shahab Shokouhi and our expert editor is Simon-Laslo Janssen. I’m Walter Gottlieb, and remember… you earned this!