The US Senate could pass this week a “watershed” bill enabling drug price negotiations after years of government pressure. Analysts are busy poring over the available details to see how the legislation may affect the pharmaceutical industry and who is most affected by the changes.
As the legislation stands, if passed, the Health and Human Services (HHS) secretary would be authorized to begin negotiating drug prices for 10 high-costs medicines in 2023, with the negotiated prices to go into effect in 2026. The number of drugs would grow to 60 by 2029, the analysts said. In 2026 and 2027, Medicare would only control Part D drug prices, but in 2028, it could also negotiate prices in Part B, where doctors administer therapies. One thing to note is that for drugs facing a generic or biosimilar rival, Medicare would no longer seek to negotiate prices.
Arguments FOR:
Proponents argue that millions of Medicare enrollees would better afford their medications and the program could save older adults a lot of money. The nonpartisan Congressional Budget Office (CBO) says the new legislation would save Medicare an estimated $288 billion over 10 years. The majority of the savings would come as a result of prescription drug price negotiations and the rebates that would encourage pharmaceutical companies to keep price increases below the expected rate of inflation. That means that beneficiaries would be able to get the same medications they do now, but those drugs would cost them and Medicare less. “The prescription drug pricing reforms coming together in the reconciliation bill are a huge win for older Americans,” said Nancy LeaMond, American Association of Retired Persons (AARP) executive vice president and chief advocacy and engagement officer. “By putting a limit on what they’ll have to pay out of pocket for prescriptions and allowing Medicare to negotiate lower drug prices, this legislation will save seniors money at the pharmacy and help them make ends meet.”
Arguments AGAINST:
Detractors of the proposals include big drug makers, like Eli Lily, AstraZeneca, AbbVie and Johnson & Johnson, just to name a few in the pharmaceutical industry. Analyst for the drug companies say they are concerned about the negative impact of proposed legislation on future innovation and the financials associated with some of the most helpful drugs for Medicare recipients. A SVB Securities analyst says “Not only would the economics for many drugs be curtailed before loss of exclusivity, but innovators’ willingness to develop new drugs, in particular small molecule therapies for seniors, would likely diminish.” The legislative provisions put forward aren’t “just a step backward,” according to Michelle McMurry-Heath, president and CEO of the trade group the Biotechnology Innovation Organization (BIO)—but could in fact “propel us light years back into the dark ages of biomedical research.” She called the Medicare negotiation proposal “misguided” and said it would “include risky medical price control tactics that will ultimately harm the very patients and seniors that lawmakers claim to be helping.” Medicines would be eligible for Medicare negotiations after nine or 13 years on the market, depending on whether they are a small molecule or a biologic. But because pharmaceutical companies often secure much longer periods of exclusivity than either nine or 13 years, the bill risks cutting off the “tail” of profitable drug sales. The bill would take a “disproportionate” toll on small biotechs, McMurry-Heath added, which are behind “the lion’s share of medical innovation” and “rely on a healthy investment environment to stay afloat,” she said. With less opportunities to make a return on their investment, fewer drug companies are going to front the large financial costs of research and development of promising new drugs.
A Complex Issue:
Keep in mind that Medicare Pricing is only one part of the overall legislation being proposed and agreement on the full package of budget bills is far from over. With a tough fight ahead in Congress, the analysts are waiting to see the final legislation. They are particularly interested in waiting on whether the Senate parliamentarian supports the “teeth” of the bill that would give Medicare its negotiating power. And it’s an open question as to whether the Senate can pass the bill before it goes on recess. Bloomberg Law, a global leader in business and financial data, notes that the retooled reconciliation package would need the blessing of every Democratic senator before advancing. By including the drug-pricing proposal in their budget reconciliation package, Senate Democrats are aiming to pass the measure with a simple majority that wouldn’t rely on the votes of their Republican peers, the publication explained.
Trust Georgia Medicare Insurance!
Before it is all over, you can rest assured that proponents and detractors will be out in force trying to persuade the public to choose their side of the argument. No matter what happens, Georgia Medicare Insurance is committed to providing our Medicare clients the most up-to-date and accurate information available that will impact their Medicare choices. Give us a call today or schedule a phone or video appointment!