Interested Parties Memo: President Biden Takes On Big Pharma and Is Lowering Prescription Drug Prices
After decades of opposition, President Biden enacted a law that finally takes on Big Pharma and gives Medicare the power to negotiate drug prices. President Biden’s Inflation Reduction Act will save millions of seniors money on some of the costliest prescription drugs on the market –and today, Medicare will send initial offers to manufacturers of the first ten drugs selected for drug price negotiation to help bring down the price of these prescription drugs. This is the first time ever that Medicare is not accepting the drug prices the pharmaceutical companies set.
The drug price negotiation program is a prime example of the ways the Administration is working to lower costs for American families. In 2022, nine million seniors on Medicare were prescribed the ten drugs selected for the first round of drug price negotiation. These individuals spent an estimated $3.4 billion in out-of-pocket costs in 2022 alone for these drugs, which are used to treat some of the most common conditions like blood clots, arthritis, diabetes, cancer, heart disease, and more. Some seniors spent nearly $6,500 out-of-pocket for a single one of these drugs – while Big Pharma continued to make record profits, ripping off American taxpayers and the seniors their drugs aim to treat.
New report highlights Big Pharma price gouging
A new report released today shows that in 2022, Big Pharma charged Americans two to three times more than what they charged people in other OECD countries for the same drugs, even when accounting for rebates and discounts. As one example, U.S. gross prices for insulin – a drug that has been around for 100 years and costs drug companies just $10 a vial to make – were on average almost ten times the price in the United States than in comparison countries.
This comes as large drug companies spent nearly $750 billion on self-enriching stock buybacks and dividends over the last decade. Big Pharma also executed over $135 billion in mergers and acquisitions in 2023 alone, while passing the cost to consumers. And six of ten of the drugs selected for this year’s negotiation program raised their prices in the first month of 2024 – after all ten drugs were already priced three to eight times higher in the United States than in other countries.
President Biden’s drug price negotiation program finally takes on Big Pharma’s exorbitant price gouging of seniors, allowing Medicare to put money back in the pockets of American families. By negotiating lower prices for these drugs – and dozens more in the years that follow – the Biden Administration is creating a new and better deal for patients.
Drug price negotiation could have a significant impact on seniors
Until the Inflation Reduction Act, Medicare was prohibited from directly negotiating prescription drug prices to get the best deal for seniors, even as other government agencies that provide health services actively negotiate lower drug prices. The Veterans Health Administration, Department of Defense, and Medicaid all have the power to negotiate drug prices, and they pay less than Medicare, on average, for top-selling brand-name drugs. In 2017, the Government Accountability Office found that the VA paid on average 49 percent less per unit for the same brand-name drugs offered through the VA health system than Medicare Part D paid.
Big Pharma and House Republicans continue to attack popular drug price negotiation program
Americans from all backgrounds and ages overwhelmingly support Medicare being able to negotiate lower drug prices for seniors, with eight in ten adults in favor of the federal government negotiating drug prices.
At the same time, Big Pharma is litigating nine lawsuits against Medicare Drug Price Negotiation. They’re hoping the courts will do what they could not get done in Congress: block Medicare from negotiating lower prices for seniors and families. And House Republicans are all too eager to come to drug companies’ defense. House Republicans have pledged to eliminate the Inflation Reduction Act, have vowed to cut Medicare and Social Security benefits, are trying to kick millions of Americans off affordable health care, and would keep drug prices high for seniors and American families.
President Biden won’t stand for that. He is laser focused on lowering costs, protecting Medicare and Social Security, and making sure his Inflation Reduction Act gives more seniors, people with disabilities, and families more breathing room.
Later this year, new, negotiated prices for the first ten prescription drugs selected for the negotiation program are scheduled to be announced. Over the next four years, Medicare will select up to 60 drugs for negotiation – and up to 20 additional drugs per year after that.
Beyond that, millions of seniors with diabetes are already benefitting from the $35 cap for a month’s supply of insulin under the President’s Inflation Reduction Act. Fifteen million Americans are saving $800 per year on health insurance premiums. And seniors that took the 47 drugs covered by Medicare Part B that hiked prices faster than inflation in 2023 had lower coinsurance, with some enrollees saving as much as $618 per dose.
No matter how many times House Republicans try to repeal the Inflation Reduction Act, President Biden knows how it is delivering for American families, and his Administration will continue the fight to lower health care costs for more Americans.
###
