Build Back Better bill to Allow Medicare to Negotiate Lower Drug Prices

At Last!
Everyone knows that buying a thousand of something should get you a better price than buying just one.  What about 63 million?  That’s how many Americans are on Medicare.  Yet when the current Medicare drug provisions were passed under George Bush, the big pharmaceutical companies managed to insert a provision that actually prohibited Medicare from negotiating lower drug prices for its seniors!  In other words, big Pharma was free to charge seniors whatever it felt like.  And it did.  In fact, it set prescription drug prices so high in America that, according to the non-partisan AARP, Americans pay far more than other countries for the exact same drugs!  Just one example:  the cost of the insulin drug Humalog (a life-saving drug for diabetics) was $300 in the US but only $32 in Canada!*

Not surprisingly, all this has been extremely unpopular with the American people.  In fact, large majorities of Americans in both parties have consistently said they want Congress to change the law. So why hasn’t Congress acted?  

On one side, the vast majority of Republicans in Congress have sided with the pharmaceutical companies.  They argue that forcing big Pharma to negotiate drug prices would somehow reduce innovation even though the drug industry is one of the most profitable economic sectors.  Mind you, Republicans have historically received disproportionately more campaign contributions from pharmaceutical lobby groups than Democrats.  

On the other side, the vast majority of Democrats in Congress have consistently argued for giving the American people what they have asked for:  using Medicare’s power of negotiation to make drug prices more reasonable.

Recently that trend has shifted as big pharma has targeted with laser precision campaign donations to a small group of Democrats who could go against their party and the American people on this issue.  A

Now, however, after much wrangling, it looks like something might actually change.  That’s because the current version of the Build Back Better bill includes a provision giving Medicare the right to negotiate lower prices and limit price hikes.   

No, it is not as good as most Democrats had wanted.  The bill has been watered down to appease those few conservative Democrats mentioned above. Implementation has been delayed to 2025 for the first ten drugs, and on a rolling basis to 2026, 2027 and 2028 for 50 more drugs – except for price increases and limits on diabetes drug prices, which would go into effect in 2023.  

Still, it would be a big change -- and a huge win for American seniors!  

And not surprisingly, the drug industry has been aggressively advertising against the bill, with slick TV ads that darkly warn that the end of monopoly pricing might somehow imperil innovation in the drug industry. 

Nevertheless, it now looks like at least some of these features will be in the bill to be voted on shortly.  It can have a profound effect on drug prices over time, especially for senior citizens, but eventually the effect will reach all or most patients. 

Whatever your party affiliation, if you care about drug prices, show support for this bill going through.

*See https://www.ajmc.com/view/the-deadly-costs-of-insulin