3 Reasons Why Democrats’ Latest Drug Pricing Plan Went from Bad to Worse

Democrats are using drug pricing as a scapegoat for inflation issues. A partisan bill they introduced?yesterday?is being rammed through under the guise of fighting inflation, but?the Biden Administration’s own data show that medicines are not fueling inflation. In fact, the negotiated prices health plans pay for medicines have been flat in recent years.

But that hasn’t stopped insurers and middlemen from shifting more and more costs onto patients at the pharmacy. What’s missing from the bill dropped?this week?is any serious attempt to fix an insurance system that discriminates against people who need life-saving cures and treatments. Moreover, the number of medicines swept in by the plan could account for up to half of total Medicare Part D spending by 2030, leaving the program unrecognizable. Here are three reasons why this plan fails patients:

1. This version weakens policies aimed at addressing out-of-pocket cost concerns.?This new text delays most aspects of the Part D redesign until 2025 (as opposed to going into effect in 2024), meaning patients don’t get the benefit of the $2,000 out-of-pocket cap until 2025.?Simultaneously, it leaves patient coinsurance at the same level as under current law, instead of improving affordability for patients with out-of-pocket costs below the catastrophic phase of Part D as previous versions of the bill did.
2. It still threatens future innovation and access as prior versions?did.?The bill imposes government price setting for medicines, price setting that may?last?even?after?a?generic or?biosimilar competitor comes to market.?This isn’t about addressing prices for medicines with no competition. It’s about decimating innovation by driving prices down to the cost of production without any chance for the HHS Secretary to consider exceptional circumstances. Tactics like this result in restricted and delayed access to new medicines.?For instance, Americans have access to 90% of new treatments and cures. If you look at countries with government price setting, like France and Canada, that number drops below 50%.?That’s not to mention the impact this type of legislation would have on future R&D, which by some estimates could sacrifice more than 100 new treatments over the next two decades.
3. If that wasn’t bad enough, the bill also ignores the role middlemen and insurers play in determining patient out-of-pocket costs.?Middlemen should be held accountable, not let off the hook. But the bill blocks the rebate rule, which could have immediately lowered costs for seniors across the board by requiring insurers and PBMs to pass along directly to patients the billions of dollars in rebates and discounts that they get from drug manufacturers. Take insulin for example. These rebates, discounts and other payments made by insulin manufacturers lowered the cost of the most commonly used insulins by 84%, on average, in 2021. Middlemen should share these savings with patients at the pharmacy.

Policymakers need a win on inflation. This isn’t it. We shouldn’t let misleading rhetoric fuel a bill that would drastically harm patient access and innovation, especially when it fails to adequately address the very issues like high out-of-pocket costs and barriers to treatment that cause patients to abandon their medicines at the pharmacy counter. Learn more at?www.phrma.org/protectpatients