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Americans pay much more than people in other countries for prescription drugs. This drives voters crazy, and while lawmakers have promised to do something about it for decades, they haven’t made much progress.
That could change this week. The Inflation Reduction Act – hollowed out by Senate Leader Chuck Schumer, DN.Y., and Senator Joe Manchin, DW.V. – contains various provisions on drug prices and health insurance. The Senate plans to begin the voting process on Saturday, and it appears on track to pass Congress and be signed into law by President Biden.
This all sounds like music to the ears of patients who have suffered from expensive drugs for years.
“The proposal to limit out-of-pocket spending now on the table would definitely make a huge difference in my life,” said Medicare recipient Bob Parant, 69, of Westbury, New York. He has type 1 diabetes and pays about $5,000 out of pocket each year for insulin, on top of thousands more for a heart drug.
Here are details about that proposal and others in the bill, and answers to some frequently asked questions.
What exactly is Congress changing about drug prices?
For the first time, the federal secretary of health could directly negotiate the prices of certain expensive Medicare drugs each year. This will start with 10 drugs in 2026 and increase to 20 drugs in 2029. To qualify for negotiation, the drugs would have to be on the market for several years.
Then there’s the proposal Parant is most excited about: People on Medicare won’t have to pay more than $2,000 a year in out-of-pocket costs for prescription drugs, which will make a big difference for seniors with certain conditions like cancer and multiple sclerosis. . This would come into effect in 2025.
And if drug companies raise the prices of their drugs faster than inflation starting next year, they will have to pay a discount to Medicare. That can affect many medications — according to an analysis by the Kaiser Family Foundation; in 2019-20, half of all prescriptions covered by Medicare rose in price faster than inflation. This provision could discourage pharmaceutical companies from constantly raising prices.
Do experts think it will make a difference?
Many health policy experts believe these changes are significant.
“This is a huge breakthrough,” said Tricia Neuman, who leads the health care policy program at KFF. “Congress has been talking about doing something about drug prices for decades. [This] may not be everything everyone wants, but it’s a really big deal and it will provide significant help to literally millions of people who need it.”
“It’s a huge deal,” agreed Stacie Dusetzina, a professor of health policy at Vanderbilt University. “It really breaks a lot of new ground and solves a lot of problems.”
The Congressional Budget Office, which analyzed an earlier draft of the bill, estimates that these changes will save the government $288 billion through 2031.
Why does it take so long for many of these things to take effect?
For someone who uses Medicare and spends $10,000 a year on cancer treatment, like Neuman’s friend, the timeline of these changes can be difficult to take.
“Obviously, next year she’ll be wondering, ‘Why am I still paying a lot of money?'” Neuman says. “Some things just can’t happen fast enough just because it takes a while to get things going.” It will take a lot of work from federal health agencies and industry groups to prepare for these provisions to take effect.
Neuman says she understands people long for relief, but once provisions like the cash cap in Medicare come into effect, “this will be a really big deal for people who depend on expensive drugs and for others who have seen their drug prices rise.” every year.”
I’ve heard the bill will lead to fewer new drugs. Is that true?
This is an argument from drug manufacturers to try to scare people into resisting these changes. According to the nonprofit organization Open Secrets, by 2022, the pharmaceutical and health products industries will have spent more on lobbying Congress than any other industry. There is a fierce fight to prevent these changes from becoming law as they would reduce their profits.
For example, PhRMA, the Pharmaceutical Research and Manufacturers of America, argues in an ad campaign that the drug pricing provisions in the bill could reduce the number of new drugs entering the market by “making research and development horrifying.” The trade association also pointed NPR to this industry-funded analysis by Avalere, which estimates the bill could reduce drug manufacturers’ revenues by $450 billion by 2032.
But an analysis by the Congressional Budget Office estimates that the effect on drug development would be quite modest. About 15 of the 1,300 drugs wouldn’t hit the market in the next 30 years — that’s about 1% of new drugs. In addition, most large pharmaceutical companies spend more on marketing than on research and development.
Some ads claim that Medicare would be cut. Is this true?
These ads are misleading. For example, a project called Commitment to Seniors launched a seven-figure ad campaign claiming that the Senate bill would “transfer nearly $300 billion out of Medicare.” In fact, that amount is what the government expects to save, because Medicare doesn’t have to pay that much for expensive drugs, it’s not money taken out of Medicare’s budget. So, most importantly, seniors’ benefits would not be reduced.
“When people see an ad on TV from a group called Commitment to Seniors, it sounds pretty harmless,” said Issue One’s Michael Beckel, who tracks dark money. It turns out that Commitment to Seniors is a project by another group, American Commitment, which has given PhRMA more than a million dollars, including $325,000 in 2020.
Beckel says it’s not uncommon for the industry to engage in such tactics. “The pharmaceutical industry is a major lobbying force and a major player in the dark of money.”
What about insulin? Would people with diabetes get help with those prices?
Insulin is often the best medicine when it comes to prices that get out of hand and betting on life or death. Insulin prices in the US are on average four times higher than in other countries after rebates, and about 1 in 4 diabetic patients have reported taking less insulin than prescribed because they cannot afford it. At this point, it’s unclear whether any of the proposed reforms to the price of insulin — or at least patients’ out-of-pocket costs — will make the final cut.
There are ongoing efforts to limit copays to $35 per month for those on insurance who use bi-partisan insulin, but this may not be included in the bill.
What else is in the health bill?
The other big thing in the bill is protecting consumers from a potentially catastrophic change that would happen without new legislation.
People who buy insurance on Affordable Care Act marketplaces — such as Healthcare.gov and the state marketplaces — can keep generous premium subsidies for another three years. After these additional subsidies went into effect with the approval of the US bailout plan, the government estimated that 4 out of 5 enrollees were eligible for a plan with a premium of $10 or less per month.
Krutika Amin, who works with Neuman at KFF, says it’s important for lawmakers to enact this extension now, as insurance companies are currently setting their rates for next year’s plans ahead of open enrollment in the fall.
“If Congress is able to extend the additional grants for the August recess, it will help provide security for insurance companies as well as state and federal agencies operating. [the marketplaces] to be able to implement it in a way that is seamless for the consumer,” she says.
The extra discounts on subscriptions have made all the difference. Last year, 14.5 million people — more than ever — signed up for insurance on Healthcare.gov, and early analysis from HHS suggests the total number of people uninsured in the U.S. hit a record low in the first few months of this year. reached.
NPR Pharmaceuticals Correspondent Sydney Lupkin Contributed to Report.