Drug pricing advocates expressed qualified enthusiasm for Democrats’ scaled-back deal to lower prescription drug prices, with some contending that the measure is a good step forward to make more sweeping changes down the line.
Senate Majority Leader Charles Schumer (D-N.Y.) on Tuesday announced a scaled-back deal on a measure that would lower prescription drug prices after resistance from moderate Democrats including Sen. Kyrsten Sinema (D-Ariz.) that a more sweeping measure would harm innovation.
The measure is a rare loss for the pharmaceutical industry, long known as one of the most powerful forces in Washington.
But advocates for lower drug prices were somewhat tempered in their praise regarding the deal, given the concessions that had to be made to moderate Democrats.
“I think this is a significant step forward,” said Tricia Neuman, a Medicare expert at the Kaiser Family Foundation. “I know some people are disappointed it isn’t broader, but it is a foot in the door.”
The Pharmaceutical Research and Manufacturers of America (PhRMA) denounced the agreement, warning it would harm innovation leading to new treatments.
“If passed, it will upend the same innovative ecosystem that brought us lifesaving vaccines and therapies to combat COVID-19,” said Stephen Ubl, CEO of PhRMA. “Under the guise of ‘negotiation,’ it gives the government the power to dictate how much a medicine is worth and leaves many patients facing a future with less access to medicines and fewer new treatments.”
But Rachel Sachs, a health policy expert at Washington University in St. Louis, argued that the industry would have a negative reaction regardless of the scale of the drug pricing measure.
“This statement is a reminder that the scale of the proposal is irrelevant to industry’s opposition,” Sachs tweeted. “Whether a bill impacts their bottom line by one dollar or one billion dollars, they argue that it will destroy innovation.”
The agreement announced Tuesday would for the first time allow Medicare to negotiate lower prices on some drugs, a long-held goal of Democrats. But the negotiation provision was scaled back to only apply to older drugs that are no longer on their period of “exclusivity,” when they are protected from competition. That translates to nine years for many drugs and 12 years for more complex biologics.
Ten drugs would be subject to negotiation starting in 2025, with up to 20 drugs starting in 2028.
Those limitations led some drug pricing advocates to qualify their praise.
“We’re disappointed with where this has landed, but we still recognize that there’s going to be a lot of people that will be helped by it,” said Steve Knievel, an advocate with the progressive group Public Citizen.
He expressed hope that now that the door has been opened to negotiating drug prices, the agreement is “something that we can improve on now that our foot is in the door.”
Others said the agreement is a sign that momentum is shifting against the pharmaceutical industry.
“While the pharmaceutical corporations were able to use their money to limit the number of drugs Medicare can negotiate on, this is still an important victory for seniors, who will now get to keep more of their earned Social Security checks,” said Alex Lawson, executive director of the progressive group Social Security Works. “It’s also the biggest defeat Big Pharma has ever suffered — and it won’t be the last.”
Pharmaceutical companies argue that while Democrats say the bill allows for “negotiation” of drug prices, it is really just price-setting. For example, drug companies would be hit with an excise tax as a penalty if they walk away from the table.
They also argue that unless the measure requires insurance companies to pass more savings on to consumers, the average consumer might not see changes in the price they pay for drugs at the pharmacy counter.
For seniors on Medicare, though, the agreement does include a new cap of $2,000 on out-of-pocket drug spending, which could save money for seniors who take expensive medications.
“The most tangible benefit in the compromise is the cap on out-of-pocket spending, which could have a significant impact on people who take very expensive drugs,” Neuman, of the Kaiser Family Foundation, said.
The measure would also limit drug price increases to the rate of inflation.
Some experts and advocates raised the concern that drug companies could find ways to game the system, for example by simply launching new drugs at a higher price to begin with.
With a few years until many of the provisions kick in, advocates for drug pricing say the pharmaceutical industry could seek to further water down or kill sections before they take effect.
“There’s a lot of time for them to lobby to weaken it,” said Knievel.