New legislation is a great first step to lower drug price
SUMMARY: The new, proposed, drug legislation is a first step rather than a sweeping change. It’s a collection of measures meant to bring down prices slowly and on targeted drugs, and pharma is already complaining.
Based on discussions the preliminary proposals include:
1ne: Out-of-pocket spending on medications for seniors would be capped at $2,000 per year.
2wo: The price of insulin will be capped at $35 a month.
3hree: The price of drugs will not be allowed to rise faster than the rate of inflation.
4our: Medicare will negotiate the price of many drugs 5 years after they are approved when they end their period of “regulatory exclusivity.”
Over the weekend, a group of moderate House Democrats wrote a letter to their leadership saying, “If we fail, those on the other side of this issue will need to explain to Americans why they let Big Pharma win, why entrenched special interests take precedence over the American people.”
Why did it happen?
KFF Tracking Poll found large majorities support allowing the federal government to negotiate and this support holds steady even after the public is provided the arguments being presented by parties on both sides of the legislative debate (83% total, 95% of Democrats, 82% of independents, and 71% of Republicans).
Most adults — across partisans — don’t believe high drug prices are needed for drug companies to invest in new research instead agreeing that “even if U.S. prices were lower, drug companies would still make enough money to invest in the research needed to develop new drugs.”
High drug prices preferentially benefit the largest drug manufacturers, which spend only about 10 to 20 percent of their revenue on research and development — far less than they spend on marketing, administration, and stock buybacks and dividends. Despite the dire warnings of drug company lobbyists, as long as funding for the National Institutes of Health remains strong, the next generation of therapeutics will emerge, just as previous generations have.
Big Pharma remains the cash king.
- Drug companies collected almost half of all health care profits despite generating less than 20% of industry revenue.
- 12 of the 16 most profitable companies in Q2 were pharmaceutical firms.
- This theme should sound familiar.
Recent TV ads — paid for by PhRMA, the Pharmaceutical Research and Manufacturers of America trade association — raise a familiar claim in debates about changing Medicare: rationing. But it’s a lie.
The Kaiser Family Foundation says the ads are not accurate.
“In fact, the proposed drug price negotiation program does not authorize the federal government to decide which medications people on Medicare can and cannot get and does not establish or require a particular prescription drug formulary,” KFF’s Juliette Cubanski, deputy director of the program on Medicare policy, and Larry Levitt, executive vice president for health policy, wrote in an Oct. 7 post. “The legislation under consideration leaves in place the non-interference clause and its specific restrictions with the exception of the proposed drug price negotiation program,” which would concern “a relatively small number” of drugs.
This was bound to happen and the drug industry was dumb not to see it coming.
Originally published at https://worldofdtcmarketing.com on November 3, 2021.