The next four weeks will be critical for drug pricing reforms in Washington. We are on the verge of winning the most sweeping legislation to lower drug prices in decades. But Big Pharma and its allies in Congress are still trying to block or weaken it, and we must keep doing everything in our power to get it over the finish line intact.
If we succeed, it will be the product of compromise, which means it won’t be everything we wanted. It will, however, make a meaningful difference in the lives of millions of patients and virtually every American. Because the legislation resets practices all across the drug pricing system in this country, the reforms will be implemented over time.
Starting in 2023, we will curb year-over-year price gouging by making drug corporations pay penalties if they raise prices faster than the rate of inflation. This price increase cap will protect all Americans in both Medicare and private sector insurance plans. Co-payments for insulin will be limited to $35 a month for all Medicare Part D beneficiaries and in most private sector plans.
In 2024, everyone on Medicare Part D will be protected from high out-of-pocket costs. Right now, there is no annual out-of-pocket maximum in the Medicare retail drug benefit, and people can wind up paying more than $15,000 a year if they need an expensive drug to manage acute or chronic disease. Beginning in 2024, annual out-of-pocket costs will be capped at $2,000. A redesign of the program will incentivize drug plan operators to negotiate more aggressively with drugmakers for lower prices on our behalf. Additionally, Medicare beneficiaries will no longer pay cost-sharing on any recommended vaccines.
In 2025, for the first time ever, negotiated prices will begin to take effect for Medicare for the most expensive drugs. Negotiations will focus on older drugs without competition. The first year will include 10 of the highest-spend prescription drugs, moving to a total of up to 100 drugs by the end of the decade. Negotiations will start with a ceiling price set at a discount of at least 25 percent to 60 percent off the average manufacturer price, depending on how long the drug has been on the market. Lower negotiated prices will save money directly and help hold the line on premiums and out-of-pocket costs for people on Medicare. Negotiated prices will also be public, so employers and insurers can use them as leverage to get a better deal in the private sector.
Also in 2025, Medicare plans must offer enrollees the option of “smoothing” monthly out-of-pocket payments. Right now, the payment for the first month of the year can be brutal for people taking expensive drugs. Instead, beneficiaries will be able to spread the costs more equally over the year to make costs more affordable and manageable.
Much has been written about the effect of lowering drug prices on innovation and new drug development. Let’s be clear: This legislation protects, encourages, and rewards innovation. Drug corporations will still be able to set prices on new drugs to reap rewards for investment and risk. That is how we incentivize innovation now, and nothing will change to affect that process. Any scare-mongering you hear from Big Pharma about innovation under this legislation is pure hogwash.
Together, these provisions fundamentally reform our system to make it work better for those it is intended to serve — patients and all Americans. It is not as strong as we wanted, but we have to contend with the realities of the political process. There is no Republican support for Medicare negotiation in Congress — not one vote. So the bill has to be passed under a legislative procedure called reconciliation, requiring only 50 votes in the Senate. That means we cannot lose any Democratic votes in the evenly divided Senate, and there are only three votes to spare in the House.
Frankly, this bill would have been stronger with just a couple more votes on our side in each chamber. But instead, we have seen the bill weakened by members of Congress who have been serving the interests of Big Pharma — notably, Reps. Scott Peters (D-CA), Kurt Schrader (D-OR), Kathleen Rice (D-NY), Stephanie Murphy (D-FL) and Senator Kyrsten Sinema (D-AZ). Outrageously, these members are trying to take credit for winning this bill when it has taken every ounce of our effort and that of our allies in and out of Congress to fight these pro-pharma members and keep the bill as strong as it is.
The credit for the bill we are now pushing to pass goes to many people and organizations, including AARP, consumer groups, some physician groups, large employers, small business owners, President Biden, Speaker of the House Nancy Pelosi, Senate Majority Leader Chuck Schumer, and stalwart supporters in both the House and Senate.
Most importantly, much of the credit goes to you — patient advocates. The fight for Medicare negotiation has been nearly two decades, and we are on the brink of getting it done. What was different this time? Thousands of you stood up and shared your stories with news media, on Capitol Hill, in state legislatures, and beyond. Without you, we would not be on the precipice of historic change.
Having said that, we are not home yet. Our legislation is a part of the Build Back Better package that the House hopes to vote on by the week of Nov. 15. Then it goes to the Senate, and then back to the House. Final action is likely by mid-December. There is still treacherous terrain to cross before we finish the job. Big Pharma — with three lobbyists for every member of Congress — is still swarming over Capitol Hill to try to weaken the bill every day.
That’s why the next four weeks are critical. We will be doing everything we can to make sure the drug pricing legislation gets across the finish line without further weakening amendments. And we need you to buckle down for this final stretch push with us to get it done. Go to MedicareNegotiation.org and send a message to your members of Congress today. Patients have made a key difference in this fight. Now, let’s finish the job.