Thursday’s widely anticipated big announcement should tell us a lot about one of the Biden administration’s most important policy accomplishments: reform that could touch the lives of millions of seniors, change the drug market, and just maybe affect November’s election, too.
The Ministry of Health and Human Resources will soon publish the final prices 10 prescription drugs covered by Medicare are as follows negotiations between the federal government and pharmaceutical manufacturers. Medicines include expensive, widely used blood thinners and diabetes treatments, as well as cancer treatment medicine.
Such negotiations are routine in most other economically developed countries — how their governments set drug prices — but they have never happened before in the United States. That changes this year thanks to the Inflation Reduction Act, which Democrats passed on a party-line vote. and President Joe Biden signed it into law last year.
By law, annual, year-long negotiation process ends when new prices are published by September 1. And while the administration has not said publicly exactly when it plans to release the new rates, the White House has announced that Biden and Vice President Kamala Harris will appear together in Maryland on Thursday “to discuss the progress they are making to lower costs for Americans.”
As Politico reported late last week, and sources familiar with the planning have since confirmed to HuffPost, the joint appearance is intended to tout the new prices after some kind of announcement before markets open Thursday morning.
Thursday’s appearance is a White House event, not a campaign stop. But it’s safe to assume that before the November election, Harris and his fellow Democrats will continue to talk about these new rates and outline plans (including plans for the latest Biden-Harris). budget proposal) to expand and strengthen the government’s new negotiating authority.
Democrats, especially liberal Democrats, have traditionally supported giving the government direct leverage over drug prices. The pharmaceutical industry has opposed the idea, as have most Republicans.
Whether this will shape voters’ perceptions in the fall depends on whether they can be made to notice and pay attention to the ongoing new negotiation process. So far, it’s been tough for Biden, Harris and their allies. Vote has shown that a large number of Americans are unaware that the federal government has already begun to shape drug prices, even though the vast majority of Americans support the idea.
A big change that is hard to see
One reason for the public’s low awareness may be the rather limited amount of negotiating power. The new rates apply only to Medicare and not to private insurance for non-elderly, non-disabled Americans. And the negotiations cover only a limited number of drugs, starting with 10 this year.
In addition, the new prices will not come into effect until January 1, 2026. How much the new prices then save individual seniors—as opposed to the Medicare program as a whole—depends on whether those seniors also take these drugs. depending on what kind of Medicare drug coverage they have.
Even about finding out the magnitude of probable savings may be difficult or at least take some time. The newly negotiated prices for these 10 drugs are much lower than the official list prices, but Medicare insurers are already getting discounts on those prices for their customers. And those discounts are proprietary information.
But there are ways to gauge the impact of newly negotiated prices—for example, by comparing them to publicly available industry averages and indexes. The administration may release some of them as part of Thursday’s announcement.
It’s certainly possible that some seniors could end up paying significantly less for their drugs, depending on their specific circumstances and how much they save from other reforms in the same legislation.
“The drug price negotiation program, the $35 insulin cap, the inflation discount and the $2,000 out-of-pocket cap on drug costs should help make drugs more affordable for millions of Medicare patients who have been struggling to pay for them.” Tricia Neumanvice president of policy at the healthcare research organization KFF, told HuffPost.
Neuman also called the negotiated rates “an important milestone for Medicare and seniors.”
Although the negotiations only cover 10 drugs this year, the number will increase over time, which means that an increasingly large collection of drugs will be the subject of negotiations. Expensive new weight loss drugs are likely to fall into this category soon.
Both Biden and Harris have called for further expansion of the authority to apply for more drugs and to find ways to expand bargaining power beyond Medicare.
A question of compromises – and political power
Whether all this is a benefit or a loss to American society as a whole is a separate question.
According to the KFF survey, about one in four older Americans struggle with drug costs, and those in good or poor health are even more likely to report difficulties. This situation is a big reason why liberals have pushed so hard for the United States to adopt the negotiation practices common in other countries.
But conservatives have long argued that “negotiating” drug prices is really just a nicer way of saying “setting” drug prices, and that cutting drug company revenue reduces innovation because it’s harder for those companies to attract investors.
Many mainstream analysts see the relationship between income and innovation as real, though even among them there is disagreement about whether certain changes to the Inflation Reduction Act could hinder the development of meaningful treatments.
“We simply will never know what drugs we may have had without the IRA pricing,” said Manatt Health adviser Ian Spatz, who previously worked at the pharmaceutical company Merck and is now an assistant professor at the University of Southern California. told HuffPost.
But if the political debate is complex and muddled, the political battle lines are clear.
Republicans, along with some more conservative Democrats, have long opposed giving the federal government more influence over prices. Project 2025the governing manifesto of the right-wing Heritage Foundation, specifically calls for repeal of the new bargaining power and other sections of the Inflation Reduction Act. The authors of the document are, for example, several current and former Donald Trump aides.
Trump, who has said he knows nothing about the document, previously signed some executive orders aimed at lowering drug prices while he was president. He has also criticized the pharmaceutical industry and lamented the high prices Americans pay relative to Europeans, and during the 2016 presidential campaign he promised “negotiate like crazy” with manufacturers.
However, when House Democrats passed legislation similar to what became the Inflation Reduction Act, Trump attacked it and with Republican leaders held the Senate accountable when they refused to pass the legislation.
Harris is sure to point to Trump’s record in the coming months as evidence that Americans can trust him and his party to lower drug prices. But this argument resonates much more if voters see and understand the changes already underway.
