For the past few years, prescription drug pricing issues have been at the forefront of the national health policy conversation. Unlike many other issues in health policy, there is widespread, bipartisan agreement that action must be taken on the subject of drug pricing and drug affordability. However, there is vast disagreement among elected officials about what, exactly, those actions should be. This article will briefly highlight two issues that are likely to arise in the run-up to the 2020 election—patient affordability and Medicare drug price negotiation—and how stakeholders have diverged in responding to these questions.
First, policymakers are focused on making existing prescription drugs more affordable for patients. Currently, about one in four people taking prescription drugs have difficulty affording their medications, and they may respond by skipping doses or delaying filling their prescription. Lowering patients’ out-of-pocket costs is necessary to relieve the financial pressures facing patients and to address the health consequences of these financial pressures.
Legislative packages in both houses of Congress aim to provide financial relief to Medicare beneficiaries. Currently, Medicare Part D places no cap on patients’ out-of-pocket costs, and more than 1 million Medicare beneficiaries have out-of-pocket costs in the many thousands of dollars each year. The House democratic caucus led the December 2019 passage of a comprehensive drug pricing bill, the Elijah Cummings Lower Drug Costs Now Act, which would restructure the Medicare Part D prescription drug benefit to cap beneficiaries’ out-of-pocket costs at $2,000 per year. This topic is of bipartisan interest: A legislative package introduced in the House by Republicans, as well as a bipartisan package introduced in the Senate by Finance Committee Chairman Chuck Grassley and Ranking Member Ron Wyden would both cap Part D beneficiaries’ out-of-pocket costs at $3,100 per year.
These proposed reforms would be enormously beneficial for many Medicare beneficiaries. However, they would provide little, if any, help for the majority of Americans (who are not enrolled in Medicare), and they might even increase costs for other Medicare beneficiaries, as lowering some patients’ out-of-pocket costs may raise premiums for others. As such, many policymakers are considering pairing reforms to patients’ out-of-pocket costs with reforms to lower drug prices directly.
A core proposal within this second set of ideas is drug price negotiation, primarily through Medicare. At present, Medicare itself is not permitted to negotiate with prescription drug manufacturers over the price of their drugs, and, partially as a result, the United States typically pays far more than other countries’ insurance systems for the very same drugs. Many policymakers hope to strengthen Medicare’s negotiating capabilities, enabling the federal government to obtain lower prices on prescription drugs than it is currently able to do.
In particular, the House democratic bill would provide the secretary of Health and Human Services (HHS) with the authority to negotiate prescription drug prices for both Medicare and the (much larger) private insurance market, levying large fines on manufacturers that refuse to negotiate to a price closer to what other, similar countries pay for the same products. The Congressional Budget Office estimated that the negotiation element alone of the democratic bill would save $456 billion over a decade, savings which the Democrats proposed to reinvest in expanded Medicare benefits and funding for the National Institutes of Health.
Yet, unlike the out-of-pocket cost-sharing caps, there is no bipartisan agreement on this policy approach. Neither the House Republicans’ package nor the Senate Finance package would permit drug price negotiations. As a result, these two packages are forecasted to achieve much smaller savings and would provide very little help to Americans who are not on Medicare.
Against this flurry of legislative activity, the executive branch’s actions remain stalled. In 2018, HHS Secretary Azar had placed drug pricing at the center of his policy agenda with the release of the administration’s drug pricing blueprint. But in 2019 and 2020, the Trump administration has made little to no progress on the topic, even moving backward on some important potential areas of reform as the administration abandons certain policy proposals. With little time left to achieve regulatory changes before the election, the administration may publicly support the Senate finance package, seeking a broader set of reforms than it can accomplish administratively.
Despite the policy focus on high prescription drug costs over the last few years, little has changed for most patients’ ability to afford their medications. Expect these issues to remain at the forefront of the policy conversation in 2020, as election season continues at both the state and the federal level.
Rachel E. Sachs is an associate professor of law at Washington University in St. Louis. Her work explores problems of innovation and access to new health care technologies through the lens of intellectual property law, food and drug regulation, and health law.