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Let’s Lower Prescription Drug Prices for Seniors

Nov 25, 2019
In The News

Between 2012 and 2016, the price of insulin nearly doubled in the United States.

Unfortunately, in America’s prescription drug market, price hikes like that have become routine. In the first half of 2019 alone, drug companies increased the prices of over 3,400 drugs, with price hikes averaging five times the rate of inflation.

Here in Northeastern Pennsylvania, we are all too familiar with the widening gap between the need for prescription medicines and their unaffordability. According to a 2018 survey conducted by Altarum’s Healthcare Value Hub, 17 percent of adults in Pennsylvania’s Northeast/North Central region did not fill a prescription because it was too expensive, and 10 percent cut their pills in half or skipped doses. The situation is even worse for older adults on fixed incomes—drug prices are hurting older Pennsylvanians so much that last year the Pennsylvania state government had to expand access to its prescription assistance program.

Drug companies say this is simply the cost of bringing new treatments to market. But one of the largest drivers of escalating brand-name drug prices is year-over-year price increases to existing drugs. We’re paying more for the same old thing, not for groundbreaking innovation. Look at insulin, for example—Frederick Banting and Charles Best discovered it almost 100 years ago.

The truth is, it is taxpayers who are footing the bill for drug research. Between 2010 and 2016, every single new FDA-approved drug that came out was developed using taxpayer-funded basic research at the National Institutes of Health. Drug companies use this research to develop treatments, which they then sell back to American consumers at steep markups. So, you pay twice: first through your taxes and then again at the pharmacy counter.

Consumers in other countries don’t pay the same inflated prices we do. Drugs are often sold in the United States for double or even triple the price they sell for in other countries with comparable costs of living. So why are Americans uniquely vulnerable to this outrageous price gouging?

The answer is that we are failing to harness the power of negotiation—a crucial component of a capitalist economy. For years, foreign governments have used their purchasing power to negotiate lower drug prices for their citizens. Meanwhile, the United States has forbidden Medicare from engaging in similar negotiations, effectively tying our own hands.

You read that right. Many people are astonished to learn that current American law forbids Medicare from negotiating drug prices on behalf of Medicare recipients. There is no reason for this restriction. The Veterans Administration has no such restriction.

The result has unfolded predictably: left unchecked, for-profit drug companies have made a business of exploiting elderly, ill, and disabled Americans.

The result has unfolded predictably: left unchecked, for-profit drug companies have made a business of exploiting elderly, ill, and disabled Americans.

That’s why I’m a cosponsor of H.R. 3, the Lower Drug Costs Now Act. If passed, this bill would authorize the Secretary of Health and Human Services (HHS) to negotiate lower prices for up to 250 of the most expensive drugs. H.R. 3 would also cap Medicare beneficiaries’ out-of-pocket drug spending at $2,000. For one million Medicare beneficiaries, this translates to an average of $1,200 in annual out-of-pocket savings

If passed into law, Medicare beneficiaries are not the only ones who would benefit from H.R. 3. In addition, all Americans with private insurance would be able to benefit from reduced drug prices as negotiated by the government. The nonpartisan Congressional Budget Office found that the Medicare Part D drug price negotiations would alone save $345 billion in federal direct spending for Medicare between 2023 and 2029.

It’s time for a simple market solution to one of our biggest health care problems. It’s time to lower drug costs—now.