Ellen Andrews, Ph.D.
ELLEN ANDREWS

Democrats in Washington have negotiated a deal to allow Medicare to negotiate prices with drug companies. Americans pay 2.56 times higher drug prices than residents of other developed countries. It has always been embarrassing that federal law prohibits Medicare drug price negotiation and the FDA can’t consider costs in drug approvals. The US is the only developed country that doesn’t have a government system to set reasonable prescription prices.

Politically, this is a seismic shift. A rare ray of sunshine in healthcare policymaking.

To protect their profits, Pharma spent $306 million last year lobbying in Washington, almost twice as much as the next highest industry. They’ve also contributed millions to federal and state candidates carefully targeted to support their interests.

Last week, it looked like the pharmaceutical industry had won again. On Thursday, all meaningful drug cost controls were removed from the Presidents’ Build Back Better social spending plan. This left $456 billion in savings over 10 years on the table that could’ve funded school loan relief, clean energy, and housing subsidies.

Drug prices are one of the main drivers of rising health costs and insurance premiums, in Connecticut and across the US. Medicare drug price negotiation is about the only thing a large majority of Americans still agree on.

Politically, this is a seismic shift. A rare ray of sunshine in healthcare policymaking.

The new deal calls for Medicare to negotiate prices for the most expensive drugs, after the period of patent exclusivity, and limits price increases to the rate of inflation. The deal also caps annual out-of-pocket costs for Medicare beneficiaries at $2,000. That’s still high for many seniors but it’s far better than under current law. The plan includes a $35 per month cap on insulin prices. Connecticut already caps insulin costs at $25 per month under a 2020 law, but the federal law will apply to all insurance plans.

It’s not everything advocates wanted. Importantly, it won’t translate to drug prices in private plans that cover 1.9 million Connecticut residents. The Congressional Budget Office still needs to estimate the savings, and Congress has to figure out how to spend them. And then the bill has to pass Congress, no small thing.

But it’s a start – a very good start.

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Ellen Andrews, Ph.D., is the executive director of the CT Health Policy Project. Follow her on Twitter @CTHealthNotes.

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