Medicare Drug Negotiation Is A Sham

Blog#171- 9/7/23

By Richard Davis

If you want a good example of meaningless political activity and wishful thinking look to the current announcement that there will be negotiations for price cuts for 10 drugs in the Medicare drug program. People need to be reminded that Medicare D, the drug program created many years ago, was a gift to the pharmaceutical industry and did little to help seniors struggling to pay for medication. It has increased the profits of drug companies and that is no accident.

The Inflation Reduction Act (IRA) of 2022 mandated that the federal government negotiate with the pharmaceutical industry and now the Biden administration is trying to get PR mileage because they are going to “try” to negotiate to lower prices for 10 drugs commonly prescribed for seniors. I say try because big pharma is already lining up all of their legal teams to fight the negotiation process. It will be hard for the drug company CEO’s to buy another vacation home if profits are not maximized.

According to the Politico web site, “Companies have until Oct. 1 to decide whether to participate in the (negotiation) talks. If they decline, they could face an excise tax of up to 90 percent on product sales. If a company does agree, it will meet with agency officials this fall to provide product-specific data. CMS has said it plans to hold patient-focused listening sessions on each of the 10 drugs. The IRA allows CMS to select only 10 drugs for the first round of negotiations. However, the law allows CMS to increase the number of drugs subject to negotiation in subsequent years. For 2027, CMS can negotiate the price on another 15 products. By 2028, the agency can negotiate on 15 additional drugs in Medicare Parts D and B, which covers drugs taken in a doctor’s office, such as cancer treatment infusions.”

The Medicare drug program is not cheap and it has so many rules and exceptions and is so difficult to enroll into it that most people need help if they want to consider getting screwed by the pharmaceutical industry. The U.S. government, meaning politicians, didn’t have the balls to force the drug companies to negotiate prices for all drugs, whether or not they are part of Medicare D.

Politicians knew they would put their campaign financing in jeopardy if they went after the big boys head on. That just isn’t done in Washington because it is a battle no one wants to fight. They would rather ignore the fact that millions of Americans are suffering and thousands are dying because they can’t afford the drugs that have the potential to keep them healthy.

The IRA was able to cap insulin at $35 a month for those in the Medicare program but there was not enough political will to extend this discount to all of America’s diabetics. Dealing with the pharmaceutical industry is a lot like working with the NRA. Both groups usually get what they want and both groups could care less about how many lives are lost in order to protect their position and the profits of companies that support them.

The battle lines are being drawn over price negotiation. The U.S. Chamber of Commerce has filed a suit to delay the negotiation process and a number of drug manufacturers are mounting legal challenges. Republicans are lining up to support those who want to stop the negotiations and Democrats are supporting the negotiation process.

Joel White, president of the Council for Affordable Health Coverage and a former Republican staffer on the House Ways and Means Committee, summed up the situation best (although not in a grammatically correct way) saying that those touting the negotiation process are taking “a hollow victory lap.”

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