Democratic leaders in the U.S. Senate have proposed a program in new legislation that would allow Medicare to negotiate the purchase price of drugs for its recipients.
A drug price negotiation program was reportedly in the works earlier this month but got an official announcement Wednesday after it was included in the Inflation Reduction Act, a larger piece of legislation that also includes funding for energy and environmental protection. The proposal is set for a vote next week as part of a budget reconciliation bill.
If the bill passes and the program is created, Medicare will negotiate the price of 10 drugs to start, and would be able to increase the number of drugs it negotiates for to 20 over the next several years. Emily Gang, a Medicare specialist with The Medicare Coach, said this could help people who use medications that aren’t currently eligible for Medicare discount programs.
“Some medications on Medicare are really affordable, like a lot of the generics—it’s not a big deal,” she said. “There are other medications out there that tend to be more expensive. And what’s unfortunate is that, when people join Medicare, they lose certain coupon programs or certain subsidies and they end up paying a lot more money. It doesn’t happen with a lot of medications, but it is happening.”
Gang said most of those drugs are niche medications and that the proposed program would help most if it targeted these expensive drugs that are exempt from coupons. She cited chemo pills specifically, as chemotherapy administered in a hospital is generally already covered under Medicare Part B. However, chemotherapy in oral pill form falls under Medicare Part D and is often very expensive without a discount.
However, Gang said it’s still too early to know what the program will achieve and what the pharmaceutical companies will agree to—and there’s always the possibility the program will “go after a medication that everyone covers and take it from $10 to $0.”
In addition to the drug price negotiation program, the legislation proposes a $2,000 cap on out-of-pocket spending on drugs under Medicare, as well as free vaccines for Medicare recipients and a slight expansion to the plan’s low-income subsidy program. The Democrats also claim the proposal will avoid rising drug costs by proposing a rebate program for price hikes higher than inflation and changing incentives around pricing schemes.
“Patients are paying exorbitantly high prices while insurers and manufacturers rake in huge profits and negotiate secret discounts and agreements,” reads a summary of the legislation released by Senate Democratic leadership. “The bill changes that dynamic by incentivizing both manufacturers and insurers to keep drug prices down. It puts them on the hook for higher drug prices and spending to tamp down artificially high prices jointly set by big pharma and pharmacy benefit managers.”
The Inflation Reduction Act, including the negotiation program proposal, has the support of both Senate Majority Leader Chuck Schumer (D-NY) and Senator Joe Manchin (D-WV), a conservative Democrat who recently opposed President Joe Biden’s Build Back Better plan and other Democratic initiatives. According to NPR, the Democrats plan to propose the bill as part of the budget reconciliation process, which would avoid a possible Republican filibuster—provided similar legislation passes the U.S. House of Representatives. To be passed in the reconciliation process, however, the bill will need to be approved by the Senate Parliamentarian.