Is Fixing the Price of Drugs Working?

I have written often and with much enthusiasm about the “evils” of the prescription drug price fixing scheme in the Inflation Reduction Act (IRA). I’ve discussed it in statements to CMS, I’ve talked about it in Facebook Live events, and I’ve written about it in multiple blogs (here’s just one of them). I’ve tried, since it was signed into law, to monitor what impact it had on the older patients who are Medicare beneficiaries. So far, it’s been difficult to track whether it’s made a difference in the out-of-pocket costs (OOPC) for patients since the prices of the first 10 drugs negotiated just became effective on January 1st of this year. A separate provision in the IRA that caps Medicare beneficiaries’ OOPC at $2,000 per year also recently took effect. This cap greatly reduced what certain seniors pay each year. However, many people, myself included, are very skeptical of any savings seniors will experience from the price fixing part of the bill. I’m waiting for that data.

One place there has already been an impact is in the amount of money earmarked for research and development (R&D). While all types of new drugs have been affected, the small molecule drug R&D has been impacted the most, with a 68% reduction since the IRA was introduced. The IRA price fixing coupled with the focus on the most favored nation pricing scheme has chilled America’s focus on R&D and threatens our worldwide leadership in new drug discovery. France has been expanding its support for scientists focused on drug discovery, and China is moving quickly to not only supply financing for drug research but to become the most efficient and cost saving place to conduct clinical trials. We don’t need government intervention to compete against other countries in this business arena, we just need to reinvest in our already world leading drug development and manufacturing business rather than erect barriers and institute price controls that hobble our progress.

As an aside, I’ve always wondered why it was so important to include a 10-year drug price fixing component into the IRA when, in the same piece of legislation, there was a $2,000 cap on drug costs. The cap, by definition, eliminated the burden of the bankrupting costs of extremely expensive medicines. There just didn’t seem to be a reason for the price fixing component of the law, which muddies the waters for possible investors and would have a negative effect on innovation. I blame the political expediency because the sound bite of forcing “big Pharma” to cut prices played well with constituents. It just seems strange to me that the party in power today is moving forward vigorously with the very price fixing scheme that only two of their members of the House of Representatives voted for. I guess I would have expected a little push back and some moderation.

One difference in this year’s list of drugs is the inclusion of Part B administered drugs. These are drugs that are normally physician-administered or infused drugs that are done at the doctor’s office or at the hospital. These types of drugs are often for serious diseases like cancer, and the ways the providers obtain and store the drugs are usually different than the normal Part D drugs. The way Part B services are administered are unique and involve different, often specialized, providers. Some of these drugs are categorized as specialty drugs. It is important to realize that the government is injecting itself even more into some of the most intricate parts of our healthcare, solely for the purpose of cost reduction, without fully considering implications for access or quality of that care. This is a big step, and one that worries me. I’ve said in the past that the implementation of the IRA will be important and could limit the harm it could cause or, like in this case, expand the government’s harmful excursion into our healthcare.  

Of the 15 drugs selected, 5 were for cancer treatment. We are at the cusp of finding new cures for cancer. The mRNA focus, one of the silver linings of the COVID epidemic, has revealed some very encouraging areas for treating cancer. Do we really want to lower the chance for investment in cancer drug research for some possible short-term savings that may or may not reach the patient? It is estimated that a cure for cancer would save 250 to 300 billion dollars a year. A cure for Alzheimer’s and related dementias in 2025 would have saved an estimated $781 billion per year. These savings included medical care, long‑term care, unpaid caregiving, and lost quality of life. Are we really willing to threaten innovation in any way when life-improving and life-saving discoveries are really possible? At Seniors Speak Out, we’re telling Washington that more government interference is not helpful, and that innovation is important. We hope you are telling your lawmakers how you feel.

Best, Thair