Much of the nation was surprised to hear the news on July 27 that Senate Democrats had negotiated a deal with Sen. Joe Manchin, D-West Virginia, who, along with Sen. Kyrsten Sinema, D-Arizona, had wrecked President Biden’s ambitious Build Back Better legislation last year.
The agreement, dubbed the “Inflation Reduction Act of 2022,” announced by Senate Majority Leader Chuck Schumer of New York, invests $369 billion into energy and climate change programs, with the goal of reducing carbon emissions 40 percent by the year 2030. The proposed legislation would also empower Medicare for the first time to negotiate prices on a short list of prescription drugs, would cap out-of-pocket costs at $2,000 for those enrolled in Medicare drug plans and would extend expiring subsidies for Affordable Care Act coverage for the next three years.
Between The Lines’ Scott Harris spoke with Steve Knievel, advocate with Public Citizen’s Access to Medicines Program, who assesses the Democrats’ proposed legislation to reduce the cost of prescription drugs, among the highest in the world, and the effort now underway by big pharmaceutical companies and their Republican allies to defeat the bill.
STEVE KNIEVEL: The drug price sort of section of the bill, there’s sort of three main pillars of it. One is we finally break that prohibition on Medicare drug price negotiation that I just mentioned. Two, we provide a system that’s designed to rein in price spikes that exceed inflation by requiring drug corporations to pay a rebate back to the government when their prices increase at a rate beyond the rate of general inflation.
And three, redesigning the Medicare Part D benefit, which can I get wonky real quick here. But the essential characteristic is that it finally puts in place a hard $2,000 out-of-pocket limit for Medicare Part D beneficiaries, where some beneficiaries that take especially expensive medicines today can face out-of-pocket costs upwards of $10,000 or $15,000. So that could be hugely meaningful for those kinds of beneficiaries.
And then finally, you know, some of those savings are redirected towards enhancing the program as well, such as expanding eligibility for the Medicare Part D low-income subsidy, which I think we’ll get into a little bit more in a little while here.
SCOTT HARRIS: Let’s talk about the requirement in this legislation that Medicare should negotiate prices for a limited number of pharmaceutical drugs. Unfortunately, that list of drugs does not include insulin, which has skyrocketed in price. And of course, people depend on that drug for their very lives. All across the country, people with diabetes.
Tell us a bit about the framing of that limited list of drugs and the potential to expand that list further down the line.
STEVE KNIEVEL: What we have here is, you know, still only 100 drugs that are eligible. But instead of this ceiling of only allowing the secretary to negotiate up to 20 products in a given year, there’s a requirement that the secretary is going to have to negotiate those drugs. So if we have an unfriendly administration that’s beholden to pharma, even that administration would be required to go through this process and provide some service to lowering drug prices for seniors and people with disabilities.
However, you know, one important piece was eliminated. And that’s all the provisions relating to insulin coverage. You know, we are hopeful and there’s been sort of breaking news in the past starting late last week. And I’m becoming increasingly optimistic that it’s going to be the case. We’re going to see at least some of the insulin provisions that were stripped out, restored.
In addition to the Medicare negotiation insulin requirement, the bill also provided special out-of-pocket protections for people that use insulin, too. So if you’re on Medicare or if you’re on private insurance, the legislation would would have provided a $35 out-of-pocket cost limit for insulin. That was stripped out. But I’m hopeful that we’re going to see that restored.
SCOTT HARRIS: You know, insulin is such a flashpoint for a conversation about the high price of pharmaceutical drugs in this country.
Tell us a little bit about how Big Pharma exerts pressure on a body such as the U.S. Senate to really disregard the urgent need of people with diabetes to get insulin at an affordable price?
STEVE KNIEVEL: Well, Republicans have been fighting tooth and nail in a number of ways as well as the pharmaceutical industry and some of its allies. I’ve seen some of the Senate Republican talking points that they’re circulating too, saying that 90-plus percent of their constituents support that are in this legislation would be special government price controls that are going to kill innovation.
And, you know, spoiler alert, they won’t. They talk about protections against price spikes that exceed inflation as if they were some ghastly violation of liberty and argue that alternative proposals that would have you know, several orders of magnitude less impact would be superior to what’s on the table now — as short of the ideal as it is. Pharma, the drug corporation’s Industry Lobbying Association that I mentioned earlier, they are literally buying advertisements worth more than $10 million now. TV, radio, print, digital. You have it.
There are front groups for pharmaceutical corporations that are running ad spots in D.C., West Virginia and elsewhere with the frankly, really dishonest rhetoric in them, too, about overstating sort of estimated impacts on how this is going to affect new drugs that come to market. We should be with this legislation in place.
There’s still going to be many new products that are coming onto market and will arguably get more meaningful, better innovation in those products too.
The lobbying blitz that we’re seeing now is nothing short of remarkable — pharmaceutical and biological corporations sending their CEOs to Capitol Hill to push back against this legislation. So they’re running a full court press. The defense industry and pharmaceutical corporations are sort of two sectors that are more dependent on U.S. government rules than others for their profits.
And that shows in the lobbying receipts from these corporations.
For more information, visit Public Citizen at citizen.org.
Listen to Scott Harris’ in-depth interview with Steve Knievel (26:48) and see more articles and opinion pieces in the Related Links section of this page.
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