In accordance with the Inflation Reduction Act, which was signed into law last year, the Centers for Medicare and Medicaid Services can now begin negotiating lower prices that the government pays for select drugs.
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The Biden administration on Tuesday announced the names of the first 10 prescription drugs that will be subject to Medicare price negotiations.
In accordance with the Inflation Reduction Act (IRA), which was signed into law last year, the Centers for Medicare and Medicaid Services (CMS) can now begin negotiating lower prices that the government pays for select drugs.
This is a rare loss for Big Pharma, which is still fighting the law in court. For many years, the pharmaceutical industry in the US has been able to use an army of lobbyists to prevent exactly this kind of thing from happening. In that time, major pharmaceutical companies not only reported massive earnings but also used taxpayer money for developing new prescription drugs.
“For far too long, Americans have paid more for prescription drugs than any major economy,” President Joe Biden said in a statement. “And while the pharmaceutical industry makes record profits, millions of Americans are forced to choose between paying for medications they need to live or paying for food, rent, and other basic necessities. Those days are ending.”
The IRA established criteria that the pharmaceuticals have to meet in order to become eligible for price negotiation.
The first batch of 10 drugs include various blood thinners, diabetes medications, drugs preventing heart failure, those treating blood cancers, and one that is prescribed for combating arthritis. For a list of these ten drugs you can go here.
Last year, seniors paid $3.4 billion out-of-pocket for these 10 drugs.
While Medicare will start negotiating new prices for them this year, they will not go into effect until 2026.
Over the next four years, CMS will negotiate prices for a total of up to 60 drugs as well as up to 20 drugs annually after that.
In his remarks on the plan, Biden noted that the pharmaceutical industry spent almost $400 million on trying to prevent his administration from lowering drug prices for Americans.
“There is no reason why Americans should be forced to pay more than any developed nation for life-saving prescriptions just to pad Big Pharma’s pockets,” he said. “For many Americans, the cost of one drug is the difference between life and death, dignity and dependence, hope and fear.”
Congressional Republicans, however, were in no mood to celebrate. They argue that the provisions in the IRA, which every single GOP lawmaker opposed, would stifle innovation and the development of new drugs.
“The Biden administration is trying to take a victory lap while at the same time they are pricing seniors out of their health care and ensuring future cures never reach those who need them,” said Jason Smith (R-MO), the chairman of the House Ways and Means Committee. “This price-setting scheme gives government bureaucrats command and control over Americans’ health care while ensuring only the wealthy will be able to afford the newest medications.”
Sen. Mike Crapo (R-ID), the ranking member of the Senate Finance Committee, added that the “partisan law’s sweeping price-setting program ignores economic realities, and its implementation process has already begun to erode new drug development, including for cancer therapies and rare disease medications.”
However, when looking at the massive profits the major pharmaceutical companies rake in, and the miniscule amount of taxes they pay, all those claims of price negotiations stifling research and development ring somewhat hollow… especially considering that US taxpayers are footing the bill for much of these costs.