Congress is facing mounting pressure to take on drug prices, as spiking costs fuel growing consternation around the country.
For the first time, both parties’ likely presidential nominees are pushing to allow Medicare to negotiate for Part D drugs, a proposal that has long been supported by Democrats but which many Republicans view as akin to price-fixing. Donald Trump has repeatedly touted support for the policy on the campaign trail, while Hillary Clinton included it in her drug reform plan in the fall.
Their positions are smart politically, as polls show large swaths of Americans want the government to take action on the rising price of drugs. A February Kaiser Family Foundation poll found that 93 percent of Democrats and 74 percent of Republicans are in favor of allowing the government to negotiate directly with pharmaceutical companies.
Feeding the angst: The popularity of high-deductible plans, which many consumers buy for their lower premiums but later find they must kick in more for their medications.
In 2006, just 3 percent of Americans with employer-sponsored coverage enrolled in a high-deductible plan, according to Mercer. Now, that percentage has climbed to 25 percent. Nearly everyone enrolled in coverage through the Obamacare marketplaces is in a high-deductible plan, as insurers have pushed up out-of-pocket costs to suppress premiums.
Regardless of where they stand on Part D negotiations, lawmakers of all stripes are acknowledging the growing anxieties. Some conservatives have recently directed unusually harsh criticism to drug companies for raising the price of old drugs without giving what they view as sufficient justification.
“Some [drug] companies are charging whatever they can get away with,” Sen. Marco Rubio, R-Fla., told Iowans in January during a campaign stop. “There’s nothing wrong with calling them out.”
House Oversight Chairman Jason Chaffetz blasted Turing Pharmaceuticals CEO Martin Shkreli at a February hearing for his infamous decision to raise the price of a decades-old AIDS drug to $750 for a single pill.
“Don’t tell me that you’re losing money,” Chaffetz said at the time. “Don’t try to pretend and tell us that this $750 is justified, when you got a woman who’s got AIDS. And what is she supposed to do, is she supposed to tweet Martin and try to get that for a penny?”
Medicare, which is responsible for nearly one-third of pharmaceutical spending in the U.S., is projected to see its costs for the Part D drug program increase annually by 6.5 percent over the next decade, after rising by just 1.5 percent annually over the past eight years.
It is estimated that allowing Medicare to negotiate drug prices could save $15.2 billion to $16 billion annually, about 20 percent of Part D total spending.
Democrats have long tried to lift the restriction on Medicare negotiating prices with drug makers, arguing that Medicaid and the Department of Veterans Affairs are able to do so and spend less on drugs as a result.
But the Pharmaceutical Research and Manufacturers of America has pushed back, arguing that reducing drugmakers’ payments would hurt their incentive to offer attractive rebates to Medicare Part D plan sponsors, which in turn would lead to higher monthly premiums for seniors.
Many Republicans have long made that argument as well. But now Trump, their presumptive presidential nominee, is diverging from that stance, although healthcare advocates privately wonder whether he would push Republicans to switch their position on such a policy were he elected president.
It’s likely, however, that Clinton would pressure Congress to go along with the idea, after President Obama tried and failed to get it included in the 2010 Affordable Care Act. Either way, lawmakers are likely to grapple with drug prices more than ever before now that the public is riled up about the problem, said John Rother, president of the National Coalition on Health Care.
“I think the public is in the place where they’re going to demand action on a bipartisan basis,” Rother said. “I think we’re seeing members of Congress beginning to respond, and I think just about everyone who is a stakeholder in healthcare feels the pharmaceuticals have gotten out of control.”
“It’s a wide range of people who feel this is unsustainable,” said Rother, who said he is waiting to see whether Democrats seize back the Senate majority in the fall, which could change the dynamics.
And there could be a prime opportunity early next year for Congress to use savings generated by Part D negotiations to pay for reauthorizing funding for the Children’s Health Insurance Program. Drug companies have been spared from helping pay for Congress’ most recent health reforms, including last year’s bill doing away with Medicare’s Sustainable Growth Rate formula, so lawmakers might feel it is the industry’s turn to kick in some savings.
Yet the latest GOP pushback against the Obama administration’s proposed changes to Medicare’s Part B drug reimbursements, which would essentially result in payment reductions to hospitals and some specialists, could indicate an ongoing opposition to any changes to Part D’s approach as well.
Republicans warn that reducing payments for drugs could cause a ripple effect, suppressing research and development instead of incentivizing competition.
“Reimbursement will fall short in covering the costs of acquisition, storage and administration of many drugs that seniors with serious medical conditions need — quite a dangerous policy change,” House Energy and Commerce Committee Chairman Fred Upton said at a May hearing on the proposed Part B changes.
