Chairman’s News | Newsroom | The United States Senate Committee on Finance
As Prepared for Delivery
I come to the floor to mark a key milestone in the effort to lower the price of prescription drugs for American seniors and families.
While most Americans were preparing for Labor Day weekend in late August, the Centers for Medicare and Medicaid Services announced the first ten prescription drugs covered by Medicare that will be subject to price negotiations. The Inflation Reduction Act passed by Democrats in the House and Senate without a single Republican vote contains a series of measures that represent a seismic shift in the relationship between consumers and Big Pharma – including authority for Medicare to negotiate prices of prescription drugs with manufacturers.
I want to begin by acknowledging the barrage of legal actions Big Pharma and their allies are taking to stop Medicare drug price negotiation before it even begins.
As Americans have seen on a host of issues across the political landscape, the path through the federal court system is a winding road. Make no mistake – these lawsuits are all about Big Pharma stopping Medicare from negotiating for lower drug prices. I am confident that this law has been written in a way that withstand legal scrutiny and go into effect as intended – that is, to deliver lower drug prices to seniors and families who are counting on it.
These legal actions beg the question – what would happen if we didn’t negotiate in America? In my view, negotiating on price is the underpinning of the economy – it ensures two sides are getting a fair deal. Are these companies really arguing that the government shouldn’t try to get a fair price on medicines for 50 million American seniors?
Big Pharma has been guarding the prohibition on price negotiations like the Holy Grail for decades, but Democrats closed that chapter just over a year ago. As the Chairman of the Senate Finance Committee, which led the effort to give Medicare authority to negotiate, I’d like to take a few minutes on the Senate floor today to discuss how it will work and why it will result in lower costs for millions of seniors who count on Medicare.
First and foremost, these first ten drugs aren’t being drawn out of a hat, at random, or subject to the whims of politics. Congress made it clear in black letter law the criteria that the federal government must use to identify the products that will be subject to this new bargaining authority.
The medicines that have been selected are the costliest, widely used products that have also been on the market for years without competition.
I’d like to take a couple of examples to illustrate the impact of these drugs. First is Eliquis. This drug is used to prevent blood clots that can cause strokes or other heart problems. In 2021, 3.1 million seniors in Medicare used Eliquis, and Medicare spent $12.6 billion to pay for it. Eliquis alone represented nearly 6 percent of Medicare Part D’s annual spending that year.
Next is Enbrel. Enbrel is used to treat rheumatoid arthritis and similar conditions. It has been on the market for 25 years, yet its manufacturer is still generating hundreds of millions of dollars in revenue every year off this drug. Enbrel went on the market when Bill Clinton was President of the United States, but due to Medicare’s handcuffs on price negotiations, this product continues to be a cash cow for Big Pharma.
While I’m on the subject, I’d like to raise an important development that has been flying under the radar for many Americans. For too long, Big Pharma has been double-dipping into taxpayers wallets when it comes to these expensive medications. First, when they take advantage of groundbreaking research from the National Institutes of Health or another research arm of the federal government.
This research was funded by taxpayer dollars. Then, manufacturers sell the drug developed using tax-payer funded research back to taxpayers at sky-high prices, until now, with no recourse to get a better deal.
Enbrel, which I mentioned earlier, is one such example. Enbrel was discovered at Massachusetts General Hospital using NIH-supported research. The hospital sold the patents rights to the drug manufacturer that has profited off Enbrel at the expense of taxpayers for going on thirty years.
That’s all about to change, thanks to the Inflation Reduction Act. As federal negotiators begin to determine their opening bid in talks with Big Pharma, the new law states that Medicare must consider, among a host of other factors, prior federal financial support provided by taxpayers to discover and develop a drug.
It means the government gave taxpayer dollars to researchers and innovators who had a big hunch that a molecule or enzyme or protein might be able to treat a disease in the human body. An “investment” in basic science funded by taxpayers is often the foundation of a new drug. And when drug manufacturers use this taxpayer funded research to make a drug, the price of the drug should be lower to reflect taxpayer investment.
In my view, this provision that requires Medicare to take into account prior federal financial support when it negotiates drug prices is the clearest representation of the seismic shift I spoke about at the top of my remarks. I’ll have more to say about this feature of Medicare drug price negotiation down the road, but I’m gratified that Congress was able to include this provision in the Inflation Reduction Act to end Big Pharma’s double dip on taxpayers.
I’ll briefly tick through the other eight products that are up for negotiation:
- Entresto, used to treat heart failure.
- Farxiga, used to help with diabetes, heart failure, and kidney disease.
- Imbruvica, primarily a cancer drug.
- Januvia, a diabetes medicine.
- Jardiance, another diabetes and heart failure medication.
- Novolog – also diabetes.
- Stelara, used to treat plaque psoriasis and other conditions.
- Lastly, Xarelto, used to manage cardiovascular problems.
Altogether, those products amount to $38.4 billion in Medicare spending in one year alone.
If some of these names sound familiar, it’s because these types of products are exactly those that prompt Big Pharma to run multi-billion dollar ad campaigns during professional sports broadcasts and similar events. That’s because Big Pharma took it as a given that Medicare would be a cash cow year after year, and taxpayers would foot the bill. The Inflation Reduction Act changes the rules and lets Medicare negotiate, and it will lower prices for seniors.
I yield the floor.
Press Contact: Taylor Harvey