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Drug corporations sue to protect price-gouging power as Medicare turns 58


As we mark the anniversary of the historic passage of Medicare and Medicaid in 1965, we celebrate that Medicare provides health coverage, including routine preventive care, hospitalization and prescription medicines, to over 65 million seniors and people with disabilities. I’m one of those seniors, and I work with many more of them in the fight to make prescription drugs that maintain our health and save our lives affordable and available to us all.

For decades, many Medicare enrollees have struggled to afford the prescriptions they need despite Medicare coverage because of skewed rules in Medicare Part D that prohibit Medicare from negotiating lower drug prices and protect the drug corporation’s monopoly power to set and keep prices high. Leaving drug corporations in charge of prices has led to nearly one quarter of Medicare enrollees rationing medicine, skipping doses, forgoing other basic needs to afford prescriptions, and going without needed medicines because they can’t afford the prices.

I know about unaffordable medications, having been unable to afford insulin at times and having suffered four trips to the emergency room over an 18-month period for dangerously low blood sugar levels. Thankfully, we have made real progress at curbing runaway and unjust prices to consumers on insulin and other drugs, and have an opportunity to build on that progress to make prescription drugs more affordable for us all.

The era of rampant price-gouging is coming to an end thanks to a new law, the Inflation Reduction Act of 2022, that makes long-overdue improvements to prescription drug benefits in Medicare. As Medicare turns 58 this month, Biden Administration officials are preparing to implement historic reforms like negotiations that already save other programs like the Department of Veterans Affairs millions on prescriptions.  That’s something to celebrate!

Under the new law, seniors, people with disabilities and their families will save on the cost of prescription medicines thanks to common-sense reforms that for decades the drug corporations successfully opposed. These reforms include allowing Medicare to negotiate lower prescription drug prices for seniors, capping the cost of insulin at $35, creating the first-ever out-of-pocket cost cap on Part D medicines, making recommended vaccines free for Medicare beneficiaries, and requiring prescription drug companies to pay rebates to Medicare if they raise their prices faster than inflation.  Some parts of the law have already been implemented and some will be implemented over the coming several years.

new report shows that 3.4 million people with Medicare would have saved $234 million in out-of-pocket costs in 2021 on vaccines–or about $70 per person if this law had been in place in 2021. Diabetics in Medicare who use insulin would have saved about $500 a year on insulin last year if the law had been in place. In North Carolina, 56,921 would have saved an average of $449 under the new law’s $35 a month insulin cap. Medicare recipients have these savings and much more to look forward to as the law is implemented piece by piece between now and 2026.

But implementation won’t be easy and the drug corporations aren’t going to give up their price-gouging without a fight. Big drug companies’ power to raise prices faster than inflation has enabled them to  inflate profit margins over the years, making the pharmaceutical industry the most profitable sector in the nation, outperforming oil, telecommunications and manufacturing companies.  From 2019 to 2020, the drug corporations raised prices on half of all Medicare-covered drugs. They increased prices on one-third of Medicare medicines by more than 7.5%, the inflation rate in early 2022. The new law will curtail this price gouging by requiring drug corporations that raise their rates faster than inflation to pay a rebate back to Medicare.

It’s no wonder that drug corporations MerckBristol-Myers Squibb, and now Johnson & Johnson, along with PHRMA (the drug industry lobby group) and the US Chamber of Congress, have filed lawsuits to stop the law. CMS will announce the first ten drugs for negotiations on September 1st. Drug corporations that refuse to negotiate will face a huge fee for refusing to comply with the law.

Rather than reinforce accountability for the relentless price-gouging that has led millions to go without medicine over the last decade, leaders in the Republican Party are siding with drug corporations by filing bills to repeal the new benefits, despite the popularity of the policies and the benefits to their own constituents. Given that every single Republican in Congress voted against the Inflation Reduction Act and its Medicare price negotiations provisions, it’s no surprise.

But seniors, people with disabilities and their families won’t stand for more delays and rollbacks in long-overdue reforms like Medicare negotiations that finally make medicines affordable. The time for waiting is over: pharmaceutical corporations must sit down and negotiate.



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