Budget reconciliation: What’s happening with drug prices?

As the Democrats in Congress work on the budget reconciliation bill, a lot is happening with drug prices. And, it is still unclear where Congress will end up. Here’s what we know as of now:

Uninsured Americans will continue to be burdened by high drug prices: Unless something changes soon–and it’s hard to imagine what it would be–uninsured Americans will continue to face unconscionably high drug prices even if Congress lowers drug prices for everyone else. How could this be, you might wonder? It appears that lawmakers do not have a way to lower drug prices for the uninsured through a budget reconciliation bill. What the uninsured pay for drugs does not affect the budget in any evident way. Also, it appears that lawmakers do not see a way to regulate drug prices for the uninsured, short of Medicare or health care for all, which is not on the table.

The US Department of Health and Human Services has a plan to negotiate drug prices for people with Medicare: With White House backing, Secretary Xavier Becerra is looking to negotiate Medicare drug prices and to limit price increases to the rate of inflation. Becerra’s plan mirrors the plan working its way through Congress. One unanswered question is the number of drugs that will have their prices negotiated. Another is whether private insurers will be willing and able to take advantage of Medicare’s negotiated prices.

It is unlikely that a drug’s negotiated price will relate to the value that drug offers: Some countries, such as Germany and Australia, do value-based pricing–price prescription drugs based on their value to patients, in terms of the drug’s efficacy and the quality of life it offers. Currently, writes Thomas Waldrop for the Center for American Progress, drug prices in other wealthy nations are easily half the prices we pay and sometimes as little as 25 percent of the cost. Right now, we all bear the burden of exorbitant drug prices, as taxpayers and as patients. Medicare and Medicaid alone in 2019 spent $290 billion on prescription drugs.

We have little understanding of the value of FDA-approved drugs so insurers must cover drugs of little or no value with unreasonably high price tags: We do not have the information to assess a drug’s value. We do not have detailed or centralized information on drug usage rates, let alone health care usage rates.  And, the FDA does not do comparative effectiveness reviews of drugs. It simply determines whether a new drug is more effective than a placebo.

Regulating drug prices will not affect critical innovation: The federal government has funded research for every new drug on the market. Pharmaceutical companies are not innovating in the ways we need–to find treatments for conditions that are rare and therefore less profitable to them. Rather, they are focused on maximizing profits by targeting research on drugs that are most used or for which they can generate the most money.

Here’s more from Just Care:

• Coronavirus: How to transform our broken prescription drug sector for the public good
• No link between lower drug prices and innovation
• More than one in three older adults could be taking inappropriate drugs
• The wrong choice of Medicare Advantage plan could kill you
• The deadly consequences of out-of-pocket drug costs