Drug prices have increased tremendously over the last several decades. These price increases have affected a wide range of drugs, impacting nearly all Americans who rely on prescription medications to maintain their health. This increase in the prices of drugs in the U.S. represents one of the major threats to the health of the population, economic growth, and trade flows. This is not new information, of course. But what is novel is that the U.S. government is finally poised to do something about it – so long as Congress agrees to it.
On November 19, the U.S. House passed President Biden’s Build Back Better Act, which includes a crucial provision that would allow the federal government to negotiate drug prices through its Medicare program. This provision must remain in the Senate’s version of the bill if we are to finally reign in the astronomical cost of prescription drugs in this country.
Heart disease, cancer, and diabetes, are major causes of death in the U.S., yet drugs for these conditions have become increasingly expensive. Because of this surge in drug prices, patients take fewer tablets to save money, worsening health outcomes. And for the millions of Americans without health insurance, higher prices hit especially hard, disproportionately harming the poorest patients.
In this context, the Build Back Better Act plays an important role in the debate over drug prices. It’s prime time for the U.S., a leader and shining torch for other countries, to move forward with a health system that works for all, including with affordable drug prices.
In terms of the actual provisions incorporated in the bill, it is fair to say that the bill is a win-win for all parties involved. It allows the federal government to negotiate prices for some high-cost drugs covered under Medicare Part B and Part D. This would result in lower prices of high-cost drugs without generic competition.
The new plan would be phased in, targeting the highest price medications that lack competition. More specifically, negotiations over prices would only involve 10 drugs in 2025, 15 drugs in 2026 and 2027, and 20 drugs in 2028 for single-source brand-name drugs that lack generic competition. These drugs would be selected from among the 50 drugs with the highest total Medicare spending.
In addition, Build Back Better exempts from negotiations for nine years any small-molecule drugs and for 13 years any biological products, starting on their FDA-approval date. Arizona Senator Kyrsten Sinema helped secure this language, which should allay concerns by pharmaceutical companies that the popular prescription drug negotiation measures will hurt incentives for research and development. In sum, Build Back Better is a well-balanced bill that incorporates rules that protect the interests of both the public and drug companies at the same time.
It is critical that the final bill retains at least the basic provisions of prescription drug reform included in the House-passed version: Medicare negotiation, inflation rebates, and caps on out-of-pocket drug spending and cost sharing for insulin and adult vaccines. It is high time for the U.S. Senate to get its act together and approve these meaningful and commonsense ways to lower the cost of prescription drugs and put the interests of patients first.
Bashar Malkawi is global professor of practice in law at the University of Arizona.