Just over a month ago we lost Bob Barker, the man who taught us all about the brutal nature of capitalism one pricing game at a time. Now, thanks to the Inflation Reduction Act, the federal government is going to be playing a role in determining the prices for some of our favorite products. No, we’re not talking about cars or family vacations to the Bahamas – we’re talking about the prescription drugs that keep us alive! As the Biden Administration enters its own Showcase Showdown with Big Pharma, we’re taking a full episode to break down what that means and whether the result will be prices we can actually afford.

Show Notes

Our first (and only) contestant is Alex Lawson! He is the Executive Director of Social Security Works, the convening member of the Strengthen Social Security Coalition— a coalition made up of over 340 national and state organizations representing over 50 million Americans. Alex’s organization played a critical role in moving the Democratic Party (mostly!) away from efforts to cut Social Security, and has been shifting the momentum towards expanding Social Security. Social Security Works is also a key ally of ours in the national fight for Medicare for All!

Alex, come on down!

Alex starts by telling us about the time he took a camera to PhRMA’s (the Pharmaceutical Research and Manufacturers of America) office the day of the Inflation Reduction Act signing ceremony. He conducted person-on-the-street interviews, asking if they knew PhRMA spent hundreds of millions of dollars to keep Medicare from being able to negotiate drug prices, and if they had any messages for the folks in the building? Most of the responses were of the “f-you PhRMA, we got you!” variety.

PhRMA has literally never lost until the Inflation Reduction Act was passed. Even though it’s modest, Medicare went from having no authority over drug prices to the authority and mandate to find the fairest price for certain drugs is a huge loss to the industry.

Alex wants listeners to understand that this win is as simple as it sounds. Who buys the most drugs in the world? Medicare. Why doesn’t Medicare tell the pharmaceutical companies what they’re willing to pay? This is called the Maximum Fair Price. No other peer nation doesn’t have some kind of negotiated standard for drug prices.

While our guest and hosts would prefer that Medicare be allowed to negotiate the prices of all drugs used by beneficiaries, PhRMA was successful in limiting the Inflation Reduction Act drug provisions to only apply to ten pharmaceuticals. (Still, pharmaceutical companies are suing to block the implementation of price negotiations.)

Negotiating the prices for only ten drugs may seem like a drop in the bucket, but the cost of those ten drugs alone make up a huge amount of Medicare’s spending on Medicare Part D. And in coming years Medicare will be able to negotiate over ten more drugs, and so on. This will squish the most excessive profiteering of the pharmaceutical industry and deliver savings of $9 or $10 billion dollars a year.

We give President Biden credit for taking an aggressive stance against PhRMA to finally make good on an evergreen Democratic campaign promise to lower drug prices. But we also give ourselves some credit. First there was the debate in Congress in 2019 over HR3, the Lower Drug Costs Now Act. Advocacy by groups likes ours resulted in the House passing a robust bill that would have dramatically lowered drug costs. Then in 2021 both Healthcare-NOW and Social Security Works fought hard to win major expansions of Medicare in the Build Back Better bill (we were on track to win a lot more than prices for ten drugs). But Senators Joe Manchin and Kyrsten Sinema tanked the whole bill in the Senate.

Those two battles led us to the Inflation Reduction Act aiming high from the start, and resulting in a bill that will make a big impact on drug spending by Medicare. The Build Back Better fight was brutal, and we lost, but we named what we wanted: vision, hearing, and dental coverage for Medicare; long term care coverage; negotiated drug prices. We lost then, but we aimed high, so when we finally got across the finish line with the Inflation Reduction Act, we achieved a lot. It’s not everything, but it’s a remarkable start.

A few years ago Florida, under Ron DeSantis, asked for permission from the federal government to import drugs from Canada, where they are cheaper. Trump was also developing a national version of this policy to let Canada negotiate drug prices for us. They both knew the political popularity of lowering drug prices, but didn’t want to take on the pharmaceutical industry.

Drug importation policies show up at the state level, where some non-profit groups sponsor bus trips to Mexico or Canada to buy cheaper prescription drugs, and the state government of Utah actually pays for public employees’ flights to those countries because it is still cheaper than paying full price in the United States. (Your shownotes writer is reminded of an independently wealthy U.S. Senator who spent his entire Senate salary on bus trips to Canada for seniors to highlight the issue of high drug prices; that Senator went on to win two more statewide elections before retiring.)

It’s unfortunate that we continue to spend so much energy focusing on imports from Canada, whose drug prices are the second highest after the United States. As more states try to address drug prices by importing, ultimately the “solution” of importing drugs from Canada won’t be sustainable; pharmaceutical companies will eventually raise prices for Canada too. The real answer is to go to the source and negotiate prices on our own.

We’ve all heard PhRMA’s claim that if we negotiate lower drug prices, they won’t have enough money to do research and development on wonderful new life-saving drugs. Alex tells us that is completely false, and in fact, pharmaceutical corporations only “invent” rip-offs of existing drugs (“me too” drugs) using the U.S. patent system to extract maximum profit. Our current system doesn’t incentivize the companies to do R&D on drugs with the greatest public health benefit; it incentivizes looking for drugs that will deliver the greatest private gain. The real research is primarily paid for by the U.S. taxpayer, not the pharmaceutical companies.

U.S. Senator Bob Menendez (D-NJ), a “Pharma Darling,” was just indicted on federal bribery charges. Menendez is known taking loads of money from big pharma and in return almost single-handedly killing pharmaceutical price reforms like drug price negotiations. He’s hardly the only member of Congress to take funds from the pharmaceutical lobby. But over time, healthcare justice advocates have made the pharma label so toxic that some Democrats are turning down those contributions and there aren’t many Pharma Darling Dems like Menendez anymore.

We’re excited about the impact Medicare drug price negotiations will have on the power dynamics in Washington and on seniors’ wallets. This leads us to dream even bigger about the true transformation we could achieve with full Medicare for All.

Follow & Support the Pod!

Don’t forget to like this episode and subscribe to The Medicare for All Podcast on Apple Podcasts, Google Podcasts, or your favorite podcast platform! This show is a project of the Healthcare NOW Education Fund! If you want to support our work, you can donate at our website,now.org/donate-hcnef/"> healthcare-now.org.