Biden had long argued for giving the government a stronger hand in curbing drug prices, and he responded that day by vowing to tackle insulin’s cost as part of a social spending bill before Congress. “The only thing that Medicare is not allowed to negotiate for a price for is a prescription drug,” the president said, “and it’s long past time we changed that.”
But the bill Democrats call their Build Back Better Act won’t change how Medicare pays for drugs, at least under the framework Biden unveiled Thursday. The omission of drug-price negotiations blindsided liberal Democrats who are the White House’s allies and infuriated advocates, many of whom argue this is the party’s best opportunity to lower pharmaceutical costs for the foreseeable future.
The apparent inability of even an ardent president and a Democratic-led Congress to achieve that goal is a familiar one. For nearly 30 years, U.S. presidents have tried and failed to contain the price of drugs like insulin. Now Biden appears likely to join a list which includes former presidents Bill Clinton, Barack Obama and Donald Trump. All of them pledged to tackle high drug costs, and all of them failed at the hands of the deep-pocketed industry, which has spent more than $1 billion on lobbying and advertising over two decades to torpedo initiatives that could rein in its profits, according to data tracked by OpenSecrets, a government transparency group. Which is why, experts say, Americans pay roughly twice as much for their prescriptions as consumers in comparable countries.
“Is this hard? Hell yes,” said David Mitchell, a cancer patient and the founder of Patients for Affordable Drugs Now, which has tracked at least $26.5 million in spending by pharma lobbyists to influence this social spending bill. “We’re not giving up. We’re going to fight until the last possible minute.”
Barring a last-minute reversal on Capitol Hill, the United States will continue to be an outlier among wealthy, Western nations with such a scant government role in determining the prices consumers pay for the medicines they need and, as a result, drug costs far out of line with those in other countries. Among the most expensive medications are treatments for life-threatening conditions such as hepatitis C or cancers, a Rand Corp. report found this year, with some patients saying they must choose between paying for medicine and other necessities.
“It’s a remarkable example of how there can be a perfectly common-sense piece of legislation — that the government should get its money worth for what it buys, as it does for any other procurement — that has been managed to get … demonized by virtue of this massive public relations effort the industry has done so masterfully,” said Jerry Avorn, a professor of medicine at Harvard Medical School who specializes in drug epidemiology.
Advocates and some Democrats insist the final bill could still include some form of drug-price negotiations, with House Speaker Nancy Pelosi (D-Calif.) exploring a more limited, last-minute measure, said several people with knowledge of the talks. Rep. Frank Pallone Jr. (D-N.J.), chairman of the influential House Energy and Commerce Committee, said Thursday that he remains “committed to finalizing an agreement that includes price negotiation, a cap on seniors’ out-of-pocket drug spending, and a penalty for Big Pharma companies that unfairly raise prices.”
Proponents also express anger and frustration with Sen. Kyrsten Sinema (D-Ariz.), Rep. Scott Peters (D-Calif.) and a handful of other congressional moderates who opposed liberals’ price-negotiation plan, noting the holdouts received significant drug-industry contributions. Just a few defectors are enough to tank the measure with Democrats’ razor-thin margins — a 50-50 split in the Senate with Vice President Harris as a tiebreaker and only three votes to spare in the House.
“The pharmaceutical industry is employing nearly 1,500 lobbyists in D.C. alone,” a visibly frustrated Sen. Bernie Sanders (I-Vt.) told supporters Tuesday night, shortly before the White House conceded it didn’t have the votes and dropped drug negotiation from its framework. “You got that? Nearly 1,500 lobbyists in Washington, including the former congressional leaders of both political parties. That is almost three pharmaceutical industry lobbyists for every member of Congress.”
“It has not been Congress that has been regulating the pharmaceutical industry,” Sanders argued. “It has been the pharmaceutical industry that has been regulating Congress.”
Drug industry lobbyists downplayed the donations, arguing the provision would have harmed patients by depriving drugmakers of money for research and impeding the development of new drugs.
“I can’t speak to why a member of Congress may take a certain position on a certain issue,” said Brian Newell, a spokesman for PhRMA, the industry’s main trade group. “Our focus has been educating policymakers about the solutions we are for to lower costs for patients and the concerns we have with proposals like direct government negotiations.”
Americans have consistently said they back the idea of government drug-price negotiations. Some 92 percent of Democrats, 85 percent of independents and 76 percent of Republicans said they strongly or somewhat support allowing the federal government to negotiate with drug companies to get a lower price on prescription drugs for people with Medicare and private insurance, according to a survey released this month by the Kaiser Family Foundation. More than 8 in 10 adults also said the cost of prescription drugs is “unreasonable,” and 1 in 5 older adults reported trouble affording their medication, according to the poll.
But despite such sentiment across the political spectrum, lawmakers have repeatedly failed to agree on government action — a struggle that has its roots in Americans’ traditional hesitation to give the government a hand in setting health-care rates overall, as well as an explicit bar on price negotiations when drug benefits were added to the Medicare program in 2003.
After sporadic attempts going back to President Richard Nixon a half-century ago, Clinton in the 1990s championed the idea of adding drug benefits to Medicare, with some government regulation of the prices. “That led to the drug companies moving directly into the opposition” to the Clinton health-care plan, recalled John McDonough, a professor of public health practice at the Harvard T.H. Chan School of Public Health. “And they were proud to be part of the coalition of the unwilling that killed it.”
The 2003 law that created Medicare’s drug benefits was the creation of a GOP-led Congress and a Republican administration under President George W. Bush. Unlike every other part of Medicare, the drug coverage was set up as a private-sector program in which for-profit health plans sell drug benefits to seniors.
It “was the only part of Medicare under private control …[with] no limitation on price whatsoever,” said Paul Starr, a Princeton University professor of sociology and public affairs.
“The … industry was successful in getting into the law a prohibition” on price negotiation, said Larry Levitt, executive vice president of the Kaiser Family Foundation. “Drugs are the anomaly in Medicare. Medicare sets prices for hospitals, doctors, for all kinds of services, but it’s explicitly prohibited from setting prices for drugs in the legislation that created the Medicare drug benefit.”
While Obama also had concerns about drug prices, his fledgling administration worked out a deal with the pharmaceutical industry in 2009, early in its work on what became the Affordable Care Act. It promised it would not seek to include drug-price negotiations in exchange for an industry agreement to provide money to help expand insurance coverage and not to oppose the law.
“Had PhRMA been on the other side, the ACA never would have happened,” McDonough said.
Obama returned to the issue later in his administration, arguing in 2015 and 2016 that Medicare should be empowered to negotiate drug prices, although the proposal sputtered in a Republican-controlled Congress.
Both Hillary Clinton and Trump pledged to negotiate prices in their 2016 campaigns, although Trump backed away from the idea once in the White House, opting instead to index U.S. drug prices to an average paid by several other nations — an idea that was never implemented — and going after drug rebates, an idea the new White House framework would repeal.
As presidents and lawmakers repeatedly backed away from the drug price issue in the face of opposition, drug spending in the United States jumped by 76 percent between 2000 and 2017, and the costs are expected to increase faster than other areas of health-care spending over the next decade as expensive new specialty medicines are approved, according to the Rand study.
But experts say they’re also worried about the high prices for older drugs, such as insulin — which was developed a century ago. Several experts cited a branded drug called Humalog, which cost about $21 per vial when Eli Lilly introduced it in 1996. Today, the price for that same vial lists at about $275.
“It’s the exact same product,” said S. Vincent Rajkumar, a Mayo Clinic physician who’s studied the cost of insulin. “It’s like the original iPhone selling now for a price 10 times higher,” Rajkumar said.
Asked about the rising price of Humalog and other insulins, an industry official, speaking on the condition of anonymity to discuss private conversations with lawmakers, cited an array of discounts and rebates from manufacturers to health plans and middlemen that the lobbying group said had lowered the net price of insulins by 83 percent last year. Those, however, are largely hidden from public view because they reflect confidential agreements negotiated between manufacturers and buyers.
Eli Lilly also introduced a half-price generic version of Humalog in 2019, saying the move would help more patients afford the drug. But Rajkumar faulted the generic drug as a symptom of a broken health system, not a solution. “You have to ask yourself, if the same company is selling the same product with just a different label at half the price, what’s going on?” the doctor said.
Lawmakers of both parties have deemed the industry’s efforts insufficient. A bipartisan Senate Finance Committee report released this year condemned “pharmaceutical pricing practices that cause financial harm and worse health outcomes for the American people,” with the panel’s outgoing Chairman Sen. Charles E. Grassley (R-Iowa) and its then-top Democrat, Sen. Ron Wyden (Ore.) demanding reforms.
“There is clearly something broken when a product like insulin that’s been on the market longer than most people have been alive skyrockets in price,” Grassley said.
Outside health policy experts have reached similar conclusions. William B. Feldman, a doctor and research fellow at Brigham and Women’s Hospital, and his colleagues estimated the government could have saved between $1 billion and $4.4 billion in a single year had Medicare been allowed to negotiate the price of insulin, like the Department of Veterans Affairs.
With polls showing the public wants action to lower prices, some warn that Democrats may pay a price in next year’s midterm elections for failing to address the issue.
“You can’t go home to voters after promising this for decades with nothing to show for it, when there is an opportunity,” said Bill Sweeney, senior president for government affairs at AARP, the advocacy group for people 50 and older that has supported drug negotiations. “The voters will know you didn’t deliver.”
The dynamic that prompted the defection of several moderates is a reprise of previous defeats of drug-price initiatives. Earlier this year, as Democrats took control of the legislative and executive branches, pharmaceutical industry lobbyists ramped up their efforts, releasing a slew of white papers, purchasing advertisements and steering donations in hopes of blunting the latest push for price negotiation.
For instance, Peters, a California congressman who represents a biotech-heavy district and who had previously supported negotiation, warned Pelosi in a May letter that he and nine allies were seeking more modest reforms than the negotiations pushed by Democratic leadership. Immediately afterward, he received thousands of dollars in contributions from pharmaceutical interests, raking in $66,400 between May 4 and June 30 from executives associated with Pfizer, Eli Lilly, Bristol Myers Squibb, Merck and the industry trade group PhRMA, according to a Stat analysis. Peters is a top recipient of drug company donations, having received $541,000 since 2007, according to a Kaiser Health News campaign contributions tracker.
The drug industry also circulated a Congressional Budget Office projection that concluded drug-price negotiation “would result in fewer new drugs” as companies’ financial incentives shifted. The CBO this summer projected that Democrats’ legislation would lead to two fewer drugs within a decade of the bill taking effect, although PhRMA’s own projections have been far more dire.
“We cannot accept that patients — who desperately need the latest treatments and cures — simply might not have access to them because our government wanted to ‘negotiate,’ and, in doing so, created an environment where American patients are subject to a system where a lifesaving cure exists but they might not be able to access it, while people in other countries can,” PhRMA’s Gabby Migliara wrote in June.
But the drug industry’s claims have been largely rebuffed by policy analysts, who insist the companies would still have incentives to pursue new cures and treatments.
“Not every drug is innovative. Not every drug is equal. Not every drug is a breakthrough,” said Lovisa Gustafsson, a vice president at the Commonwealth Fund, ticking off drugs that merely combined older drugs or copied existing formulas.
She noted the mRNA coronavirus vaccines, which lobbyists tout as the sort of breakthrough that demonstrates pharmaceutical innovation, actually relied on basic science funded by the National Institutes of Health. “What [the vaccines] showed was the innovation of the government,” Gustafsson said.
‘My whole day revolves around insulin’
Patients and advocates say they are crestfallen by the White House decision to back away from the drug-pricing initiative.
“My whole day revolves around insulin and checking my blood glucose,” said Iesha Meza, a 30-year-old patient with Type 1 diabetes in Phoenix. Meza said she stopped paying for food and electricity to afford insulin when she was uninsured in 2015 and 2016, ultimately suffering complications. “Hopefully Congress does the right thing.”
AARP on Thursday blasted emails to Capitol Hill and sent a letter to millions of its members, with congressional phone numbers, urging them to tell lawmakers to embrace drug-price negotiation before the House and the Senate vote.
Even longtime Biden allies such as Leslie Dach — who founded Protect Our Care, a health-care advocacy group — were unhappy.
Dach acknowledged that the bill achieved important goals by expanding Medicaid coverage and lowering the cost of ACA health plan premiums. But “the failure to address the cost of drugs is very disappointing,” he said. “It’s a win for one greedy industry at the expense of the American people.”