A big announcement expected to come Thursday should tell us a lot about one of the Biden administration's most important policy achievements: reform potentially affecting the lives of millions of older people, changing the pharmaceutical market and possibly influencing the outcome of the November elections.
The Department of Health and Human Services is set to release final prices for 10 Prescription Drugs what does medicare cover following negotiation between the federal government and pharmaceutical manufacturers. The drugs include expensive, widely used blood thinners and diabetes drugs, as well as a cancer drug.
Such negotiations are commonplace in most other developed economies – it is the way their governments set prices for medicines — but they have never been held in the United States before. That changes this year thanks to Inflation Reduction Actwhich the Democrats adopted on a party vote, and the president Joe Biden signed last year.
According to the law, annual, yearly negotiation process ends with the release of new prices by Sept. 1. And while the administration has not said publicly when it plans to release the new prices, the White House has announced that Biden and Vice President Kamala Harris will meet Thursday in Maryland “to discuss the progress they have made in reducing costs for the American people.”
How Politico reported Late last week, sources familiar with the planning confirmed to HuffPost that the goal of the joint appearance was to unveil the new prices following some kind of announcement before the markets open Thursday morning.
Thursday's appearance is a White House event, not a campaign stop. But it's safe to assume that in the run-up to the November election, Harris and her fellow Democrats will continue to talk about these new prices, welcoming the plans (including those contained in the latest Biden-Harris deal) budget proposal) to expand and strengthen the government's new negotiating powers.
Democrats, especially more liberal Democrats, have traditionally favored giving the government direct influence over drug prices. The pharmaceutical industry has opposed the idea, as have most Republicans.
Whether any of this shapes voters’ perceptions in the fall will depend on whether they are forced to notice and pay attention to the new negotiating process underway, something Biden, Harris, and their allies have found difficult to do so far. Survey showed that a large number of Americans are unaware that the federal government has already begun setting drug prices, even though the vast majority of Americans support the idea.
Big changes that are hard to see
One reason for the public's low awareness may be that bargaining power is limited. The new prices apply only to Medicare, not to private insurance for non-elderly, non-disabled Americans. And the negotiations cover only a limited set of drugs, starting with 10 drugs this year.
In addition, the new prices will not actually go into effect until January 1, 2026. How much the new prices save individual retirees (as opposed to the Medicare program as a whole) will depend on whether retirees actually take the drugs and what type of Medicare drug coverage they have.
Even finding out the value The potential savings may be difficult, or at least take time. The newly negotiated prices for these 10 drugs will be far below the official list prices, but Medicare insurers are already getting discounts on those prices for their customers. And those discounts are confidential information.
But there are ways to gauge the impact of the new negotiated prices, such as by comparing them to publicly available industry averages and indexes. The administration may release some of these as part of its announcement on Thursday.
Of course, it is possible that some older people will pay significantly less for their medications, depending on their special circumstances and how much do they save from other reforms which were part of the same legislation.
“The drug price negotiation program, along with the $35 insulin price cap, the inflation rebate, and the $2,000 out-of-pocket drug spending cap, should go a long way toward making drugs more affordable for the millions of people with Medicare who have difficulty paying for them,” Trisha Newmanvice president of policy for the health research organization KFF, told HuffPost.
Newman also called the agreed-upon prices “an important milestone for Medicare and seniors.”
Although the negotiations are only for 10 drugs this year, the number will increase over time, meaning more drugs will be negotiated. Expensive New weight loss drugs will most likely soon fall into this category.
Both Biden and Harris have called for further expansion of the authority to cover even more drugs and for finding ways to expand negotiating authority beyond Medicare.
The question of compromise and political power
Whether all this will be a benefit or a loss for American society as a whole is a separate question.
About one in four older Americans faces drug costs. according to a KFF surveyand those in good or poor health are even more likely to report difficulties. This situation is an important reason why liberals are so eager to push the United States to adopt the negotiating practices common in other countries.
But conservatives have long argued that “negotiating” drug prices is really just a nicer way of saying “fixing” drug prices, and that reducing drug company revenues will lead to less innovation because those companies will have a harder time attracting investors.
Many leading analysts believe the link between income and innovation is real, although even among them there is disagreement about whether the specific types of changes in the Inflation Reduction Act could hinder the development of meaningful treatments.
“We simply won't be able to know what drugs we would have had if it weren't for IRA pricing,” Jan SpatzAdvisor in Health Manatt who previously worked for the pharmaceutical company Merck and is now an adjunct professor at University of Southern CaliforniaHuffPost reported.
But if the political debates are complex and confusing, the political lines of opposition are clear.
Republicans, along with some more conservative Democrats, have long opposed giving the federal government more influence over prices. Project 2025The government manifesto of the right-wing Heritage Foundation explicitly calls for the repeal of the new negotiating authority and other elements of the Inflation Reduction Act. The authors of the document include: several current and former aides to Donald Trump.
Trump, who has denied knowledge of the document, has previously signed several executive orders aimed at lowering drug prices while he was president. He also has a history of criticizing the pharmaceutical industry and complaining about the high prices Americans pay compared to Europeans, and during the 2016 presidential campaign he promised to “negotiate like crazy» with manufacturers.
But when House Democrats passed a bill similar to the Inflation Reduction Act, Trump criticized it and supported Republican leaders in the Senate refused to pass the bill.
Harris will likely point to Trump’s accomplishments in the coming months as proof that Americans can count on her and her party to lower drug prices. But that argument will have far greater resonance if voters can see and understand the changes already underway.