Tell your Members of Congress: Negotiate Drug Pricing for Medicare

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My name is __________. I am a constituent, and my zip code is _______. I am a member of Indivisible SF.

It is time to stand firm, resist the pressure from lobbyists, and empower Medicare to negotiate prescription drug prices on behalf of its millions of consumers. This is the fiscally responsible course of action that will fund other important parts of the Build Back Better Act.

Lobbyists may favor using a system like the ASP-plus (Average Sale Price, plus overhead) introduced for drug reimbursements for Plan B of Medicare in 2005, touting it as a transparent, market-based solution. The problem is, the Plan B ASP is based on average prices in the USA, the most expensive drug market in the world.

Standing firm against lobbyists’ pressure in this instance will also provide excellent practice for protecting our national security with the strong and effective measures included in the Build Back Better Act to address the climate emergency.

Background

Other countries, including Australia, Canada, and Britain, don’t regulate the price of other consumer goods but do regulate the price of drugs, to be sure medical treatment remains affordable for everyone, regardless of income. To answer one of Senator Manchin’s recent complaints, negotiating drug pricing would be part of a compassionate benefit (Medicare) that rewards hard-working Americans for their lifelong labor.

The Build Back Better Act includes a plan for Medicare to negotiate prices with drug companies and establish a ceiling for the price for certain medications at no higher than 120 percent of what several other wealthy countries pay. There would also be excise taxes on pharmaceutical companies that did not participate in the negotiations. This is one of the most popular provisions of the Build Back Better Act.

Lobbyists try to focus on abstract concepts like incentivizing innovation, even though the pharmaceutical industry profits enormously from worldwide sales, including sales in countries paying far lower prices. They avoid discussing cruel realities such as the $650 per year average out-of-pocket expenses Medicare beneficiaries paid in 2016, with people with serious conditions spending significantly more.

Lobbyists have also talked about utilizing a concept introduced for Plan B drug pricing during Medicare Modernization Act negotiations in 2005: ASP (Average Sale Price) plus overhead. They promote it as a market-based system of transparent drug pricing. What they don’t talk about is that it is based on the ASP in the US, the most expensive pharmaceutical market in the world. Nor will they remind us that the ASP replaced the AWP (Average Wholesale Price) that was used before.

We know that if Medicare was given the power to negotiate prices on behalf of its huge customer base, our government would save billions of dollars. The Veterans Administration has the power to negotiate drug pricing and pays about 40 percent less than Medicare does. The savings, estimated at around $450 billion over ten years by the CBO, will fund other critical parts of the Build Back Better Act, such as finally adding vision, dental, and hearing coverage to Medicare.

References:

Democrats weigh changes to drug pricing measure to win over moderates, 10/10/21, The Hill

VIDEO: On Senate Floor, Klobuchar Leads Colleagues in Series of Speeches on how Build Back Better Agenda will Lower Costs for Families and Seniors , 10/7/21, Senator Amy Klobuchar

160 Patient Advocates Demand Medicare Negotiation in Build Back Better Package, 9/21/21, Common Dreams

Build Back Better Act's health care section turns on cutting prescription drug costs,, 9/22/21, Vox

Why the United States has the highest drug prices in the world, explained , 11/30/16, Vox

Observations Regarding the Average Sales Price Reimbursement Methodology, June 2021, American Journal of Managed Care

What is the Average Sales Price for drugs and how does CMS calculate the Average Sales Price (ASP)-based payment limit, CMS, Centers for Medicare & Medicaid Services, PDF

Half of Voters Support Plan to Let Medicare Negotiate Drug Prices, 9/29/21, Morning Consult

Poll: Majority of Republicans support Medicare negotiations for prescription drug prices, 06/03/21, The Hill

Most Americans Support Medicare Negotiation for Drug Prices..., 6/3/21, West Health Gallup Poll

Analysis | The Health 202: The drug industry keeps ramping up its spending on lobbying. 5/7/2021, Washington Post