The Biden administration has taken a major step to rein in price gouging for prescription drugs in the United States. Medicare will now be able to negotiate prices on 10 of the most expensive drugs used to treat diabetes, cancer, heart disease and more. That list is set to expand over the years. In what’s seen as a blow to Big Pharma, the White House says the move, a part of the Inflation Reduction Act, will benefit more than 9 million people in the U.S. and lead to $100 billion in savings over the next decade. Pharmaceutical companies have already filed at least eight lawsuits contesting the new rule. “We’re paying far more than the rest of the world, and there’s no rational basis for it,” says Peter Maybarduk of the nonprofit consumer advocacy organization Public Citizen. Maybarduk joins us to discuss how the new negotiation process aims to break up drug monopolies and disband the pharmaceutical industry’s profit incentive.
AMY GOODMAN: The Biden administration has taken a step to rein in the soaring costs of prescription drugs in the United States. On Tuesday, the White House released a list of the first 10 prescription drugs Medicare can negotiate lower prices for. The list includes medication used to treat diabetes, cancer and heart disease. The Biden administration also added some insulin products, which surprised many. The White House says the price negotiations could lead to a savings of some $100 billion over the next decade. The move is seen as a major blow to Big Pharma, which has been fighting the plan in courts, filing at least eight lawsuit since the passage of the Inflation Reduction Act last year, which gave Medicare the authority to negotiate drug prices. President Biden spoke Tuesday.
PRESIDENT JOE BIDEN: Big Pharma is charging Americans more than three times what they charge other countries, simply because they could. I think it’s outrageous. That’s why these negotiations matter. Reducing the cost of these 10 additional drugs alone will help more than 9 million Americans. And by September 2024, HHS, Health and Human Services, is going to publish the prices it negotiated. In January of 2026, the new prices will go into effect.
AMY GOODMAN: Independent Senator Bernie Sanders of Vermont responded to the news by saying much more needs to be done to stop Big Pharma from charging higher prices in the United States. Senator Sanders pointed out one diabetes drug made by Merck costs $547 a month in the U.S. but just $16 in France.
Joining us now is Peter Maybarduk. He’s director of Public Citizen’s Access to Medicines Program.
Welcome to Democracy Now! So, talk about why this has taken so long, but also why this is such a landmark announcement from President Biden and Vice President Harris.
PETER MAYBARDUK: Well, it’s obviously terrible that Medicare hasn’t had the ability to negotiate prices until this point. It was a corrupt deal when the Medicare prescription drug benefit was created nearly 20 years ago. And Pharma was against the reform, until it was for it, because it was able to ride out the possibility of negotiation. And so, since that time, a generation of health advocates have been working to give the government the basic right to negotiate drug prices with the monopolists that our laws create and support. Countries around the world have that right. And not negotiating makes, obviously, our drug prices high and our tax dollars not go as far.
So, this list, long-expected announcement coming shortly after the one-year anniversary of the Inflation Reduction Act, shows us where our government will begin negotiations, based on some of the most — the drugs that are most expensive to Medicare. And we expect the savings to be quite substantial. It includes six very commonly used medications to support heart health and fight diabetes. My father-in-law takes four of these drugs. They’re very important to seniors. It also includes three very expensive rare disease drugs, or drugs against arthritis and a blood cancer. But, as you mentioned, the inclusion of insulin is a welcome surprise — well, not just insulin, but six insulin products sold by Novo Nordisk, something that Insulin for All activists have been fighting for for quite some time. One-point-three million Americans ration insulin. And this is another step toward breaking the back of the insulin cartel, that we’re very glad to see.
JUAN GONZÁLEZ: But, Peter, why so few drugs in the first batch that are going to be negotiated, compared to the thousands of drugs that are out there? And also, doesn’t this take effect, people will only feel the impact, in 2028? Why so long a period of time?
PETER MAYBARDUK: So, there’s a statutory mandate. They have to begin with 10 drugs, but they will add 15 drugs in the following year and another 15 drugs in the year after that. So the impact is going to grow substantially over a period of time. We, of course, would have liked to see the initial legislation be more aggressive and bring more drugs immediately into the negotiation portfolio. The VA negotiates on behalf of veterans already. They handle it with a large number of drugs. But this is the deal that was cut. But that impact is going to grow.
The prices will take effect on January 1st of 2026, and it does take some time. There will be a negotiation. There will be an exchange of information this fall with the companies. CMS, the Center for Medicare and Medicaid Services, will sit down with patient groups and hear their perspective. And then there will be an initial price offer from the government in February and negotiations next summer.
But the Inflation Reduction Act, more broadly, already is having positive impacts on drug prices. Beyond the negotiation provisions, there are measures to curb price spikes — the “Pharma Bro” Martin Shkreli problem — that also is a standard industry practice, to increase the prices of their drugs that are already on the market year by year. In fact, AARP found that for the top 25 Medicare drugs, Pharma has tripled the price of those drugs since they came on market. Prices are going up, not down, after they put a drug on market. Anyhow, the Inflation Reduction Act also includes, and has penalized so far — CMS, I believe, has penalized about 40 companies for taking price spikes, and ensuring that that practice stops. So, IRA is already holding prices in place for some drugs, and over time we will see price reductions through the negotiation. But, as Senator Sanders mentioned, there is quite a bit left to do and more that needs to be done outside of IRA.
JUAN GONZÁLEZ: And didn’t the Inflation Reduction Act also have a cap on the amount of money that people would have to spend out of their own pocket for drugs taken at home?
PETER MAYBARDUK: There are out-of-pocket caps and coverage expansions that are part of the act and will support seniors with their drug costs, yes.
AMY GOODMAN: Peter Maybarduk, if you can respond to what some of the Republicans have said? I mean, this seems to me, across the political spectrum, to be appreciated, to say the least, but the question is, like Sanders has raised, Senator Sanders, why it is so limited. But ahead of the midterm elections, Congressman Kevin Brady, Republican, said repealing the law could be a Republican agenda item “because those drug provisions are so dangerous, by discouraging investment in life-saving cures.” Is this discouraging investment in life-saving cures, or is it just going to stock buybacks?
PETER MAYBARDUK: Much of it’s going to buybacks. No, it’s not discouraging investment. And those critics are out of step with public opinion. A recent West-Gallup poll showed that 83% of Americans favor some form of a drug price negotiation and this going ahead.
Look, the American people support pharmaceutical research and development to the tune of $40 billion a year through the National Institutes of Health and its grants. Almost every single new drug that comes to market has benefited from taxpayer subsidies of their research and develop agenda, in addition to the many tax breaks. And further, prices are not related to R&D costs. It’s not as though the pharmaceutical companies look at their R&D costs and say, “Here’s what it’s going to take to recoup.” They say, “No, what is the most that we can charge” — and this has come out in Senate hearings and elsewhere — “what’s the most we can charge before the blowback becomes unsustainable?”
We have to recall that these are drugs that are monopolized, they’re patent-protected, and the companies will charge, in an environment without market competition, as much as we collectively are willing to pay to care for our sick. Negotiation to pay the price that we find appropriate is sort of the least that our government can do to begin to rein in those sorts of abuses.
AMY GOODMAN: If you can talk about, going back to that point about, for example, Merck’s diabetes drug, Januvia, costing $547 in the U.S., but just $16 in France? Why is there this massive difference? And also, the fact that this doesn’t go into effect for another, what, almost three years, 2026? And are new drugs subject to this?
PETER MAYBARDUK: Well, I think, for us, one of the biggest shortcomings of the negotiation provisions is that drugs aren’t subject to negotiation until they’ve been on market seven to 11 years, depending on the class of drug. Now, pharmaceutical companies have been raising the price of new drugs, when a drug first comes to market, an average of 20% per year for the past 15 years. So the launch price of drugs keeps getting higher. And if we don’t find a way to deal with that problem, we can actually expect that while the Inflation Reduction Act will save a great deal of money, prices for new drugs will continue to go up.
Now, the government does have tools to deal with that. And many of us, including Senators Sanders and Warren and Representative Lloyd Doggett and many of their progressive colleagues in Congress, have championed executive action against the patent monopolies, to say that when a drug is outrageously expensive, the government actually has the right, under current existing law, to authorize generic competition with those drugs at any time and save a great deal of money. And if we start to do that, then we will see the kind of downward pressure on prices. You know, it will force some restraint in the boardroom and would very nicely complement the Inflation Reduction Act’s provisions on negotiation and inflationary rebates.
JUAN GONZÁLEZ: And, Peter, I wanted to ask you — Americans spent, in 2022, $600 billion on medicines. That’s half of the total expenditure on medicines in the entire globe. We watch TV, and every day there are so many drugs being peddled by the pharmaceutical industry that they’re running out of names, to come up with names for these drugs. Could you talk about this enormous marketing effort of the pharmaceutical industry to push drugs on the American people?
PETER MAYBARDUK: Well, it’s out of control. And, you know, we hope, through processes like IRA, we can slowly start to get toward more rational and transparent processes, as well, reveal more information about price, better value — if the government implements the act quite assertively, better value the medical innovations that make the biggest difference to health rather than medications that are primarily cosmetic or just do the same thing as the last five expensive drugs.
But it’s true. You know, we’re paying far more than the rest of the world, and there’s no rational basis for it. It’s also true that there’s really no rational basis for the prices of patented drugs anywhere in the world. This is the problem we get when we create legal monopolies and then do very little to constrain the price of those monopolists. It leads to treatment rationing in the United States, three in 10 people self-rationing their own access to medicines in the United States. And, of course, it leads to tremendous preventable suffering and death around the world.
AMY GOODMAN: Where does universal healthcare, single-payer healthcare, the movement for it, stand today, Peter? I mean, that’s the bigger question.
PETER MAYBARDUK: Well, you know, the two processes, we need both, because you can have universal healthcare and still have drug monopolies. So, while we’re making important strides on universal coverage here and around the world, we also need to see specific disciplines set on the pharmaceutical corporations, because we wouldn’t want them ripping off a single payer, either. But at least through single payer, you get those, and if you couple it with aggressive negotiation and other tools, you get that increased bargaining power. Pharma exploits the relatively limited bargaining power of health systems that have many purchasers, where no one knows what the other one is paying. So, unifying those could be quite helpful. And pushing for transparency of R&D costs, as well as prices, would help, too.
AMY GOODMAN: Peter Maybarduk, we want to thank you so much for being with us, director of Public Citizen’s Access to Medicines Program, speaking to us from Massachusetts.
Coming up, Texas Democratic Congressmember Greg Casar is just back from a congressional trip to Colombia, Brazil, Chile, which will soon mark half a century since the U.S.-backed military coup. We’ll speak to him as President Biden just met with the Costa Rican president at the White House. Stay with us.