“Big Pharma has had no limit—up to now—as to what they could charge our seniors,” Neera Tanden, domestic policy advisor to President Biden, told Ms.
Quick, what were the provisions of the Inflation Reduction Act of 2022? If you’re like most people, you don‘t remember much except that inflation was rampant, and President Biden wanted to give folks some relief from high prices on necessities like food and gasoline. Most of us didn’t pay a lot of attention to the details beyond the headlines, which were often about tax credits and rebates for green energy projects in moderate to low income households.
But along with energy incentives, another Inflation Reduction Act provision that will greatly affect senior citizens, particularly women, was also front-page news: For the first time since Medicare was implemented in 1965, it will at long last be able to negotiate with pharmaceutical manufacturers on the price of drugs. After decades of Big Pharma fighting to block Medicare from directly negotiating lower drug prices for seniors, President Biden announced in October that all manufacturers of the 10 drugs selected for Medicare price negotiations will be at the table, thanks to the Inflation Reduction Act. No thanks to Republicans in Congress though—not a single one supported the bill.
How will women benefit? Several ways. Nearly 3 in 10 Americans struggle to afford their medications because of cost. With our still miserable gender pay gap numbers, it’s a pretty safe bet that the majority of those folks are female. In 2022, women on Medicare spent $1.55 billion in out-of-pocket costs on the 10 drugs included in the negotiations.
Among the first drugs selected for Medicare price negotiation are those that treat diseases that affect women disproportionately, including diabetes, heart disease, blood clots and cancer. Women are also at a higher risk for rheumatoid arthritis, and will save on drugs like Embrel that treat it—currently at a whopping cost of $440+ per month once they’ve met a deductible of $1760+.
But women won’t have to wait for the negotiations to benefit from other provisions in the Inflation Reduction Act. Four million seniors are already seeing the rewards, most notably the new $35 per month cap on the cost of insulin, down from $63 on average. With close to 4 million women age 65 or over with diabetes (and women with less wealth overall), this is a major economic boost.
The Medicare drug negotiation breakthrough has been a long time coming—58 years to be exact. It’s about time. But it’s also about money, especially for women.
Ms. money editor Martha Burk spoke with Neera Tanden, domestic policy advisor to President Biden, about the benefits and what took so long.
Martha Burk: This is indeed a game changer for Americans needing life saving drugs. But the pharmaceutical companies say it will stifle innovation in drug research. Right or wrong?
Neera Tanden: Not true. For years the Veterans Administration and Department of Defense have been able to negotiate drug prices. But Medicare was carved out during the [George W.] Bush administration. With price negotiation that will change.
Burk: How do drug prices here compare with other countries?
Tanden: Big Pharma charges two to five times more here for the same drugs it provides to other countries. Collectively they spent upwards of $100 million dollars to fight Medicare negotiations in the U.S. The bottom line was that Big Pharma has had no limit—up to now—as to what they could charge our seniors.
Burk: Are these first 10 drugs likely to be the only ones negotiated?
Tanden: No. This is just the first 10. The Inflation Reduction Act calls for 15 more next year, and 15 to 20 a year after that. It’s focused on the drugs Medicare is spending the most on.
Big Pharma charges two to five times more here for the same drugs it provides to other countries.
Neera Tanden, domestic policy advisor
Burk: Some Big Pharma companies have claimed that mandating price negotiations is unconstitutional.
Tanden: Medicare has always negotiated in other parts of the healthcare system, and the Constitution does not prohibit that. Medicare was the exception because a deal was made with the pharmaceutical companies, which the Inflation Reduction Act ended.
Burk: Could Medicare’s ability to negotiate prices be changed by a future administration?
Tanden: It’s important to recognize that this change was so many years in the making. It was passed by a Democratic Congress and signed by a Democratic president. People need to recognize what is at stake.
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