WASHINGTON D.C. – Nearly 1 in 4 Americans struggle to afford prescription drugs. Yet Medicare is currently prohibited from negotiating prescription drug prices to get the best deal for American seniors. President Biden and Congressional Democrats rolled their sleeves up in recent days to produce a compromise plan to end this unfair prohibition and reduce the costs of prescription drugs, while ensuring we continue to reward innovation and breakthrough new treatments. Specifically, the plan will:
Finally let Medicare negotiate drug prices. Medicare will negotiate prices for high-cost prescription drugs. This will include drugs seniors get at the pharmacy counter (through Medicare Part D), and drugs that are administered in a doctor’s office (through Medicare Part B). Drugs become eligible for negotiation once they have been on the market for a fixed number of years: 9 years for small molecule drugs and 12 years for biologics. Medicare will negotiate up to 10 drugs per year during 2023, with those prices taking effect in 2025, increasing to up to 20 drugs per year.
The policy will establish a clearly defined negotiation process that is fair for manufacturers, and gets the biggest savings on drugs that have been on the market a long time. This discourages drug companies from abusing laws to prolong their monopolies, while encouraging investments in research and development of new cures. Drug companies that refuse to negotiate will owe an excise tax.
Impose a tax penalty if drug companies increase their prices faster than inflation. Starting when this bill becomes law, future drug price increases will be compared to their current prices. We will finally put an end to the days where drug companies could raise their prices with impunity. If prices for a drug increase faster than inflation, manufacturers will owe a tax penalty, holding down prices for Americans with all types of health insurance.
Directly lower out-of-pocket costs for seniors. Today, there is no cap on how much seniors and people with disabilities have to pay for drugs, and millions of seniors pay more than $6,000 a year in cost-sharing. This proposal puts an end to this burden, and ensures that seniors never pay more than $2,000 a year for their drugs under Medicare Part D.
The plan will also lower insulin prices so that Americans with diabetes don’t pay more than $35 per month for their insulin. Lawmakers have also agreed to lower seniors’ cost-sharing for all types of drugs and they are working expeditiously to finalize legislative text that will save seniors money at the pharmacy counter without increasing premiums.
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