After years of Congressional back and forth on drug pricing regulation, it appears historic movement is on the horizon.
On Sunday, the Senate passed the $740 billion Inflation Reduction Act of 2022 by a 51-50 margin, with Vice President Kamala Harris offering the decisive vote. The bill includes long-debated provisions for drug pricing reform and climate change moderation, and aims to lower the national deficit by $300 billion.
It’s a much smaller package than Democrats originally wrote up. Its $3.5 trillion predecessor included paid family leave and a child tax credit increase.
The Inflation Reduction Act of 2022 gives the federal government the go-ahead to negotiate Medicare prices for certain expensive drugs. Negotiations for 10 drugs covered by Medicare will begin in 2026, with that number increasing to 26 in 2029. The bill also caps out-of-pocket prescription drug prices for Medicare beneficiaries at $2,000, starting in 2025.
At the same time, other healthcare provisions didn’t make the final cut. A proposal that capped the price of insulin at $35 per month, for example, was stripped from the bill by Senate Republicans.
The bill’s passage comes after congressional Democrats tried last year to push through drug reform in President Biden’s $1.75 trillion Build Back Better plan. That plan was dropped when Senator Joe Manchin refused to give it his support late last year.
Drug pricing reform nonetheless remained on the backburner, despite consistent pushback from the pharma industry. In a statement, lobbying group PhRMA characterized the Inflation Reduction Act as a “tragic loss for patients.”
“They say they’re fighting inflation, but the Biden administration’s own data show that prescription medicines are not fueling inflation,” PhRMA president and CEO Stephen Ubl said in the statement. “They’re also misleading the American people when they say this bill fixes the affordability challenges patients face.”
But the bill’s impact on pharma may not be as significant as PhRMA claims. The bill’s Medicare Part D cap doesn’t begin for three years, while negotiations for the 10 high-priced drugs won’t begin until 2026. In addition, those terms don’t apply to private markets, according to Terry Haines, founder of healthcare consultancy Pangaea Policy.
“That’s a long way off from regulating or negotiating drug prices across the board,” Haines said, adding that the political implications of the limited pricing measures may not be immediately apparent.
“Lowering drug prices has been a top-10 issue for voters since the Obama days,” Haines continued. “But wait until voters find out how little has happened, and that it won’t happen quickly.”
Jon Bigelow, executive director of the Coalition for Healthcare Communication, agreed, noting that the new bill may represent the best possible outcome the pharma industry.
“The provisions that limit prescription drug prices are less severe than might have been expected,” he said. “These measures, by themselves, will have limited impact on biopharma and, contrary to some of the heated rhetoric, are not going to destroy innovation in developing new medicines. The real question is whether a precedent has now been set that will lead to Medicare negotiation on a broader range of prescription drugs.”
Drug pricing advocacy groups, meanwhile, celebrated the bill’s passage, with nonprofit organization Patients for Affordable Drugs Now calling it a “historic win” for patients.
“This legislation is game-changing,” David Mitchell, founder of Patients for Affordable Drugs Now, said in a statement. “It alters the trajectory of drug pricing and policy in the U.S. It finally begins to break the power of multinational drug corporations to dictate prices of brand name drugs to the American people.”
This story has been updated to include commentary from the Coalition for Healthcare Communication.