Congress talks a lot about high prescription drug prices but for the most part it’s all talk. Pharmaceutical companies continue to charge U.S. consumers prices much higher than they charge outside the U.S.
Once all the rhetorical hot air has been blown from the room, the most compelling reason for this is that they shaft U.S. consumers because they can. And the primary reason they can is because our government lets them, while governments in other countries do not.
Nothing is ever so simple and that’s the case here. But this simplified narrative contains much truth.
Hope springs eternal for lower drug prices and so it is today, given the pro-consumer bent of the new Biden administration. But with Democrats needing a tie-breaking vote in the U.S. Senate to achieve a bare majority, lowering drug prices will require some bipartisanship. This assumes the Senate filibuster is not nuked or that Democratic leadership doesn’t further stretch the bounds of budget reconciliation to write a prescription for lower drug prices.
The Kaiser Family Foundation has studied 2019 drug prices for Medicare beneficiaries using the programs Part D program for self-administered drugs and its Part B program, which administers drugs in outpatient settings.
The distinction is important because Part D and B pay differently for drugs. The private insurance plans that administer the Part D program have different tiers and coverage levels for drugs, with an annual cap on total consumer drug spending of $6,550 plus no more than 5 percent of the cost of drugs once spending has exceeded that cap. (Of course, 5 percent of a big number can still be a lot.)
Part B of Medicare pays only 80 percent of covered prices, which saddles beneficiaries for the other 20 percent. That could devastate the household budgets of people who must have expensive medications. Some Medigap supplement insurance plans will pay all of that 20 percent, meaning that out-of-pocket Part B costs are close to zero after backing out the annual Part B deductible).
Here is Kaiser’s take on the billion-dollar drugs in the Part D and B programs. These budget busters tend to have no competition and often are exploiting legally creative strategies to extend their patent protection well beyond the legal maximum period enacted by Congress.
“The 250 top-selling drugs in Medicare Part D with one manufacturer and no generic or biosimilar competition (7 percent of all Part D covered drugs) accounted for 60 percent of net total Part D spending” of an estimated $145 billion in 2019. “The top 50 drugs covered under Medicare Part B (8.5 percent of all Part B covered drugs) accounted for 80 percent of total Part B drug spending” of more than $37 billion in 2019.
|2019 Billion Dollar Medicare Part D Drugs|
|Brand Name||Generic Name||Total Spending|
|Lantus Solostar||Insulin Glargine,Hum.Rec.Anlog||$2,495,768,702|
|Novolog Flexpen||Insulin Aspart||$1,844,090,302|
|Levemir Flextouch||Insulin Detemir||$1,622,206,517|
|Advair Diskus||Fluticasone Propion/Salmeterol||$1,449,351,617|
|Invega Sustenna||Paliperidone Palmitate||$1,249,951,724|
|Humalog Kwikpen U-100||Insulin Lispro||$1,218,126,351|
|2019 Billion Dollar Medicare Part B Drugs|