When it comes to lowering the cost of prescription drugs, there is all too often more smoke than fire. Let me give you a specific example. President Donald Trump recently directed the secretary of Health and Human Services to “take appropriate steps” to “test a payment model” for prescription drugs. He quickly tweeted that the order will “ensure that our country gets the same low prices Big Pharma gives to other countries.” This is just not true. His math is off.
How far off? For every 100 Medicare beneficiaries, only one has a chance of seeing any change under his proposal. That’s because only 7 percent of seniors get drugs administered by physicians in Medicare (called Part B drugs) in a year. Of those, 80 percent have supplemental insurance coverage — and thereby wouldn’t be affected by this program. That brings us down to 1.4 percent of Medicare beneficiaries. And it only gets smaller. Because this is a “test,” it cannot be applied to the whole country. Meaning that fewer than one out of every 100 people on Medicare will see lower out of pocket costs for the medications they receive in a doctor’s office or the hospital.
What about older Americans who get their prescriptions at the pharmacy, called Part D drugs? They will have to wait a long time to see any benefit, if ever. Medicare does not directly pay for prescriptions filled at the drug store; insurance companies contract with Medicare to pay for those prescriptions. The bids for 2021 have already been made and accepted, the rules finalized, and the premiums set. That means that the earliest anything could change would be in plan year 2022, and that would take a complete re-working of how Medicare pays for Part D. In other words, don’t hold your breath.
This president has a well-established pattern of over-hyped and incompletely thought through proposals, and nowhere is that truer than with drug prices. As a nation, we have been subjected to three years of such proposals: we were promised drug prices were going to be included in ads; we were promised that rebates and discounts paid to insurers by drug companies were going to translate into savings for patients at the pharmacy; we were told rebates were going away altogether; we were told patients were going to be able to import cheaper drugs from other countries. None of this has come to pass. As recently as Tuesday’s debate, he claimed that “I’m getting (insulin) so cheap, it’s like water.” PolitiFact rated that claim mostly false.
The truth is, drug prices remain high and continue to grow faster than our incomes, and older Americans continue to shoulder the burden of those costs. About 16 percent of Medicare drug plan enrollees pay an average of more than $1,100 out of pocket and 3.4 percent pay an average of more than $3,100. In 2018, the median income of an American 65 years or older was $25,601. Prescription drugs cost real money. They drain people with limited incomes. As a result, thousands of older Americans are skipping meals and cutting their pills just so they can afford the prescriptions they need to stay healthy.
The president, though, is not only giving these Americans empty words and ineffectual proposals. Many times he is standing in the way of real solutions.
Earlier this year the House of Representative passed legislation that would have lowered drug prices, not just for seniors on Medicare, but for Americans across all age groups. The Tampa Bay Times itself called it a bill with “plenty of good provisions.” Trump responded with a threatened veto.
He is not merely stopping future legislation. He’s trying to make things even worse. The most important step in recent memory to reduce out of pocket drug costs for older adults came from the Affordable Care Act. That’s because the ACA closed the so-called prescription drug “donut hole” for Medicare. That one provision, one that many people don’t even know about, saved an estimated 12 million Medicare beneficiaries a total of more than $26 billion over six-years.
Nevertheless, the president is working tirelessly to overturn the Affordable Care Act in the U.S. Supreme Court, even as the pandemic rages. Were that to happen — were President Trump to succeed — he would end up increasing prescription drug costs by thousands of dollars for millions of seniors, at the same time he sends empty tweets about lowering drug costs for those very same people.
We don’t need rhetoric, and we don’t need tweets. We need a real plan. That’s exactly what former Vice President Joe Biden has proposed. He has a plan to lower prescription drug costs for Americans, based largely on the law that passed the House last year. He promises to work with Congress and empower Medicare with all the tools it needs to effectively negotiate with drug companies and ensure that American taxpayers are not held hostage by high prices for the medication they need. Common sense and the Congressional Budget Office both suggest that this approach would work.
So does the Tampa Bay Times. Last December, the Times explained what the House bill would mean for older Americans in Florida. In Rep. Kathy Castor’s Tampa-based district, for example, the bill would affect about 92,000 people who get their medications through Medicare Part D, and more than 484,000 people covered by private insurance. The Times noted that, in a given year, about 19,000 Florida women will be diagnosed with breast cancer. The House legislation would lower the average cost of one breast cancer drug, Ibrance, from $69,000 to $23,900 per year. One out of every five Floridians has arthritis, and the House bill would cut arthritis drugs from $40,000 to $10,000 a year. These are many thousands of dollars in savings, every single year.
Any older American with a prescription knows that drug costs are too high. The math is all too real. It’s time that the proposals to bring down those costs were real, too.
Richard G. Frank is the Margaret T. Morris Professor of Health Economics in the Department of Health Care Policy at Harvard Medical School. He wrote this exclusively for the Tampa Bay Times.