On July 30th, 1965, President Lyndon B. Johnson signed Medicare into law, creating the nation’s most beloved healthcare program, which provides care to 66 million seniors and people with disabilities. Over the years more improvements have been made to the program to increase access and affordability for enrollees, including the Inflation Reduction Act of 2022 (IRA), which made long-overdue improvements to prescription drug benefits in Medicare.
Under this new law, seniors, people with disabilities, and their families will save millions on the cost of prescription medicines thanks to common-sense reforms that Big Pharma companies have fought against for decades. These reforms include allowing Medicare to negotiate lower prescription drug prices, capping the cost of insulin at $35, creating the first-ever out-of-pocket cost cap on Part D medicines, making recommended vaccines free for Medicare beneficiaries, and requiring prescription drug companies to pay rebates to Medicare if they raise their prices faster than the rate of inflation. Some parts of the law have already been implemented and some will be implemented over the next several years.
These improvements in Medicare will save taxpayers over $98 billion over the next ten years and make medicines more affordable for millions of seniors who have struggled to afford everything from insulin to cancer drugs. The new law stops drug-corporations from using their monopoly power to price gouge,which inflates their profits at our expense.
But drug corporations won’t give up their power easily. Big Pharma corporations, industry lobbyists, and Republican allies in Congress are fighting tooth and nail to halt these new reforms and allow Pharma companies to retain their monopoly price-setting power.
And it’s no wonder why: Eli Lilly, Johnson & Johnson, Merck, AbbVie and Pfizer, the 5 largest Pharma companies by market cap, reported combined earnings of $81.9 billion last year – an $8 billion increase from 2021. Two of those companies (Merck and Johnson & Johnson) have joined fellow Pharma corporations Bristol-Myers Squibb and Astellas, as well as the U.S. Chamber of Commerce and the industry lobby group the Pharmaceutical Research and Manufacturers of America (PhRMA) to sue Medicare in an effort to stop negotiations for lower prices before they even start.
These lawsuits are outrageous, Americans pay more than 2.5 times more for some brand-name drugs than people in 32 other comparable countries. Aging Americans and people with disabilities and chronic health conditions bear the brunt of these excessive prices. No one should have to go into debt, go without life-saving medicines, or choose between prescriptions and other basic needs like groceries and rent. Yet millions across this nation do.
We know that the Inflation Reduction Act is already helping people and will only do more in the coming years. A new report shows that 3.4 million people with Medicare would have saved $234 million in out-of-pocket costs in 2021 on vaccines–or about $70 per person if this law had been in place in 2021. Diabetics in Medicare who use insulin would have saved about $500 a year on insulin last year if the law had been in place. Medicare recipients have these savings and much more to look forward to as the law is implemented piece by piece between now and 2026.
And we’re just getting started: on September 1, Medicare will announce the first ten prescription drugs that will have negotiated prices for the first time, a historic event that will ultimately benefit millions of Medicare enrollees. The Biden Administration is working hard to implement the Medicare negotiations and Democrats in Congress have already introduced a new bill to expand the number of drugs that can lower prices through negotiations and to stop drug corporations from raising prices for people with private coverage faster than inflation.
It’s up to advocates, impacted people, families, providers and others to stop the opponents of lowering drug prices through Medicare negotiations from taking away long-overdue lower prices that will enable millions more people to get the medicines they need. We can’t let them turn back the clock on progress.
Let the countdown to lower drug costs begin!