Pallone’s aggressive plan to lower drug costs finds its moment
Here are a few facts that should infuriate us all:
· A study by the Rand Corporation found that prescription drug costs in America are nearly triple the cost in comparable countries, a finding echoed in earlier studies by the Congressional Budget Office.
· Rand also found that pharmaceutical companies are killing it on Wall Street, earning more than twice the level of profit as the S&P overall.
· This comes as the AARP reports that 1 in 4 people in New Jersey do not take the medicines they need because of the high cost.
This is a travesty, a tribute to the lobbying power of big pharma, and testament to the harsh inequities that plague the American economy at every level.
The leading voice in Congress fighting this is our own Rep. Frank Pallone (D-6th), the most powerful member of our delegation as chairman of the Energy and Commerce Committee. He has a plan that would flip the table on this industry, an aggressive blueprint to lower costs that he has been pushing for years.
Now, his moment has arrived. His plan passed the House in 2019, but died in the Senate, then controlled by Republicans. Now it’s back, and it’s imbedded in the $3.5 trillion Democratic budget. If Democrats hold together, Pallone’s reform could become law within a few months.
The bill would allow Medicare to use its enormous buying power to negotiate price reductions with drug companies, a move with overwhelming public support that would cut prices by more than half, according to the CBO. That would save the federal government nearly $500 billion over the next decade, the CBO says, money that could help finance the bill’s expansion of Medicare to cover dental, hearing, and vision benefits. And those lower prices would apply to the private insurance market as well.
The bill would also cap out-of-pocket costs for seniors at $2,000 a year, and link costs in America to costs abroad by capping the gap at 20 percent.
Big Pharma argues that lowering prices will deprive them of money needed to develop crucial new drugs, like the Covid vaccines. But they send more money to their shareholders in buybacks and dividends than they spend on research.
“I’ve been around for 30 years, and the pharmaceutical industry is always complaining as they continue to make record profits,” Pallone says. “There’s no reason to believe lower profits means less research. It means less money for their shareholders.”
Pallone’s bill would boost federal funding for research through the National Institutes of Health, money that can be directed at genuine health needs, like heart disease and diabetes, as opposed to less important needs that hold the promise of great profits, like drugs to prevent balding. And its NIH money that today does much of the basic research behind innovations that the drug companies profit from, including the mRNA Covid vaccines from Pfizer and Moderna.
All this hinges on the passage of the $3.5 trillion Democratic budget, which improves its odds. Dave Mitchell, head of the advocacy group Patients for Affordable Drugs, says that if the bill were standing on its own, “the onslaught of the pharma lobby would be unstoppable.” But he and Pallone both say the $3.5 billion bill is so important to Democrats, that the measure now has its best chance ever to become law.
Sen. Cory Booker supports using Medicare to negotiate lower prices, the core idea in Pallone’s bill. Sen. Robert Menendez has not endorsed that approach, and says he’s concerned that Pallone’s bill doesn’t cut consumer costs enough, an inexplicable argument as we stand on the verge of such profound progress.
“We don’t completely understand why Sen. Menendez keeps insisting on that,” Mitchell says. “He should just take yes for an answer.”
The bill will change as it winds through the House and Senate, but the ambition behind it is remarkable. It would end the crisis of high drug costs, improve public health, and save money. Pallone is seizing the moment for all it is worth. Here’s hoping he hits his target.