Democrats hope their new health care, tax and climate law begins to rein in soaring prescription drug prices. One of its most touted provisions allows Medicare, America’s health insurance program for seniors, to negotiate some prescription drug prices for the first time, with some calling it “game-changing” and a significant victory over the pharmaceutical industry. Drug manufacturers had stubbornly opposed any governmental regulation of drug prices for decades and are likely to challenge the measure in court.
As a scholar who has published extensively on the politics of health policy, I’m skeptical that giving Medicare the ability to negotiate prices on a handful of drugs will be as transformative as the law’s backers hope. While a good step, it is unlikely to make a significant difference in how much seniors pay overall for medicine. Fortunately, there are several other provisions in the law that will do much more to meaningfully help seniors struggling with the high cost of prescription drugs.Why U.S. drug prices are so high Pharmaceutical innovation over the past few decades has been tremendous. The quick response to the COVID-19 pandemic in terms of vaccine development and treatments perfectly exemplifies the incredible benefits that drug developers have brought to the world. Yet these developments have come at a high price, particularly in the United States, where each person spends more than $1,100 a year on drugs – up from $831 in 2013. Indeed, Americans are paying substantially more than residents of similar countries like Germany, the U.K. and Australia – who pay $825, $285 and $434 per person each year, respectively. People who need specific high-priced drugs are even more adversely affected. Merck’s
Dulera, an asthma drug, costs 50 times more in the U.S. than the international average. Januvia, a Merck drug for diabetes, and Combigan, a glaucoma drug from AbbVie’s
Allergan unit, cost about 10 times more. Americans shell out, on average, $98.70 for a vial of insulin, compared with the $6.94 Australians pay. These costs impose a big burden on Americans – 1 in 5 of whom skip medications because of the cost. Seniors are particularly affected by these problems. The reasons for high prices are varied, including the overall complexity of the U.S. healthcare system and the lack of transparency in the drug supply chain. But as I noted in a 2019 article in The Conversation, the biggest reason Americans pay so much more than people do elsewhere is simple: Pharmaceutical companies face no limits setting prices.Changing the game – a little The new law, known as the Inflation Reduction Act and signed into law on Aug. 16, seeks to change that. The main m …