Just over a month ago we lost Bob Barker, the man who taught us all about the brutal nature of capitalism one pricing game at a time. Now, thanks to the Inflation Reduction Act, the federal government is going to be playing a role in determining the prices for some of our favorite products. No, we’re not talking about cars or family vacations to the Bahamas – we’re talking about the prescription drugs that keep us alive! As the Biden Administration enters its own Showcase Showdown with Big Pharma, we’re taking a full episode to break down what that means and whether the result will be prices we can actually afford.

https://www.youtube.com/watch?v=cnxbIhEPhs0&t=1s

Show Notes

Our first (and only) contestant is Alex Lawson! He is the Executive Director of Social Security Works, the convening member of the Strengthen Social Security Coalition— a coalition made up of over 340 national and state organizations representing over 50 million Americans. Alex’s organization played a critical role in moving the Democratic Party (mostly!) away from efforts to cut Social Security, and has been shifting the momentum towards expanding Social Security. Social Security Works is also a key ally of ours in the national fight for Medicare for All!

Alex, come on down!

Alex starts by telling us about the time he took a camera to PhRMA's (the Pharmaceutical Research and Manufacturers of America) office the day of the Inflation Reduction Act signing ceremony. He conducted person-on-the-street interviews, asking if they knew PhRMA spent hundreds of millions of dollars to keep Medicare from being able to negotiate drug prices, and if they had any messages for the folks in the building? Most of the responses were of the "f-you PhRMA, we got you!" variety.

PhRMA has literally never lost until the Inflation Reduction Act was passed. Even though it's modest, Medicare went from having no authority over drug prices to the authority and mandate to find the fairest price for certain drugs is a huge loss to the industry.

Alex wants listeners to understand that this win is as simple as it sounds. Who buys the most drugs in the world? Medicare. Why doesn't Medicare tell the pharmaceutical companies what they're willing to pay? This is called the Maximum Fair Price. No other peer nation doesn't have some kind of negotiated standard for drug prices.

While our guest and hosts would prefer that Medicare be allowed to negotiate the prices of all drugs used by beneficiaries, PhRMA was successful in limiting the Inflation Reduction Act drug provisions to only apply to ten pharmaceuticals. (Still, pharmaceutical companies are suing to block the implementation of price negotiations.)

Negotiating the prices for only ten drugs may seem like a drop in the bucket, but the cost of those ten drugs alone make up a huge amount of Medicare's spending on Medicare Part D. And in coming years Medicare will be able to negotiate over ten more drugs, and so on. This will squish the most excessive profiteering of the pharmaceutical industry and deliver savings of $9 or $10 billion dollars a year.

We give President Biden credit for taking an aggressive stance against PhRMA to finally make good on an evergreen Democratic campaign promise to lower drug prices. But we also give ourselves some credit. First there was the debate in Congress in 2019 over HR3, the Lower Drug Costs Now Act. Advocacy by groups likes ours resulted in the House passing a robust bill that would have dramatically lowered drug costs. Then in 2021 both Healthcare-NOW and Social Security Works fought hard to win major expansions of Medicare in the Build Back Better bill (we were on track to win a lot more than prices for ten drugs). But Senators Joe Manchin and Kyrsten Sinema tanked the whole bill in the Senate.

Those two battles led us to the Inflation Reduction Act aiming high from the start, and resulting in a bill that will make a big impact on drug spending by Medicare.