Article Summary –
The pharmaceutical industry, supported by its Republican allies, is advocating for the repeal of the Inflation Reduction Act’s provision that allows the federal government to negotiate drug prices for Medicare Part D, arguing through a PhRMA-funded ad campaign that it will actually increase costs for consumers. Despite these claims, Medicare drug price negotiation remains widely popular, with 85% of registered voters supporting it, and the law is projected to save beneficiaries billions in drug costs, including a $2,000 cap on out-of-pocket payments starting in 2025 and significant savings from negotiated prices. Critics, including advocacy groups and some think tanks, challenge the validity of PhRMA’s claims and studies, suggesting that the industry is using misleading tactics to protect its profits, while also noting that much of the initial drug research is funded by taxpayers.
The pharmaceutical industry, alongside Republican allies, aims to repeal the Inflation Reduction Act provisions allowing the government to negotiate lower Medicare Part D drug prices. Pharmaceutical Research and Manufacturers of America (PhRMA) has launched an ad campaign, based on their research, claiming these negotiations could lead to higher costs for seniors.
PhRMA, with an annual budget over $500 million, runs ads warning that the law’s price measures may ultimately increase consumer costs. Clicking these ads directs users to a PhRMA page claiming Part D patients might face increased costs and urging lawmakers to amend the price setting process.
Medicare drug price negotiation remains popular, with 85% of voters in support, according to a September 2024 KFF Health poll.
Republican lawmakers, slated to hold narrow congressional majorities, have consistently opposed the Inflation Reduction Act and seek its repeal, as reflected in the Republican Study Committee’s 2025 budget plan and the Heritage Foundation’s Project 2025 blueprint.
The law’s measures include a $2,000 annual out-of-pocket cap for Medicare Part D starting in 2025, a $35 monthly insulin copay cap, and a requirement for the Centers for Medicare and Medicaid Services to negotiate drug prices beginning in 2026.
CMS expects initial negotiated drug prices to save beneficiaries around $1.5 billion and the government $6 billion. An October 2024 report showed 4.6 million Part D enrollees would have benefited from the $2,000 cap by mid-2024.
PhRMA’s higher cost claims are based on a Milliman study, estimating 3.5 million Part D patients might see increased costs. However, millions could benefit or see no impact from lower prices.
Patients For Affordable Drugs and Protect Our Care oppose PhRMA’s claims, criticizing the study’s methodology.
The conservative American Enterprise Institute highlighted questionable assumptions in the analysis: “The Milliman actuaries assumed prices for the first ten drugs would equal the maximum allowed, but lower negotiated prices could alter findings.”
Matthew Cortland, from Data for Progress, noted the study used selective data and ignored the broader positive impacts of the Inflation Reduction Act.
PhRMA did not respond to requests for comment. Andrea Ducas from the Center for American Progress stated: “PhRMA’s court fights highlight their concerns over profit loss and potential consumer savings.”
The PhRMA site includes industry claims that reduced profits might hinder future drug development. However, a 2019 analysis suggested only a minor impact on drug innovation.
Brad Woodhouse from Protect Our Care criticized pharmaceutical companies for using fear tactics to maintain high profits at the expense of consumers: “The Inflation Reduction Act is saving people money, full stop.”
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