Article Summary –
The pharmaceutical industry, supported by Republicans, is campaigning to repeal the drug price negotiation provisions in President Biden’s Inflation Reduction Act, arguing through PhRMA-funded research that these measures will increase costs for Medicare Part D recipients. Despite PhRMA’s claims, which rely on a contested study by Milliman suggesting increased out-of-pocket costs for some beneficiaries, the provisions are projected by CMS to save millions for beneficiaries and the government. The act remains broadly popular among voters, with critics of PhRMA’s stance highlighting its reliance on misleading assumptions to protect profits at the expense of consumer savings, while noting that taxpayer-funded NIH research plays a crucial role in drug development.
The pharmaceutical industry, along with its Republican allies, is urging a repeal of the Inflation Reduction Act provisions that allow the federal government to negotiate drug prices for Medicare Part D. In a fresh ad campaign, the Pharmaceutical Research and Manufacturers of America (PhRMA) claims, through a study it funded, that these lower prescription drug prices could lead to higher costs for seniors.
PhRMA, backed by an annual budget exceeding $500 million, employs online ads warning that the 2022 law’s attempt to reduce drug costs might increase consumer expenses. For instance, one ad cautions that “Seniors will likely see higher medicine costs because of the price setting provisions in the IRA.” Clicking these ads leads users to a PhRMA webpage that claims “most Part D patients are not expected to experience any cost savings from price setting in 2026,” urging lawmakers to revisit the IRA’s approach.
However, Medicare drug price negotiation is highly supported, with 85% of registered voters in favor, according to a September 2024 KFF Health poll.
Republicans in Congress, who will have slim majorities, have unanimously opposed the Inflation Reduction Act, advocating for its full repeal. The Republican Study Committee’s 2025 budget plan and the Heritage Foundation’s Project 2025 blueprint both call for overturning the act’s drug price strategies.
The Inflation Reduction Act ensures a $2,000 annual cap on out-of-pocket prescription costs for Medicare Part D users by 2025, a $35 monthly cap for insulin, and mandates that Centers for Medicare and Medicaid Services negotiate drug prices starting 2026.
The first 10 negotiated drug price reductions are expected to save $1.5 billion for beneficiaries collectively and save the government $6 billion. A Department of Health and Human Services report estimates that 4.6 million enrollees would have met the $2,000 limit by June 2024.
PhRMA’s assertion of increased costs is based on an actuarial study it commissioned from Milliman. This study predicted that “3.5 million Part D patients could experience higher out-of-pocket costs” and argued slower progression towards out-of-pocket limits due to price negotiations. Yet, it also noted that millions might see savings or no change.
Patients For Affordable Drugs and Protect Our Care contest PhRMA’s claims, stating the study uses misleading assumptions. They suggest it merely picks convenient IRA provisions to argue against.
The conservative American Enterprise Institute criticized these assumptions as “questionable,” noting if CMS secures prices below legal caps, the study’s results may prove invalid.
“PhRMA is citing a misleading report,” said Matthew Cortland of Data for Progress, highlighting that the Inflation Reduction Act benefits consumers.
PhRMA did not immediately respond to requests for comment.
Andrea Ducas from the Center for American Progress noted, “PhRMA is fighting to stop negotiation in court, revealing their concern over profit loss and consumer savings.”
PhRMA’s site warns that reduced profits might lead to diminished research and development efforts, impacting future drug availability, a long-held industry talking point. However, a Congressional Budget Office analysis anticipated only a minor impact, with eight fewer drugs over a decade.
“The NIH covers much initial research,” Cortland emphasized, noting taxpayer-funded studies’ importance in advancing medical research.
Brad Woodhouse from Protect Our Care accused big drug companies of using “scare tactics and lies” to hinder progress. “The Inflation Reduction Act is saving people money, full stop,” he stated emphatically.
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