How a potential Senate deal could lower health care costs for millions of Americans

For the first time, the U.S. government could have the power to negotiate prices for some of the costliest drugs covered under Medicare. The proposed legislation would also help Medicare recipients by imposing penalties against drug manufacturers who raise prices too quickly and removing some copay requirements. Julie Rovner of Kaiser Health News joins Laura Barrón-López to discuss.

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  • Judy Woodruff:

    The U.S. Senate is set to vote on President Bidens proposed budget package next week after Democrats struck a deal on health care and climate provisions. Some key proposals in the bill aim to lower the cost of prescription medication for seniors.

    Laura Barrón-López has our look.

  • Laura Barrón-López:

    Judy, for the first time, the federal government could have the power to negotiate prices for some of the costliest drugs covered under Medicare.

    The proposed legislation would also help Medicare recipients by capping out-of-pocket drug costs at $2,000 a year, imposing financial penalties on drug manufacturers who raise prices faster than inflation, and removing the 5 percent co-pay beneficiaries must pay when they max out on coverage for high-cost drugs.

    Drug companies have fought these types of drug pricing reforms for years. But, if the bill passes, it could provide relief to millions of Americans.

    For more on all this, I'm joined by Julie Rovner of Kaiser Health News.

    Julie, thanks for being here.

  • Julie Rovner, Kaiser Health News:

    Thanks for having me.

  • Laura Barrón-López:

    So, Julie, Democrats have been trying to allow Medicare to negotiate drug prices for some 20 years.

    So how significant would this be if this bill passes? And what impact would it have on people?

  • Julie Rovner:

    It's a big deal.

    Democrats, as you say, have been trying to allow Medicare to negotiate drug prices for really decades going back to the 1980s. In 2003, when Republicans passed the bill that created the Medicare drug benefit, Medicare was affirmatively not allowed to negotiate prices. So they have been fighting about this ever since.

    It would start with just a few drugs, really just 10 the first year, and it would not expand very much. But some of the most expensive drugs are an enormous part of what Medicare spent on drugs. So it could have an outsized impact.

  • Laura Barrón-López:

    This is for 20 of the costliest drugs, correct?

    But does this apply to any new drugs and what companies charge?

  • Julie Rovner:

    It does not apply to new drugs, at least initially. They have to have been on the market for quite some time without generic competition. So these are for drugs that are very expensive, but don't have anything that helps bring those prices down.

    The government would step in to do that. And, eventually, it would be 20 drugs. At the beginning, it would only be 10 drugs.

  • Laura Barrón-López:

    OK.

  • Julie Rovner:

    So, it's a very small number that the negotiation applies to.

  • Laura Barrón-López:

    As you know, inflation is high. People are really worried about all of their expenses. So what kind of savings will people see from the cap on co-pays?

  • Julie Rovner:

    People could see significant savings.

    People right now, there is — as you mentioned, there's a catastrophic portion of the Medicare drug benefit where, if you go over that, you only have to pay 5 percent. But that 5 percent can be a lot of money with some of these really expensive drugs.

    So the combination of not having to pay that 5 percent and not having to pay more than $2,000 a year on co-pays could save millions of Medicare beneficiaries a lot of money.

  • Laura Barrón-López:

    Democrats are also contemplating within this deal continued cost savings for people who have insurance under the Affordable Care Act. What does it do in this bill?

  • Julie Rovner:

    Basically, it continues a policy that Congress put in place in 2021 that made larger subsidies for people buying coverage under the Affordable Care Act who were already eligible and made some people who had not been eligible. Those who earn about $50,000 a year or more had been ineligible for any subsidy. So it made those people eligible.

    That was — at the moment, those will expire at the end of 2022 if Congress doesn't extend them. This would extend them three years. It would be really important, because, if Congress doesn't extend them, these people will start getting notices of premium increases, in some cases, could be premium doublings, right around the time they vote, in early November.

  • Laura Barrón-López:

    Right. They would have gotten those right before November.

    And that gets me to the politics of this. All the provisions that we just talked about that could potentially be passed, can you tell us a little bit about the potential political benefit for Democrats if they — if they succeed?

  • Julie Rovner:

    Well, this is something that Democrats have been promising for the last several presidential elections and something they haven't been able to do, partly because of the power of the prescription drug industry.

    And they're already fighting this tooth and nail. As much as people are saying, this is such a small piece of what started out as this President Biden's Build Back Better bill, it's still really significant when it comes to prescription drug spending.

  • Laura Barrón-López:

    Also, Democrats are considering a measure to lower the cost of insulin. That could be a potential add-in to this larger reconciliation bill. What do we know so far about that?

  • Julie Rovner:

    We know that there's been a lot of people who are supporting this, have said they want to add it. This has been a bipartisan effort to cap the price of insulin for people with diabetes, basically, at $35 a month, that, right now, there's people who die because they can't afford their insulin.

    It's not clear exactly which provision we will make it in. But there's certainly an effort to do something in specific about insulin.

  • Laura Barrón-López:

    And, as we mentioned earlier, inflation is high. Americans are struggling to pay for groceries and other consumer goods.

    So, when you look at this slew of health care benefits that could potentially pass, how much difference do you think it could make for people's bottom line?

  • Julie Rovner:

    Well, obviously, for the Affordable Care Act, it could make a — it will make a difference for them not getting a huge increase, which is not something that that's really that small. Even though it won't change anything, if they don't do it, it would go up very much.

    But drug prices have been a continuing problem, rising drug prices for Americans. They have told pollsters for years doing something about drug prices is very popular, even before we had this sort of spate of high inflation. Drug price inflation has been a problem going back many, many years, and, as I said, something both parties would like to do.

    President Trump tried to do something and didn't get very much done. So this would be a big win for the Democrats.

  • Laura Barrón-López:

    Well, thank you so much, Julie Rovner of Kaiser Health News, for joining us today.

  • Julie Rovner:

    Thank you.

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