The Build Back Better bill wants to lower prescription drug costs. Does it go far enough?

Even while President Joe Biden is promoting the new infrastructure package, he and Democrats are trying to lock down a vote on a social spending and climate bill — The Build Back Better Act. Part of that bill is aimed at lowering prescription drug prices for older Americans. Amna Nawaz takes a look at what's at stake in this bill.

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  • Judy Woodruff:

    Even while President Biden is promoting the new infrastructure package, he and Democrats are trying to win approval of a social spending and climate bill called Build Back Better.

    Part of that bill is aimed at lowering prescription drug prices for older Americans.

    Amna Nawaz has the details, as part of our look at what's at stake in this bill.

  • Amna Nawaz:

    Judy, one of the most debated pieces of the bill is an agreement that would allow the government through Medicare to negotiate prices with pharmaceutical companies on certain drugs starting in 2025.

    It would also cap out-of-pocket costs for seniors at $2,000 a year, starting in 2024. For diabetic patients, out-of-pocket costs for insulin would be capped at $35 for a 30-day supply That's starting in 2023.

    To help us understand more about the impact of this and its limits, I'm joined by Stacie Dusetzina, associate professor of health policy at Vanderbilt University School of Medicine.

    Professor, welcome to the "NewsHour." Thank you for making the time.

    That key provision in this proposal, the ability to negotiate for prescription drug prices, we know some Democrats wanted Medicare to have the power to do that with many more drugs, up to 250 drugs. That was significantly scaled back in this bill.

    Tell me about that and the impact you through that will have.

  • Stacie Dusetzina, Vanderbilt University:

    So it is a major scale-back from the original proposal, but I think it is still a very important change.

    So, to date, Medicare hasn't been able to negotiate for any drug prices. So the ability to negotiate for drug prices, even though it only starts with 10 drugs, and drugs that have been on the market for a long time, for about nine to 13 years, it is a major step forward, and I think it will result in savings overall, but it is very different than the original plan.

  • Amna Nawaz:

    Obviously, as you mentioned, this doesn't apply to new drugs.

    I guess, from the pharmaceutical company's perspective, if you're looking to maintain your profits or even increase your profits, how do you know they won't do things like just boost the prices of those drugs that aren't under negotiation to make up for some of that?

  • Stacie Dusetzina:

    We don't know that. So that is something that we're going to be watching.

    I think that another important part of this bill is, it does reduce the ability of companies to raise their prices above inflation in the Medicare Part D program and in Medicare Part B. So it is trying to address some of these potential concerns about price increases. But, certainly, new drugs may come out with higher prices. It's yet unclear.

    I do think that the ability to negotiate for some drugs, again, is completely different than the status quo. So being able to open up the door to drug price negotiations is an important first step.

  • Amna Nawaz:

    And what about the benefit for people with private insurance? Is it the same?

  • Stacie Dusetzina:

    So, for private insurance, they will not have nearly as many impacts from this bill.

    The largest one is really the provision around insulin coverage and being offered at $35. So it has dramatically scaled back when it comes to how the bill would affect the private insurance market. But the provisions also provide a huge amount of benefits and fix a lot of known problems with both Medicare and Medicaid.

  • Amna Nawaz:

    Professor, obviously another important provision, capping those out-of-pocket annual costs at $2,000 a year for people 65 and older.

    How many people is that likely to impact?

  • Stacie Dusetzina:

    So, estimates from 2019 suggest that over 1.5 million Medicare beneficiaries had spending of over $2,000 on the benefit.

    So we know that that's a pretty good estimate of how many people may be affected. We also know that a lot of people don't fill their prescriptions because of cost-related concerns. So the benefit could actually extend to more people.

    Separately, even if you don't think you're going to hit this $2,000 maximum, it provides financial security for you, in case you ever do need really expensive medications. So, I think the benefit is really for everyone in the Medicare Part D program.

  • Amna Nawaz:

    So we know bringing down prescription drug prices has been a battle for years, right, decades, even.

    Given the pushback we have seen from pharmaceutical companies, do you see this proposal as the best possible swing lawmakers have to try to negotiate for lower drug prices? Or is this an opening for future negotiations down the line?

  • Stacie Dusetzina:

    I think it's an opening. And it also recognizes some of the concerns that we have about the tradeoffs between lower prices and innovation, because the evidence for that tradeoff isn't very well-established.

    So I think this will give us some experience with drug price negotiation and thinking about how we could spend our dollars more wisely and opens the door to future discussions.

  • Amna Nawaz:

    Obviously, quickly, if you don't mind, I'll ask you as well. This — like a lot of things on Capitol Hill, there are mixed reviews, right?

    So conservative group attack this as a socialist scheme. Liberal groups say it's a watershed moment. How do you view it, as a policy expert?

  • Stacie Dusetzina:

    I think that this is a real win for consumers, and especially for Medicare beneficiaries.

    I spend a lot of time thinking about access to things like cancer drugs on the Medicare benefit. And I think the improvements here are very, very large for the consumer. I think that they may also open up concerns about how we set Drug prices initially and other places where we might need some intervention.

    But I think it's a very important first step.

  • Amna Nawaz:

    Professor Stacie Dusetzina, associate professor of health policy at Vanderbilt University, thank you so much for joining us.

  • Stacie Dusetzina:

    Thank you.

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