University of Chicago Medicine Breast Cancer June 2022
Erik Paulsen

Erik Paulsen

Dem plan cuts drug costs, but restricts access

By Erik Paulsen

It’s commendable that Democrats in Congress are determined to include prescription drug-pricing reforms in their Build Back Better spending bill. Far too many Americans struggle to pay for their medications, and high out-of-pocket drug costs are potentially life-threatening, especially for those with chronic diseases.

Unfortunately, the latest version of lawmakers’ drug-pricing plan contains bad ideas as well as good ones. In particular, it allows Medicare to set prices for a range of popular drugs, in an effort to save the government money. But this would reduce access to state-of-the-art medicines for millions of seniors, while severely setting back medical innovation.

As the bill moves toward final revisions, let’s hope for the sake of patients that legislators drop these worrisome provisions, and instead focus on policies that will make drugs more affordable.

GSWNH ErikPaulsen 123121

Erik Paulsen

To be sure, there are important initiatives to celebrate in the drug-pricing proposal. For one, it would limit annual out-of-pocket drug spending to $2,000 for those enrolled in Medicare Part D. It would also cap out-of-pocket insulin costs at just $35 a month — a major victory for the one in four seniors who live with diabetes.

We’ve needed reforms like these for years. According to a recent poll by the Kaiser Family Foundation, a third of patients living with a serious health condition struggle to afford their prescription drugs. Three in 10 Americans say they’ve failed to adhere to a prescribed drug regimen because of cost.

In fact, widespread drug non-adherence results in an estimated 125,000 deaths each year in the United States. Reducing out-of-pocket drug costs is the most direct way to address this crisis.

Yet Democratic lawmakers could undermine these important measures by including a price-setting scheme that will result in fewer medicines available for seniors. Under the proposed legislation, the Department of Health and Human Services would be free to “negotiate” the price of at least 20 Medicare-covered medicines within the next seven years.

But these wouldn’t be “negotiations” in the normal sense. Given Medicare’s buying power and the punitive excise tax the legislation would impose on drug makers who refuse to go along, the federal government would in fact be able to dictate price. Should a manufacturer walk away despite the tax, Medicare would simply refuse to cover the drug in question.

In the short term, this arrangement would deny seniors access to medicines that the government deems too expensive.

In the long term, government price restrictions could be even more harmful, as they would lead to a decrease in medical innovation. If the government is free to name its own price, the incentive to invest in medical breakthroughs will evaporate. Research budgets will shrink, and the number of new drugs released each year will plummet.

At a time when so many illnesses still lack adequate treatments, a policy that obstructs research into breakthrough cures, therapies, and vaccines is unacceptable.

The lives of millions of chronic-disease patients depend on affordable access to the latest prescription medicines. Congress can help these Americans with reforms that lower what they pay out-of-pocket for drugs. But policies that restrict drug access, and hamper medical innovation, should have no place on the healthcare agenda.

Erik Paulsen is a former Republican congressman from Minnesota. He served from 2009-19.

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