Supporters of the Inflation Reduction Act have made claims about lowering the cost of healthcare and prescription drugs. But the bill does neither and sets a dangerous precedent that will lead to less access to care and fewer cures for patients. In fact, not only does it harm healthcare – it funnels money toward the two entities that are currently the biggest problems in healthcare – Pharmacy Benefit Managers and insurers.
The proposal claims to give the government the ability to ‘negotiate’ drug prices in the Medicare space. But the form of negotiation included in the bill is something that only the government would call negotiation. For instance, on Page 89 of the 725-page bill, the penalties for the drug companies who don’t take the price offered by HHS Secretary are described: they will pay ten times the cost of the medication if they don’t comply. That isn’t negotiation – that is price fixing. And, with the US already experiencing over 200 medication and solution shortages price fixing will only make things worse instead of better.
With price fixing money can be saved in the short-run, but this short-run savings comes at a high cost – fewer drugs in the future. CBO forecasts that the result of this proposal is 59 fewer drugs coming to market over the next several decades. That may not sound like much unless you are one of the 10% of Americans with a rare disease or currently incurable disease. For example, the 100,000 US citizens with sickle cell disease, which has substantial morbidity and mortality are now within reach of an innovative curative therapy
Now, drug prices are high. But if politicians were actually paying attention to the market, they could see why – middlemen.
Instead, the current proposal actually finds a way to give these market leaches more money – and for that matter even more leverage over my patients. On page 215, the bill proposes a permanent repeal of the Trump rebate (aka kickback) rule. And, while a rule created by Trump might be polarizing – the policy itself isn’t. In fact, former DNC Chair Howard Dean, M.D. was a big fan of the rebate rule stating that it would “dramatically lower out-of-pocket costs for tens of millions of older adults and help them afford lifesaving expensive medicines.” The reason is simple; rebates are legalized kickbacks that PBMs collect from manufacturers. In 2020, David Balto published the estimate of kickbacks collected to be close to $200 billion per year.
Those kickbacks and fees collected by PBMs account for 80% of the cost of insulin and similar amount for other drugs. The United States of America will NEVER solve the drug pricing problem without PBM reform – and instead of reform this bill gives PBMs steroids.
Lawmakers wondering how to vote, like moderate Senator Kristin Sinema of Arizona and the members of the bipartisan Problem Solvers Caucus need to think about all Americans, but especially those with pre-existing conditions and seniors as they ponder their vote on the partisan bill.
They need to correctly diagnose the problem – middlemen. Figure out the cure – more power to the patients and physicians. And most importantly show the empowered, Gucci-clad cronies the door –instead of letting them commit malpractice on my patients.
Marion Mass, M.D. is a practicing pediatrician, co-founder of Practicing Physicians of America and leadership in Free2Care.