US prescription drug spending tops $500 billion a year, looms over 2020 elections

With U.S. prescription drug spending exceeding $500 billion a year and growing three times faster than inflation, a cost-control plan by House Democrats remains stuck in the Republican-led Senate, establishing a major campaign issue in congressional and presidential races this year.

The Lower Drug Costs Now Act, approved last month on a party-line vote, would save households, businesses and taxpayers billions of dollars, and slash prices on medicines for millions of Californians living with conditions like diabetes and asthma, according to backers.

“Prescription drug prices are literally killing people right now,” Rep. Jared Huffman, D-San Rafael, said Friday. Expensive medications are “forcing people to choose between other basic needs and their own health.”

Under the legislation approved by the House, the cost of the most commonly used insulin medications for more than 3 million California diabetes patients - currently from $1.200 to $20,000 a year - would drop to as little as $400 a year, according to a House Ways and Means Committee report cited by Huffman. Asthma drugs for 2.4 million Californians would be cut from about $1,400 to $270 a year.

U.S. drug prices are nearly four times higher than the combined average in 11 other countries in Europe and Scandinavia as well as Japan and Australia, and annual spending per person ranged from $318 in Denmark to $1,220 in the U.S., the House committee report said.

The Department of Health and Human Services said prescription drug spending soared from $354 billion in 2009 to an estimated $535 billion in 2018, a 50% increase compared with 17% inflation over the same period.

The price surge already has continued in 2020, with the cost of 572 drugs increasing by an average of 5%, this month, according to a report released last week by GoodRx, an organization that tracks pricing for more than 3,500 pharmaceuticals.

Against this backdrop, the House in December approved HR 3 with a 230-192 vote, with all but two yes votes from Democrats and all of the no votes from Republicans and Michigan Rep. Justin Amash, who switched from the GOP to independent in July. Huffman, a North Bay congressman best known for his environmental advocacy, said drug cost controls are “not an inherently toxic or partisan” matter, noting that “a lot of Republicans” would support some reforms.

“We would love for the Senate to step up and have some votes on this issue,” he said.

Senate Majority Leader Mitch McConnell signaled last year he was uninterested.

“Socialist price controls will do a lot of left-wing damage to the health care system. And of course we’re not going to be calling up a bill like that,” McConnell said, according to a Politico report.

Senate Republicans, wary of regulating a powerful private pharmaceutical industry, have not united around drug pricing legislation of their own, despite an appeal by President Donald Trump for bipartisan action.

Drug prices will be a “huge issue” in 2020 presidential campaigning, Huffman predicted, calling it “winning ground for Democrats because we’ve been delivering on health care, and Trump and the GOP have been fighting to take it away. The Senate would be smart to take up our bill and make this a bipartisan win for everyone, but they rarely work that way.”

The nation’s pharmaceutical companies, which spend millions of dollars lobbying Congress and federal agencies, are opposed to the Democrats’ bill as approved, contending it would slash their annual revenues and sharply reduce new medicines developed by small biotech firms.

The legislation includes provisions that would:

Give Medicare the power to negotiate prescription prices directly with drug companies and make the lower prices available to people with private insurance, as well. In Huffman’s district from Marin County to the Oregon border, 123,016 people rely on Medicare Part D and 498,057 get prescription drug coverage from private insurance.

Every other industrialized nation negotiates prices with the pharmaceutical industry and drug companies still earn profits there, Henry Waxman, a former California Democratic congressman, said in a HealthAffairs blog.

Limit the maximum price for any negotiated drug cost to the average price in similar countries.

Set a $2,000 cap on out-of-pocket drug expenses for people on Medicare.

Save taxpayers about $500 billion over the next ?10 years and reinvest the savings in expanding Medicare benefits to cover other health services, such as dental, vision and hearing, combat addiction and pursue new medical treatments and cures.

A Kaiser Health Tracking Poll in 2015 found little difference between Democrats and Republicans across America on whether drugs for chronic conditions like HIV, cancer and mental illness should be affordable to people who need them. Overall, 77% said that should be a “top priority” for the president and Congress, including 85% of Democrats and 73% of Republicans.

Federal government action to reduce drug prices was favored by 63%, including 74% of Democrats and 56% of Republicans.

The poll also found 42% of the public finds it “very or somewhat difficult” to afford health care, with a range from 56% for households with less than $40,000 annual income to 41% for those earning $40,000 to $89,000 and only 16% for households earning $90,000 or more.

The California Medical Association backed HR 3 in a letter to the state’s congressional delegation last month, calling the cost of prescription drugs “one of the greatest challenges impacting our patients’ health and well-being.”

One in four patients say they or a relative did not fill a prescription in the past year due to high cost, and the same percentage of cancer patients are choosing not to fill a prescription or are taking less medicine, also due to the price, association President Dr. Peter Bretan said in the letter.

Medicare prescription drug spending reached $119 billion in 2016, more than double the amount in 2007, Bretan said. Prescription medicines represent 19% of all Medicare spending.

“We believe that HR 3 will result in fairer prices for patients’ medications and ensure that seniors, many of whom live on fixed incomes, will have access to the medicines they need,” Bretan said.

The Pharmaceutical Research and Manufacturers of America, a trade association representing the biopharmaceutical industry, contends that drug costs account for just 14% of the nation’s health care spending. That amount for medicines grew by $18 billion from 2015 to 2018, an amount dwarfed by the $158 billion in spending for hospital care and $94 billion for physician and clinical services, according to the pharmaceutical trade group.

The approved House bill would “fundamentally restructure how patients access medicines by giving the federal government unprecedented, sweeping authority to set medicine prices in public and private markets while importing price controls from other countries that restrict access to innovative medicines,” said Nicole Longo, a spokeswoman for the drug makers trade group.

A study funded by the group found the bill would cut annual revenue for some drug companies by 58%, leading to a nearly 90% reduction in new medicines coming from small biotech firms.

Targeted therapies, medicines requiring long-term outcomes and those with lower revenue potential would be affected by the bill’s “drastic change to economic incentives,” according to the study.

Last year, the pharmaceutical makers trade association spent nearly $23 million on lobbying, accounting for 10% of the $228 million spent by the pharmaceutical and health products sector, which employed 1,418 lobbyists, according to OpenSecrets.org, a nonpartisan, independent research group that tracks money spent in U.S. politics.

The pharmaceutical sector made about $44 million in federal campaign donations during the 2017-18 election cycle, the nonpartisan research group said.

You can reach Staff Writer Guy Kovner at 707-521-5457 or guy.kovner@pressdemocrat.com.