Prescription drug prices are hitting Americans particularly hard. The average American now spends approximately $1,200 per year on medication – more than anyone else in the world. Prescription drug spending and price increases have surged far more in the U.S. in the last decade than in other countries. Price surges for insulin have particularly attracted interest because it is so widely used and because the price in the U.S. for this century-old medicine has doubled, and in some cases tripled, in the last decade.
Several factors contribute to rapidly rising drug prices in the America. Most countries control and negotiate drug prices. The U.S. government does not. There are unique challenges to bringing generics to market in America. Pricing and business practices in the pharmaceutical industry are less transparent in the U.S. than in other countries.
Because the surging costs of prescription drugs negatively affects so many Americans, there is rising bipartisan resolve to do something about it. President Biden has made it a top priority. The Problem Solvers Caucus, a group of 28 Democratic and 28 Republican members of the House, and the Common Sense Coalition, a group of 16 moderate senators from both sides of the aisle led by Senators Susan Collins (R-ME) and Joe Manchin (D-WV), are also focused on prescription drug prices.
Senators Charles Grassley (R-IA) and Ron Wyden (D-OR) introduced one leading example of a bipartisan measure to address the problem in September 2019 – the Prescription Drug Pricing Reduction Act. According to the non-partisan Congressional Budget Office (CBO), the bill would save seniors and Americans with disabilities $72 billion in out-of-pocket costs in Medicare Part D and reduce premiums by $1 billion. The CBO estimated that the entire bill could save taxpayers more than $94 billion over the next decade. The bill would impose some stringent price reporting controls on the pharmaceutical sector, as well as continuing some significant rebates from drug manufacturers. Pharmaceutical companies remain opposed to the bill.
Although the bill had bipartisan support in the last Congress, then Senate Majority Leader McConnell (R-KY) did not put the legislation on the Senate’s calendar. Some of the bill’s provisions were included in the appropriations bill signed into law at the end of 2020. Other provisions, including insulin price controls, will likely be reintroduced in the 117th Congress with bipartisan support.
Other proposals focus on more specific aspects of the problem. There is bipartisan interest in Congress in cracking down on backroom deals that keep lower-priced generics off the market. The Federal Trade Commission has found that pay-for-delay agreements slow generics getting to market by an average of 17 months. In the meantime, consumers must continue paying brand-name drug prices, which can be as much as 85 percent higher than the prices of their generic counterparts.
One example of bipartisan legislation that is aimed to make it easier to bring generic drugs to the market is the Preserve Access to Affordable Generics and Biosimilars Act. It was introduced in the last Congress in the Senate by Senators Chuck Grassley (R-IA) and Amy Klobuchar (D-MN) along with three additional Republican and three additional Democratic Senators. It was introduced in the House by three Democratic Representatives and two Republican Representatives. The purpose of the bill is to limit anticompetitive pay-for-delay deals that slow the introduction of affordable follow-on versions of branded pharmaceuticals. This bill, or something similar, is expected to be reintroduced on a bipartisan basis in this Congress.
