Myth vs. Fact: The Senate’s latest price setting proposal

The narratives being built around the Senate’s latest price setting proposal frame it as a bill intended to lower drug prices for patients and address rising inflation. But those narratives aren’t the facts. Here, we bust those myths.

Myth: Under the proposal, the government will negotiate with manufacturers on medicine pricing.

Fact: This is not a “negotiation.” It is a game of chicken and seniors and patients on Medicare and Medicaid are the losers. If a manufacturer does not agree to the price dictated by the government, they are forced to pay a massive excise tax of as much as 95% of a medicine’s sales. Making matters worse, as of last week, the proposal adds another penalty to the mix. Now if a manufacturer doesn’t accept the government-set price, they have to either pay the 95% tax on the medicine’s sales or withdraw ALL of their medicines from Medicare and Medicaid. Giving impossible ultimatums — with patients’ wellbeing in the balance — isn’t negotiation, it’s coercion.

Myth: Innovation won’t be harmed by the drug pricing provisions in the Senate reconciliation bill.

Fact: The bill guts incentives necessary to encourage investment in R&D after medicines are approved. Long-term research following a medicine’s approval often allows researchers to establish that a medication works in patients that have another stage of the illness or different disease. This type of research is a fundamental part of medical innovation. Nearly 60% of oncology medicines approved a decade ago received additional indications for other types of cancer. The Senate’s drug pricing bill puts this kind of medical innovation in jeopardy by setting the price of medicines well before many of these critical advancements can be realized. This disincentivizes the investment necessary to conduct post-approval R&D and get approval for new uses for lifesaving treatments.

Myth: The Senate reconciliation bill will be a huge benefit for seniors on Medicare, improving affordability.

Fact: The bill doesn’t do enough to help patients better afford their medicines. For example, while the bill does include an out-of-pocket cap in Medicare Part D, the $2,000 out-of-pocket cap will help less than 10% of beneficiaries in the program and doesn’t take effect until 2025. The bill also delays a policy that would have provided real and immediate relief to millions of seniors by requiring Part D plans to share some of the massive rebates and discounts they get from manufacturers directly with seniors at the pharmacy counter. At the same time, this package significantly jeopardizes more affordable generic and biosimilar medicines that help control costs for all patients in the United States from coming to market and compete. Today, more than 90% of all prescriptions filled in the United States are lower-cost generic medicines. That may not be the case if this bill is implemented.

Learn more about why government price setting is bad policy and better ways Congress could help patients access and afford their medicines.

Take action: Tell Congress to protect access to new medicines.