Recently, I voted in the Senate Finance Committee against the Prescription Drug Pricing Reduction Act, which includes major changes to how Medicare and Medicaid reimburse for drugs. While I agree that Congress should be working to help lower drug prices, there unfortunately were serious issues with this specific legislation.
I had concerns about the package in part because senators only had 48 hours to review a description of the concepts that would be voted on and we were not able to review the actual legislative text or get feedback from stakeholders beforehand. But one of the most serious issues with the bill is how it would mandate government price controls under Medicare Part D, which helps provide prescription drug coverage for seniors.
Part D relies on the private sector to deliver and manage benefits. Its system, based on choice and competition, has been a great success. It cost 45 percent less in its first ten years than expected, and according to a recent study, nearly 9 in 10 seniors are satisfied with the program.
One of the key pillars leading to success of the Part D program is a provision in the law that prevents the federal government from fixing prices on prescription drugs or placing nationwide limits on the drugs that will be available to seniors and the disabled. I wholeheartedly support this provision, because important medical decisions should be made between seniors and their doctors, not by Washington. It does not mean that seniors are paying higher prices. Medicare prescription drug plans have strong incentives to negotiate discounts that would be as low – or lower – than anything the government could negotiate.
The Prescription Drug Pricing Reduction Act would erode that provision by dictating that manufacturers pay a rebate to the government if the price of a drug increased above inflation. It is not clear what the impact of this new price control would be on the launch price of new lifesaving or life-improving drugs. Would manufacturers just set their initial prices higher? Price controls sound good in theory, but the problem is they do not work.
In the 1970s when Diana and I were starting our shoe store, President Nixon tried to control the price of gasoline and other goods. It was terrible for the consumer. Do you remember the long lines at the gas pumps? The Veterans Administration (VA) drug program is another good example, which shows how government price controls can affect patients. Many veterans have complained to me that they can’t get the drugs their doctor prescribed and that they want and need to have.
In the VA system, the government sets a price on a drug it can get at the cheapest rate, and limits or restricts access to those it cannot get at cheap rates. As a result, recent studies show that the VA benefit does not cover almost one-fifth of the most commonly prescribed Part D drugs. I do not think seniors want to experience these access restrictions in Part D. In fact, I have talked to many veterans in Wyoming who have told me that they signed up for Part D so that they could finally get the drugs they needed that they could not get through the VA. While the Senate Finance Committee passed the Prescription Drug Pricing Reduction Act, it still needs to be considered by the full Senate and the House before it becomes law. I hope that ultimately it is amended in a way so I can support it.
We have been working hard to help lower drug prices, and this isn’t the only way. Throughout my time in the Senate, I have supported numerous measures to reduce the cost of prescription drugs. Last year, I supported the Patient Right to Know Drug Prices Act and the Know the Lowest Prices Act, both of which were signed into law. In June, I voted in the Senate Health, Education, Labor and Pensions (HELP) Committee to support the Lower Health Care Costs Act, which the Congressional Budget Office projected would reduce spending on prescription drugs by $4.6 billion. That bill now awaits consideration by the full Senate.
My colleagues and I are working to find some areas of bipartisan agreement to make changes to our system so prescription drugs are more affordable while ensuring we don’t inhibit innovation or development of new drugs. I have heard from countless folks in our state about challenges they face trying to afford their medication, and I am very concerned about the toll this is taking on American families and our federal budget. I also operate with the knowledge that Medicare has been a support system for millions of Americans for decades. I want to make sure it remains available over the long-term for the hard-working Americans who have earned those benefits and paid into the system.
Legislatively mandated price limits are government price controls. Beware when the federal government says it knows how best to protect you.