Medicare will negotiate drug prices. Big Pharma is really upset. AARP is really happy. What’s the REAL story?
Briefly: One of the key parts of the Inflation Reduction Act authorized Medicare to negotiate drug prices for 10 medications. Those 10 meds have been identified, and the howls of protest from Big Pharma are deafening: "But, our profits!!!!!"
Pharma is the most profitable sector in the economy, with a gross profit margin double that of non-pharma companies.
Lest you feel sorry for Big Pharma, you should know that the 10 medications are “older drugs and drugs that have really been blockbusters in the Medicare program. So the companies that have made these products have really reaped handsome profits from those drugs for many years, before they’re even eligible for negotiation.”
Oh, and about Pharma’s complaint that this will hamper innovation? Experts disagree. Overall changes to Medicare’s Part D drug program “will probably have a positive impact on drug innovation, especially in areas that address the unmet health needs of high-cost Medicare beneficiaries.”
Joseph Paduda is co-owner of CompPharma, a consulting firm focused on improving pharmacy programs in workers’ compensation. This column is republished with his permission from his Managed Care Matters blog.