BREAKING: McCaskill Report Shows Medicare Could Save Billions with Negotiation on Prescription Drug Prices

Senator’s report shows nearly $3 billion a year could be saved on 20 drugs alone if Medicare could successfully negotiate drug prices directly

WASHINGTON – U.S. Senator Claire McCaskill, the top-ranking Democrat on the Senate Homeland Security and Governmental Affairs Committee, today released her latest report in her ongoing investigation into dramatic increases in prescription drug prices. The report found that drug prices directly negotiated by the government could save the Medicare Part D program $2.8 billion in a single year on the 20 most commonly prescribed brand-name drugs alone.

“When we don’t let Medicare negotiate for better prices, it puts the profits of big pharma ahead of the interests of Missouri seniors,” McCaskill said. “Getting bulk discounts is something every business does, and the fact that the federal government is prohibited from doing it for Medicare is unconscionable. Missouri families from every small town and big city across our state are worried about how they’re going to afford life-saving medications and we’ve got to do every single thing we can to lower drug costs.”

The report compared Medicare Part D spending on the 20 most commonly prescribed brand-name drugs in the program to corresponding prices negotiated by the Department of Veterans Affairs in 2015. In 2016, the Medicare program accounted for 29% of all retail prescription spending, but it is expected to account for 33% of projected spending by 2026. Despite the fact that Medicare represents such a significant share of prescription spending, federal law prohibits the government from negotiating Medicare Part D drug prices directly with pharmaceutical manufacturers. In contrast, the Department of Veterans Affairs can negotiate lower drug prices directly.

The report’s key findings include:

·         Even when applying the average rebate amount—17.5%—for Medicare Part D brand-name drugs published by the Centers for Medicare and Medicaid Services, and increasing negotiated federal prices by $13.46 to account for dispensing fees and other costs, Medicare and its beneficiaries could save a collective $2.8 billion in a single year under negotiated federal prices for the top 20 most commonly prescribed brand-name drugs alone.

·         Negotiated federal drug prices rose at significantly lower rates than list prices for the top 20 most commonly prescribed brand-name drugs in Medicare Part D.  After adjusting for inflation, the average list price for these drugs in the Part D program rose from $151.58 to $241.09 between 2012 and 2017—an increase of 59.1%—compared to an increase in the average negotiated federal drug price of $104.10 to $149.88—an increase of 44.0%—for the same drugs during the same time period.

·         The federal government spent over $139 billion on prescription drugs in 2016, or 42.3% of the total prescription drug expenditure for the United States. Lower negotiated drug prices suggest the federal government could achieve lower drug prices for other federal agencies and programs, including Medicare Part D, if it successfully leveraged its significant purchasing power.

READ THE REPORT: Manufactured Crisis: How Better Negotiation Could Save Billions for Medicare and America’s Seniors

McCaskill has made tackling rising healthcare and prescription drug costs a top priority in the Senate. In March, McCaskill released a bombshell report which found that the prices of several of the most popular brand-name drugs in the Medicare Part D program skyrocketed between 2012 and 2017, increasing at almost ten times the annual average rate of inflation in this period. Last week, her bipartisan legislation to prohibit “pharmacy gag clauses” that lead to consumers needlessly overpaying for prescription drugs cleared a key committee hurdle.

During McCaskill’s time as the top Democrat on the Senate Special Committee on Aging, she joined Republican Committee Chairman Susan Collins to launch an in-depth investigation into prescription drug price increases. McCaskill introduced legislation earlier this year to end taxpayer subsidies pharmaceutical companies receive for the billions of dollars they spend on prescription drug advertising each year, which currently is fully tax-deductible. Additionally, McCaskill’s bipartisan legislation to increase competition for generic drugs and help lower prescription costs was signed into law by President Trump. McCaskill also recently introduced legislation that would increase transparency in the pharmaceutical industry by requiring companies to display on their website the country of origin of all active pharmaceutical ingredients in the drugs they manufacture.

Earlier this year in February, healthcare and emergency room costs in Missouri and across the country were the focus of a roundtable discussion with McCaskill, ER doctors, patient advocates, and community health workers in Kansas City. In May, McCaskill held similar roundtable discussions in Columbia and St. Louis. She also introduced legislation that would bring greater transparency and consumer protections to the air ambulance industry, and allow states to better regulate medical costs associated with air ambulance services.

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