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What The Budget Deal Means For Medicare Drug Prices


The new budget passed late this week includes changes for Medicare patients. It will require drug companies to give deeper discounts to Medicare on expensive prescriptions. That should reduce the cost of drugs for patients. The skyrocketing cost of prescription drugs is something followed closely by Elisabeth Rosenthal, a veteran healthcare reporter and editor-in-chief of Kaiser Health News, who joins us from her offices. Thanks so much for being with us.

ELISABETH ROSENTHAL: Thanks for having me.

SIMON: Will this and other features you see in the budget help reduce the cost of prescription drugs?

ROSENTHAL: Well, to a small number of people, it will. I mean, this really targets the Medicare-age population and Medicare plans. And for people who have very high drug costs within Medicare, it will definitely help them. But it, of course, doesn't solve the much larger problem of the very high prescription drug prices that everyone pays in this country. And P.S., what we're talking about for Medicare patients, even, are discounts on these very high initial prices. So, you know, a discount of a really high price still isn't a very good deal.

SIMON: Why do we have a problem with this in the United States?

ROSENTHAL: Well, we're the only country that doesn't in some way directly negotiate prescription drug prices with manufacturers - the only developed country, that is. I mean, most other countries in some form either evaluate the cost-benefit ratio of a new drug and decide what they're willing to pay or, you know, very aggressively negotiate with drug manufacturers, particularly for older drugs, as they age.

SIMON: Insulin in one form or another has been saving lives for - what? - 80 years.


SIMON: Why has the price gone up in recent years?

ROSENTHAL: Prices will rise to whatever the market will bear, right? We see that uniquely in the U.S. One vial of insulin in the U.S. costs seven times what it does in Germany. So there's a huge disparity there. Some of the reasons have to do with reformulations of insulin that are, in fact, better than some of the older ones. Although, when I'm talking about that 1 in 7 price comparison, that's the same exact insulin.

In the U.S., what's happened - and this is something that I know the Trump administration is looking at and many experts in the field have decried - the slow arrival of biosimilars or generic insulins onto the market, which are on the market in other countries. The problem in this country is the lowering of prices of insulin. And insulin patents have been held up in the courts for years now in suits and countersuits between the three big insulin drug makers, including by Eli Lilly, which is the former employer of our new HHS Secretary.

SIMON: That's Alex Azar - has been appointed Secretary of Health and Human Services.


SIMON: Is he the kind of choice that gives you optimism that prescription drug prices will come down?

ROSENTHAL: Well, there's a certain argument to be made that Alex Azar of all people on Earth understands how the games are played and how these suits and countersuits about making generics or making biosimilars have held up the arrival on the U.S. market and have raised prices for everyone. On the other hand, there's ongoing concern about the revolving door between government and pharmaceutical companies such that you wonder, is their loyalty to the American people, or is their loyalty to the pharmaceutical world from which they came?

SIMON: I don't think I can think of any politician who says, and if you elect me, I promise prescription drugs will cost more.

ROSENTHAL: (Laughter).

SIMON: I mean, on the contrary, every politician says, elect me, and I'll do something to bring down the cost of prescription drugs. Why doesn't that get done?

ROSENTHAL: Yeah. Everyone agrees that our prescription drug costs are too high - both right and left - you know, Democrat, Republican. It's one of the few points of information, points of fact that everyone agrees on. The problem is everyone disagrees on how best to tackle that. And there are a lot of forces that are resisting any change at all.

The bipartisan solution which Senator Klobuchar and Senator John McCain have proposed is allowing prescription drug imports from other countries, so we allow for a global competition in the sense of, you know, if everyone else is getting a better deal than us, why can't we buy our prescription drugs from there the same way we buy our, you know, refrigerators and cars?

SIMON: Elisabeth Rosenthal, editor-in-chief of Kaiser Health News and author of "An American Sickness: How Health Care Became Big Business And How You Can Take It Back." Thanks so much for being with us.

ROSENTHAL: Thanks for having me.