The Medicare program of the United States is one of the most important and transcendental to offer medical care to low-income indivials, whether they are the elderly, or people with disabilities or severe and chronic medical conditions. It is a federal program administered by the Centers for Medicare & Medicaid Services (CMS).
The Medicare program is made up of three parts (A, B, and C) I being Part C the one sees and covers the drugs needed by the covered populations. The United States has been fighting big pharma speculation for years, and now there is a plan to cut ridiculously high prices for drugs that, in other countries, cost up to 10 times less.
Medicare Plan Seeks to Eliminate Drug Price Disparities in the US
The prices of essential medications can vary considerably worldwide, which generates a complex situation for patients and health systems, particularly that of the United States, where the same medicine can cost up to ten times (or more) compared to the prices seen in other countries.
For example, Eliquis, the Bristol Myers Squibb blood thinner has an annual list price of $7,100 in the United States, while in countries such as Japan, Canada, Germany, the United Kingdom and France, the cost ranges from $650 to $940. And no, there’s no typo, no extra ceros there: that’s the actual prices in the US.
Other unexplainable price is seen in Stelara, Johnson & Johnson’s arthritis treatment is listed at $79,000 in the US, while in Germany, Canada, the United Kingdom, Japan and France, the price varies between $12,000 and $30,000. Keytruda, Merck’s cancer drug has an annual list price of $191,000 in the United States, while in countries such as the United Kingdom, Canada, France, Germany and Japan, the cost ranges from $44,000 to $115,000.
Medicare Now Engaging in Drug Price Negotiations
While Americans often pay significantly more for medications compared to other developed nations, a glimmer of hope emerges with Medicare’s first-ever drug pricing negotiations. However, bridging the affordability gap may remain a long-term challenge.
For the first time, Medicare is directly negotiating with pharmaceutical companies to lower the cost of ten high-priced medications, including Eliquis and Stelara. Importantly, while international prices won’t directly influence these negotiations, the Biden administration, Senator Sanders, and others continuously highlight this significant disparity as a key issue within the US drug pricing system.
Previously, former President Trump proposed a “most-favored-nation” approach, aiming to align Medicare reimbursements for specific drugs with prices obtained by other developed nations. This aimed to leverage existing international negotiations for lower costs.
Vermont’s Senator, Bernie Sanders, stated that the big pharma makes billions a year in profits, which give them a wide margin to lower the essential drugs’ prices. Drug manufacturers have raked in more profits from the sales of three specific drugs in the United States than from the entire global market combined.
A recent report highlighted that Johnson & Johnson and Bristol Myers Squibb directed substantial amounts, $17.8 billion and $12.7 billion respectively, towards stock buybacks, dividends, and executive compensation in 2022, overshadowing their investments in research and development, which stood at $14.6 billion and $9.5 billion respectively.
In contrast, Merck demonstrated a different approach by allocating nearly double the funds to research and development compared to dividends and executive compensation. The ongoing debate revolves around drug companies expressing concerns that potential price negotiations by Medicare might hinder their research and development efforts, potentially leading to a decline in the introduction of new medications to the market.