Biden and Harris Take a Victory Lap on Drug Prices

Biden, Harris Tout Billions in Savings From Medicare Drug Price Cuts

Appearing together for the first time since she replaced him atop the Democratic ticket, President Joe Biden and Vice President Kamala Harris on Thursday celebrated a milestone in the new program that empowers Medicare to negotiate lower prices for 10 of the most expensive drugs used by seniors.

The Centers for Medicare & Medicaid Services released the results of the negotiation process, which was initiated under the 2022 Inflation Reduction Act. CMS said the program will save Medicare roughly $6 billion in the first year, with people enrolled in Medicare Part D saving an additional $1.5 billion in out-of-pocket costs when the lower prices take effect on January 1, 2026.

Currently, about 9 million Medicare Care D enrollees take at least one of the 10 drugs that were chosen for negotiations. The price discounts range from 38% to 79% off list prices, according to a fact sheet provided by the White House. The largest price cut is for Merck’s diabetes drug Januvia, the price of which will fall from $527 to $113 for a 30-day supply. Some of Novo Nordisk's insulin drugs, including NovoLog and Fiasp, will see the second largest discount, with the 30-day price falling 76%, from $495 to $119.

Drugmakers protest: Pharmaceutical firms have criticized the negotiation program, claiming it will hurt profits, reduce the development of new drugs and might not save patients money. "There are no assurances patients will see lower out-of-pocket costs because the law did nothing to rein in abuses by insurance companies and [pharmacy benefit managers] who ultimately decide what medicines are covered and what patients pay at the pharmacy," Steve Ubl, the president of PhRMA, the industry trade group, said in a statement.

The Wall Street editorial page warned this week that the "inevitable, albeit invisible, result of Democrats’ raid on pharmaceutical companies will be fewer new medicines," while speculating darkly that "Democrats’ goal is to expand government control over private health markets and generate more money to finance their cradle-to-grave society."

Even so, some drugmakers have changed their tune lately, saying the price reductions will not have a significant financial effect overall. "We’re increasingly confident in our ability to navigate the impact of IRA on Eliquis," Bristol-Myers Squibb Chief Executive Chris Boerner recently said, per the Journal, referring to a drug that saw a 56% price reduction as a result of the negotiations.

Stacie Dusetzina, a health policy expert at Vanderbilt University, told Reuters that she doesn’t think the discounts are large enough to change the trajectory of the pharmaceutical industry. "It suggests to me that companies are still going to be able to make profits [and] have incentives to innovate," she said.

Democrats celebrate: At an event in Maryland, Biden said pushing back against sky-high drug prices is part of his larger effort to help the middle class, even if it comes at the expense of corporate profits. Biden also tipped his hat to his vice president, who provided the tie-breaking vote for the Inflation Reduction Act in the Senate and whose popularity has surged in the polls since becoming the Democratic nominee. "Folks, I have an incredible partner," he said. "The progress we have made. She's going to make one hell of a president."

Biden said his effort to rein in high drug prices was "just getting started" and that he and Harris would "keep standing up to Big Pharma." Harris said she, too, has been working for years to lower drug prices. "My entire career, I have worked to hold bad actors accountable and lower the cost of prescription drugs," she said. "Medicare can use that [negotiating] power to go toe-to-toe with Big Pharma and negotiate lower drug prices."

Trump Again Rips Into Harris, Says He's 'Entitled' to Personal Attacks

Donald Trump slammed Vice President Kamala Harris again Thursday afternoon, blaming her and Biden administration policies for inflation, falling household incomes and reduced middle-class wealth. With Republican allies urging his campaign to focus on issues, Trump, reading notes from a binder, repeated a series of attacks on the economy and immigration that he also leveled during a speech on Wednesday, including many false and misleading claims.

"We’re going to have a crash like the 1929 crash if she gets in," Trump warned, despite recent economic data that has largely defied forecasts for a recession let alone much gloomier projections. While concerns have grown recently that the economy has slowed, it has continued to show signs of stability, including easing inflation and retail sales that rose 1% in July, according to Commerce Department data released Thursday. That was much better than expected (see more below).

Trump also offered a prebuttal to a forthcoming proposal from Harris to ban price gouging on groceries, warning that government price controls were a "communist" idea that would fail. He also repeated a line targeting Harris’s plans to address prices from her first day in office: "Day one really for Kamala was three-and-a-half years ago. Where has she been, and why hasn’t she done it?"

The event at Trump’s Bedminster, New Jersey, golf club was billed as a press conference, but the former president spent more than 45 minutes attacking Harris and railing about a range of topics before he fielded any questions from the media.

Asked about those Republicans calling for him to focus on issues, Trump said people don’t know who Harris is yet and defended his campaign approach. "I think I’m entitled to personal attacks," he said. "I don’t have a lot of respect for her, I don’t have a lot of respect for her intelligence, and I think she’ll be a terrible president."

He also bristled at Harris and Democrats calling him "weird" and complained at length about the legal cases against him. But he insisted that he has to run this campaign his way: "I think this is a different kind of race," he said. "All we have to do is define our opponent as being a communist or a socialist or somebody that’s going to destroy our country."

Number of the Day: 1%

In another blow to pessimists convinced the economy is teetering on the edge of a recession, data released Thursday show that U.S. consumers ramped up their spending in July, despite persistently high prices. Retail sales rose 1% from month to month, far exceeding Wall Street expectations for growth of 0.4%. Additionally, initial jobless claims fell by 7,000 for the week ending August 10, with the 227,000 total coming in below expectations.

Yung-Yu Ma, US chief investment officer at BMO Wealth Management, told Yahoo Finance that, "All of a sudden, things have come together. And what seems like almost a Goldilocks scenario for the data is a tremendous shift from what we had a week or so ago when we had the market sell-off." He added that BMO analysts "think the soft landing is firmly in place."

The Cost of Allowing Medicare to Cover Anti-Obesity Drugs

Medicare is currently prohibited by law from covering anti-obesity medications when used specifically for weight loss, but the soaring popularity of Ozempic, Wegovy and other such drugs has led to calls for the government health insurance plan to cover them. A new study in the journal Health Affairs estimates that such a change for 2025 would increase Medicare Part D costs by $3.1 billion to $6.1 billion, or about 2.2% to 4.3% of Medicare’s projected $143 billion in spending on its Part D prescription drug benefit. The lower estimate assumes that 5% of newly eligible patients are prescribed one of the drugs, while the higher figure assumes 10% of patients get one.

"Given that it will likely take time for patient uptake to increase, 10 percent uptake likely overstates short-run costs," write the study’s authors, Benedic Ippolito of the American Enterprise Institute and Joesph F. Levy of Johns Hopkins University.

But the analysis also says that the longer-term cost effects of a Medicare policy change are likely to decrease as the weight-loss drugs are approved to cover a broader range of conditions. Wegovy, for example, was approved in March to reduce the risk of heart attack, stroke and related life-threatening cardiovascular events. More than 77% of qualifying Medicare beneficiaries who could be prescribed these drugs already have another diagnosis that these medications may treat or be approved to treat in the future, the study says.

That means that, while Medicare spending would still rise, the specific policy change of covering anti-obesity medicines won’t cost as much. Another big consideration: These drugs are also likely to be chosen for price negotiations in 2025, with new prices then taking effect in 2027.

Given those factors, the 10-year cost to Medicare of covering these drugs "is likely in the low to middle tens of billions of dollars," the authors conclude. They also note that fully evaluating the merits of expanding Medicare coverage of these anti-obesity medications would require also weighing the benefits to patients, which they say goes beyond the scope of their article.

Fiscal News Roundup

• In a First, Medicare Has Set Prices for 10 Drugs, Saving Billions – Politico
• White House Says Deals Struck to Cut Prices of Popular Medicare Drugs That Cost $50 Billion Yearly – Associated Press
• Biden, Harris Greeted by Chants of 'Thank You, Joe' at 1st Joint Event Since He Exited Race – ABC News
• Kamala Harris to Propose Ban on ‘Price Gouging’ for Food, Groceries – Washington Post
• Harris Is Zeroing In on High Food Prices as Inflation Remains a Big Issue in the Presidential Race – Associated Press
• Harris Has Opened Up a Second Path to Victory, According to The Post’s Polling Model – Washington Post
• Trump Hits Harris on Inflation and Economics in Remarks at His New Jersey Golf Club – Associated Press
• Surprise Jump in Retail Sales Casts Aside Recession Fears – Washington Post
• Youngkin Tax Team Delayed Business Tax Refunds Worth Hundreds of Millions – Washington Post
• Hidden-Camera Video Shows Project 2025 Co-Author Discussing His Secret Work Preparing for a Second Trump Term – CNN

Views and Analysis