Profits Over Patients? Drug Manufacturers Launch Legal Fight Over Medicare Price Negotiations

Profits Over Patients? Drug Manufacturers Launch Legal Fight Over Medicare Price Negotiations

The prescription drug industry is taking aim at Medicare’s new powers to negotiate drug prices that seniors pay for their prescription medications at pharmacies. Pharmaceutical companies and their allies are filing lawsuits, calling Medicare’s new authority “unconstitutional.”

Undoubtedly, this is no surprise to older adults enrolled in Medicare or anyone at TSCL. Drug makers have fought legislation to lower prescription drug prices for decades.

Some 88% of participants in TSCL’s surveys support allowing Medicare to negotiate Part D drug costs, and TSCL supported efforts to provide Medicare with this new authority. New changes also add a new Part D $2,000 cap on out-of-pocket spending starting in 2025 — a provision supported by 62% of participants in TSCL surveys. Finally, the law limits any increases in the price of prescription drugs to the rate of inflation, which has overwhelming support in TSCL surveys.

Drug makers argue that Medicare’s new powers are the equivalent of government “price setting,” saying the law is unconstitutional because it violates the separation of powers and drugmakers’ right to due process, as well as the Eighth Amendment’s protection against excessive fines. But Medicare by law routinely negotiates the cost of virtually all services, diagnostic tests, durable medical equipment, and just about everything else that is covered by the program, including the price of prescription drugs such as chemo infusions, administered in doctors’ offices covered under Medicare Part B.

The first ten drugs subject to price negotiations will be chosen in September. New pricing will take effect in 2026. The Congressional Budget Office estimates that the price negotiation authority will save Medicare about $100 billion over the first ten years.

The new prescription drug legislation reduced the out-of-pocket costs of insulin charged to Medicare beneficiaries to $35 per insulin prescription per month. Have you, your family, or your friends been able to save money in 2023 due to this new law? Please take TSCL’s 2023 Retirement Survey and let us know!


Sources: NICA, GCCA, PhRMA Litigation Asserts Price Setting Provisions In the Inflation Reduction Act Are Unconstitutional, PhRMA, June 21, 2023. “Drugmakers Aim To Strike Down Medicare Drug Price Negotiations at Supreme Court,” Spencer Kimball, CNBC.