Update for Week Ending August 7, 2021

Update for Week Ending August 7, 2021

So far, No August Break for Senators

As we reported last week, August is the month when both houses of Congress traditionally take a break, both for government and personal travel, as well as working in their states and districts.  While the House left last week, the Senate remains in session, working on President Biden’s infrastructure bill, which appears to be headed for passage this week.

The Infrastructure Investment and Jobs Act will spend nearly $550 billion on roads, bridges, broadband internet, water pipes and other public works systems undergirding the nation.

Senators have found much to like in the bill, even though it does not fully satisfy liberals, who view it as too small, or conservatives, who find it too large.

The bipartisan package is funded by taking money from other programs already passed by Congress, and other spending cuts and revenue sources.

Once the infrastructure bill is passed, Senate Majority Leader Chuck Schumer (D-N.Y.) plans to move on to passage of a budget resolution that will set the stage for Democrats to pass the remainder of President Joe Biden’s economic agenda.

That effort will be strictly along party lines so if all the Democratic Senators vote for it, passage should happen pretty quickly.

If the Senate passes the bills, the House will have to work on them when it comes back into session in September.

The bill is worth reporting on here because it is likely to affect prescription drug prices.  However, the details about how it may do so are very complicated so we will provide further information below for those who are interested in the particulars of the issue.

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U.S. Health System Gets Failing Grade According to New Study

The U.S. health care system ranks last among 11 high-income countries in providing equitably accessible, affordable, high-quality health care.

That’s according to a recent study by the Commonwealth Fund, whose mission is to “promote a high-performing health care system that achieves better access, improved quality, and greater efficiency, particularly for society’s most vulnerable, including low-income people, the uninsured, and people of color.

The Fund carries out this mandate by supporting independent research on health care issues and making grants to improve health care practice and policy. An international program in health policy is designed to stimulate innovative policies and practices in the United States and other industrialized countries.”

The study compared the performance of health care systems of 11 high-income countries in five areas:  access to care, care process, administrative efficiency, equity, and health care outcomes.

The top-performing countries overall are Norway, the Netherlands, and Australia. The United States ranks last overall, despite spending far more of its gross domestic product on health care. The U.S. ranks last on access to care, administrative efficiency, equity, and health care outcomes, but second on measures of care process.

Four features distinguish top performing countries from the United States: 1) they provide for universal coverage and remove cost barriers; 2) they invest in primary care systems to ensure that high-value services are equitably available in all communities to all people; 3) they reduce administrative burdens that divert time, efforts, and spending from health improvement efforts; and 4) they invest in social services, especially for children and working-age adults.

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New Bill Would Prepare for Future Diseases

The Covid-19 pandemic demonstrated in a vivid and tragic way how unprepared we are for new diseases of this type, even though there were warnings for years from medical and scientific experts that we would be hit by one of them in coming years.

However, in the future the U.S. could have vaccines, therapies, and other medical countermeasures ready in case of disease outbreaks under a bill introduced last week in the Senate.

According to Bloomberg News, “the bill, by Sen. Tammy Baldwin (D-Wis.), would provide $2 billion to the Biomedical Advanced Research and Development Authority over four years, starting in fiscal 2022, to create a “Disease X” program aimed at developing responses to unknown viral threats.

“There’s currently no sustained funding, program, or strategy dedicated to medical countermeasures for previously unidentified infectious diseases.

“’Infectious disease outbreaks now occur three times more often than they did 40 years ago. The next pandemic, driven by an unknown Disease X, will come,’” Baldwin said in a statement. “’We must invest in the development of novel antivirals, vaccines, and diagnostics for unknown threats now so that we are better prepared to control the spread than we were at the start of the COVID-19 pandemic.’”

As we all know, seniors have been particularly hit hard by the Covid so this new bill is welcomed.

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How an Infrastructure Bill Could Affect Drug Prices

It seems strange that a bill that is suppose to deal with the nation’s infrastructure could affect prescription drug prices, but that’s the way Washington works.

In order to get less popular items passed, Congressional members will seek to attach them to legislation that is popular and likely to pass so that even if other members of Congress don’t like a particular provision, they’ll still vote to pass a bill because of its over-all impact.

On top of that, America’s health care system is so complicated with so many working parts that making changes to it can be extremely difficult.  It is often the case that certain changes will benefit one part of the system but hurt another part and there is so much money at stake that the part or parts of the system that might be hurt by a change fight ferociously to stop the change.

That usually means spending hundreds of thousands or even millions of dollars in lobbying to prevent a change.

One of the parts of the U.S. health care system that very few people know about is the PBMs – the Pharmacy Benefit Managers.  But they have a major impact on the prices of prescription drugs.

According to the PBMs, “health care plans hire PBMs to secure lower costs for prescription drugs, passing the savings directly to patients. PBMs are your first line of defense against rising prescription drug costs. They work to ensure lower costs and better health outcomes through affordable access to medicines you need.

“By negotiating with drug manufacturers and pharmacies to control drug spending, PBMs have a significant behind-the-scenes impact in determining total drug costs for insurers, shaping patients' access to medications, and determining how much pharmacies are paid.”

That’s what the PBMs say.  However, critics of PBMs say this:

“Pharmacy Benefit Managers are one of the most problematic, least regulated and least understood aspects of the healthcare delivery system.  Over 80% of pharmaceuticals in the United States are purchased through PBM networks.  PBMs serve as intermediaries between health plans, pharmaceutical manufacturers and pharmacies, and PBMs establish networks for consumers to receive reimbursement for drugs.  Although the primary function of a PBM initially was simply to create networks and process pharmaceutical claims, these entities have exploited the lack of transparency and created conflicts of interest which have significantly distorted competition, reduced choices for consumers and ultimately increased the cost of drugs.”

According to an article in Kaiser Health News, PBMs “negotiate with drugmakers to get significant reductions on a drug’s list price. They pass the bulk of that savings along to Medicare and the insurers, who can pocket some of it and use it to lower overall premiums for customers who buy drug plans in Medicare Part D.

“While customers benefit from a lower premium, it doesn’t mean they actually get a better price for their drugs, said Gerard Anderson, a professor of health policy at Johns Hopkins Bloomberg School of Public Health.

“That’s because a patient’s price is not based on the rebate but on a share of the original list price of the drug. If a drug costs $100, and a patient’s share is 25%, they pay $25, regardless of how big a rebate the PBM got for the insurer.

“It thus serves the interest of the PBM for the drugmaker to raise prices. ‘When the list price goes up, your patient responsibility goes up, so the patient ends up paying more,’ Anderson said. ‘The PBM makes money because, when the list price goes up, the rebate is larger. But the patient loses, because their cost sharing is based often on the list price.’

“Since the PBM controls the formulary that says which drugs are covered in a given plan, Anderson and others point out, it is also in the interest of a drug company to raise list prices if it wants the PBM to give its drugs preferential treatment.

“A wrinkle in federal law allows that to happen. Typically in federal contracting, if someone sets a high price to give the buyer a cut, it’s considered a bribe or a kickback, and it’s illegal. But the law that created the Part D drug program carved out what’s known as a safe harbor to allow such deals in the hope that negotiations would lower overall costs.”

However, a rule issued by the Trump administration would eliminate that “safe harbor” by taking it away from the PBMs and giving the rebate to customers at the pharmacy counter.

However, the PBMs went to court to challenge the rule.  In addition, the Congressional Budget Office predicted that, rather than save money, it would end up costing the federal government $177 billion over 10 years because drugmakers would be less likely to provide as many discounts, causing a spike in Medicare drug coverage premiums.

So, because of the way federal government budgeting works, if the Biden Administration delays the implementation of the rule until 2026, that $177 billion is seen as a savings in government spending. Therefore, that money can be spent on something else until 2026 and is not counted as increasing the federal debt.

As a result, that projected savings will be used by Congress to, in part, pay for the new infrastructure bill.  In addition, some of it will also be used to pay for some of the items in the budget resolution that the Democrats hope to pass without any Republican support.

Yes, it’s all very confusing, but that’s how, in brief, the infrastructure bill could affect prescription drugs.

If you would like a more detailed explanation you can go here:


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As we continue recovering from the Covid 19 pandemic, TSCL remains constant in our fight for you to protect your Social Security, Medicare, and Medicaid benefits.  We’ve had to make some adjustments in the way we carry on our work, but we have not, and will not stop our work on your behalf.

For progress updates or for more information about these and other bills that would strengthen Social Security and Medicare programs, visit the our website at www.SeniorsLeague.org, follow TSCL on Twitter or Facebook.