To stop skyrocketing drug prices, the government needs to start negotiating

 It’s time for Congress to enact a common-sense solution to bring down drug prices

two hands shaking in agreement


Drug prices are up 35% since 2014. For retirees on a fixed income, like Donna struggling to pay $6,000 per year for her medicine, rising prices are frightening. But it’s not just patients that are struggling. America’s federal health program for seniors, Medicare, is buckling under the pressure from the skyrocketing costs of pharmaceuticals. Medicare accounts for more than 15% of federal spending with a budget exceeds $180 billion annually. Congress has a solution that could alleviate the straining budgets of both patients like Donna and our federal health program: Medicare negotiation.

Although Medicare is the biggest purchaser of drugs in America, it is the only drug buyer which is not allowed to negotiate the prices it pays. Indeed, in most instances, it is prohibited by statute even to discuss with drug manufacturers how much individual drugs cost. Our law prohibits our government from doing what every private company is allowed (and encouraged) to do: negotiate for discounts below drug list prices.

That means no savings for American tax-payers, or individual Medicare patients like Donna. Those prices increase out-of-pocket costs like copays and deductibles, forcing patients to delay treatment, avoid potentially life-saving prescription drugs and mortgage their financial future just to survive.

For more than four years, Congress has been debating a proposal to allow Medicare to negotiate for lower drug prices. In his State of the Union, President Joe Biden committed to allow Medicare to negotiate for fair and reasonable prices on the prescription drugs it spends the most on. A congressional oversight committee estimated that allowing Medicare negotiation could save the taxpayer $78.8 billion over ten years. And this proposed policy will likely bring down drug prices across the whole market.

Allowing Medicare negotiation will have a dramatic impact for more than 62 million Americans who are on Medicare and would see savings in their out-of-pocket drug expenses. And if we extended those negotiated prices to commercial plans, an additional 179 million younger people with private insurance would also receive the benefit of lower drug prices.

The primary reason Congress still hasn’t taken action to implement this common-sense, cost-saving policy is the strength of the pharmaceutical industry. It has spent on average $223 million every year over the last two decades lobbying against any changes to their business model.  The existing pricing system ensures tremendous revenue for the drug companies. For example, internal industry documents obtained by a House Oversight Committee showed that price hikes aren’t necessarily tied to higher costs but rather are a business model to increase profitability. According to a House investigative report, “a draft internal Pfizer presentation from 2016 explicitly linked Pfizer’s global profitability to its ability to raise prices in the United States, noting that growth was driven by “price increases in the U.S….The three insulin companies targeted the United States for price increases, and Medicare lost out on more than $16 billion in savings.”

Allowing Medicare to negotiate drug prices has broad public support and is one important way to bring about reasonable prices to an industry that has had unfettered power to raise prices year over year. It’s time Congress stands on the side of patients and votes to allow our own federal government to have the power to go to the bargaining table to achieve the drug cost savings Americans need. High prices cause fear, uncertainty and economic harm for people like Donna and puts an unsustainable strain on our federal program to ensure senior health. If you agree, take a moment to let your senators know that you support a policy to allow Medicare to negotiate for reasonable drug prices.
Photo Credit: ave calvar on Unsplash



Patricia Kelmar

Senior Director, Health Care Campaigns, PIRG

Patricia directs the health care campaign work for U.S. PIRG and provides support to our state offices for state-based health initiatives. Her prior roles include senior policy advisor at NJ Health Care Quality Institute, associate state director at AARP New Jersey and consumer advocate at NJPIRG. She was appointed to the Ground Ambulance and Patient Billing Advisory Committee in 2022 and works with patient advocates across the U.S. Patricia enjoys walking along the Potomac River and sharing her love of books with friends and family around the world.