AARP analyzed how much seniors are spending on prescription drugs and released a devastating report last month. The report found that drug prices have increased faster than the rate of inflation for the 12th consecutive year, and the annual increases show no sign of stopping without government intervention.
The report looked at list prices of more than 700 drugs commonly used by Medicare beneficiaries and found that inflation rates rose between two to nine times the rate of inflation. For example, if a drug with a current list price of $19,816 had kept up with inflation, it would only cost $7,263.
Leigh Purvis, director of health services research at AARP’s Public Policy Institute, said drug prices are about to exceed what Medicare beneficiaries can pay.
“If you take a look at what people are bringing in a year with Social Security on average, that’s almost 20 percent higher,” she said. “It’s also approaching the median income for Medicare beneficiaries. That means these drugs are not affordable if they exceed a person’s average [yearly] income.”
A separate analysis from the nonpartisan Kaiser Family Foundation found that the price of 10 of America’s most commonly used drugs grew up to 15.7 percent faster than inflation.
“There is a wide bipartisan support, now more than ever, that this needs to change,” Purvis said. “There will come a point where no one will be able to afford prescription drugs. This is simply unsustainable.”
Could Pelosi’s bill fix the problem?
In September, House Speaker Nancy Pelosi release a bill to address drug costs rising faster than inflation. The bill would officially give the Department of Health and Human Services (HHS) the power to negotiate prices of as many as 250 of America’s most popular drugs, including the extravagantly expensive insulin.
If passed, drug companies would be penalized if the prices of drugs are increased faster than the rate of inflation, and if they do so arbitrarily. Should drug companies not abide by the law and continue to charge extravagant amounts, the company could be fined in accordance with how much profit the company made off of the drug in question. In other words, if these drug companies steal money from the American people to give to their shareholders, the government would take the money back and return it to the public. The bill would also cap annual out-of-pocket drug costs at $2,000 for Medicare beneficiaries.
A recent report from the nonpartisan Congressional Budget Office (CBO) revealed that Pelosi’s bill would save Medicare $345 billion over 10 years.
However, Republican members of Congress have long been opposed to such bills and consider it the responsibility of the free market to lower prescription drug prices. Additionally, several Republican members of the House of Representatives were caught trying to block a drug price investigation in order to protect drug company stock prices, indicating that these members of Congress are not intending to lower drug prices at all.