Drug Manufacturers Would Owe $150 Million If Build Back Better Were Law
New study quantifies BBB intended inflation penalties on 25 high-spend drugs for Medicare recipients
WASHINGTON, DC – March 1, 2022 – Drug manufacturers would have paid over $150 million in inflation penalties during the first quarter of 2022 if the Build Back Better Act were a law, according to a new study from the nonprofit organization West Health Policy Center and its Council for Informed Drug Spending Analysis (CIDSA).
The study estimated the inflation penalty payments that would have been required for 25 high-spend Medicare Part D drugs in the first quarter of 2022. Each drug took price increases above inflation in January of this year. Researchers only assessed the penalties that would be paid under the Medicare program; because penalties would actually be paid on both Medicare and commercial sales, total inflation penalties under the proposed legislation would likely be significantly higher.
Of the 25 drugs studied, the top four most expensive drugs account for almost 90% of the estimated payment penalties. One drug, Humira Pen, accounted for over a third of the estimated penalties, representing nearly $60 million in payments. The next three most expensive drugs— Stelara, Trulicity, and Invega Sustena—would each owe over $15 million in penalty payments. In 2019, only about 500,000 of 38 million total Medicare Part D beneficiaries used these four drugs, demonstrating the impact price increases on a handful of expensive drugs can have on total Medicare costs.
“Even after a year of inflation that that saw record price increases for consumer goods, drug price increases still lead the pack and outpace inflation,” said Sean Dickson, Director of Health Policy at the West Health Policy Center and CIDSA Chair, who led this study. “The inflation penalties included in the Build Back Better Act would bring drug price increases in line with other goods, helping reduce costs over the long run.”
The rate of Americans going without prescribed medications due to cost doubled over the course of last year. In late 2021, the U.S. House of Representatives passed the Build Back Better Act, which included a penalty payment for drug price increases above the rate of inflation. Intending to help slow drug price growth across all markets, the penalty would have applied to drug sales to patients with commercial insurance as well as sales to Medicare beneficiaries. Following intense lobbying efforts by the pharmaceutical industry, passage of the legislation has been stalled in the U.S. Senate. Lobbying expenses for the industry topped $23 million in 2021.
About the West Health Policy Center and West Health
Solely funded by philanthropists Gary and Mary West, West Health is a family of nonprofit and nonpartisan organizations including the Gary and Mary West Foundation and Gary and Mary West Health Institute in San Diego, and the Gary and Mary West Health Policy Center in Washington, D.C. West Health is dedicated to lowering healthcare costs to enable seniors to successfully age in place with access to high-quality, affordable health and support services that preserve and protect their dignity, quality of life and independence. Learn more at westhealth.org and follow @WestHealth.
CIDSA, the Council for Informed Drug Spending Analysis, is a nonpartisan expert group funded by West Health and focused on bringing a non-pharma perspective to drug spending policy dialogue. Learn more at www.cidsa.org and on Twitter at @CIDSAexperts.