Rising prescription drug prices have been devastating to many Americans, especially those 50 and older who depend on them. The number of brand-name and specialty drugs with outrageously high prices that cost $100,000 or more is growing. We shouldn't have to pay more than three times what people in other countries pay for the same medicine.
The pharmaceutical industry needs reform, and one step in the right direction is the bipartisan Preserve Access to Affordable Generics and Biosimilars Act (S. 1428) sponsored by neighboring U.S. Sens. Chuck Grassley, R-Iowa, and Amy Klobuchar, D-Minn. The bill would end the use of "pay-for-delay" deals that harm consumers by delaying generic drug competition.
Today, drug companies with deep pockets will pay generic drug manufacturers millions (sometimes hundreds of millions) of dollars to keep their products off the market for a certain amount of time. This practice keeps competition and lower-priced drugs out of the market and allows drug companies to continue charging Americans astronomical sums for lifesaving medicine. The Federal Trade Commission (FTC) estimates that these pay-for-delay schemes cost American consumers $3.5 billion per year and delay generic drugs from entering the market by an average of 17 months. This means 17 months of drug companies and generic drug manufacturers making millions off the backs of American consumers who are paying the highest prices in the world for the medicines they need.
Generic drugs have proved to be one of the safest and most effective ways for consumers to lower their prescription drug costs, and the use of generic drugs has been steadily increasing. In 1984, generic drugs accounted for 19% of all retail prescription drugs dispensed in the United States. Now, generic prescription drugs account for 90% of all prescriptions dispensed in the U.S. and 87% of prescriptions in the Medicare prescription drug benefit program. Generic prescription drugs play an essential role in efforts to reduce health care spending, and AARP supports expanded access to them and additional savings for consumers and taxpayers by eliminating pay-for-delay agreements.
We are grateful that Sens. Grassley and Klobuchar are reaching across the aisle and working together to deliver meaningful reform.
AARP also supports the Elijah E. Cummings Lower Drug Costs Now Act (H.R. 3), which would crack down on price gouging by requiring Medicare to negotiate lower prices on high-cost medicines, penalize companies that raise prices higher than inflation, and cap seniors' out-of-pocket Medicare drug costs. Unsurprisingly, Big Pharma is doing everything it can to block this bill from passing, including running millions of dollars in misleading television ads attacking members of Congress who support the bill.
So, what should you urge Congress to do? How about all of the above! In the 1990s, Pharma CEOs promised Congress and the American people that they would voluntarily keep drug price increases at or below inflation. That clearly didn't work. A recent Kaiser Family Foundation study showed between 2018 and 2019 the median price increase for drugs covered by Medicare Part D drugs was 6.4%, or 3.5 times the rate of inflation. AARP research shows this is an ongoing pattern, with drug price increases annually exceeding inflation for more than a decade.
No more broken promises. Since the industry won't lower drug prices on its own, the time has come for Congress to act on increasing access to generics, lowering out-of-pocket costs and finally allowing Medicare to negotiate for lower drug prices. These reforms would make an enormous difference in the lives of all Americans who too often have to choose between taking their medicine and paying their bills.
Will Phillips is the Minnesota state director and Brad Anderson is the Iowa state director for AARP.