Making Prescription Drugs More Affordable for All Americans

Prescription drugs play a vital role in managing or curing diseases, keeping Americans of all generations healthy, and improving the quality of life for people of all ages.  And yet, rising drug prices are making some brand name medicines increasingly unaffordable. 

Today, one in two Americans say someone in their family skipped pills, or postponed or cut back on needed medical care due to the cost.  Nearly 20 percent of Medicare Part D beneficiaries delayed or did not fill a prescription because of costs – higher than any other insured group.

AARP believes that health reform must make prescription drugs more affordable for our members – and all Americans.  Taken together, the bills described below would save Medicare and taxpayers tens of billions of dollars.

Narrowing the Medicare Part D "Donut Hole:" Congress should take steps toward closing the "donut hole" (Part D coverage gap) – both to reduce the amount of time that individuals have to pay premiums without getting insurance coverage and to prevent additional people from entering the coverage gap.

Background

• In 2007, 3.4 million Medicare beneficiaries fell into the Medicare Part D “donut hole,” a coverage gap where they are responsible for their entire drug costs but still have to pay their Medicare Part D premium.  Because drug prices continue to outpace inflation, the donut hole is expanding faster.
• Because of the way the donut hole is currently designed, year after year, the amount of money individuals are required to pay premiums without receiving prescription drug coverage continues to go up.  At the same time, too many low-income Americans are being denied the assistance they need to afford their prescriptions because they did the right thing and saved a small nest egg for retirement.
• The latest AARP Rx Watchdog report found manufacturer prices for the most widely used brand name drugs most widely used by Medicare beneficiaries increased by an average of 7.4 percent compared to the general inflation rate of 2.9 percent in 2007.  Unfortunately, too many lower-income Americans are barred from receiving the Part D low-income subsidy because they did the right thing and saved a small nest egg for retirement.
• Medicare Part D low-income subsidy provides full "donut hole" coverage for those below 150 percent of the federal poverty limit ($16,245 for individuals, $21,855 for couples).   

Legislative Solution:  AARP believes Congress should begin to close the "donut hole" in Medicare Part D through a variety of options, such as changing the way the government calculates drug benefit costs, or freezing the dollar limit of the donut hole to its current level.

Legislative Solution:  AARP supports legislation that would raise the asset limit to help low-income Americans who now cannot get the Medicare Part D low-income subsidy – which closes the donut hole for those least able to afford it – because they managed to save a small nest egg.

Allow for Generic Biologic Drugs:  Congress should create a much needed pathway for the approval of safe and affordable generic biologic drugs.

Background

• Biologics treat serious diseases such as cancer, multiple sclerosis, and rheumatoid arthritis but often cost 10, 15 or even 20 times more than most non-biologic drugsUsers of these often life-saving medications are typically forced to pay exorbitant amounts to treat their conditions
• Unlike traditional prescription drugs, there is no regulatory pathway at the Food and Drug Administration to permit approval of lower-priced generic versions of biologic drugs. 

Legislative Solution:  AARP supports the "Promoting Innovation and Access to Life-Saving Medicine Act (H.R. 1427/S. 726)," which would create a pathway – similar to that for traditional prescription drugs – for the approval of generic and comparable biologic drugs, as well as a process for timely patent dispute resolution.

Drug Price Negotiation: Congress should give the Secretary of Health & Human Services (HHS) authority to directly negotiate the best prices for Medicare by leveraging the power of the program’s 44 million beneficiaries.

Background

• Current law prevents HHS from any involvement in negotiations between Part D plans and pharmaceutical manufacturers
• Negotiation would generate savings, especially for single-source drugs and the six protected classes of drugs where Part D plans have little negotiating power
• Medicare should follow the private sector, which routinely uses bargaining power to negotiate better prices

Safe Importation: Congress should allow for safe importation of lower-priced prescription drugs

Background

• Without a change in government policy, Americans will continue to import cheaper prescription drugs from other countries with no guarantee of safety
•  Legalizing importation would provide those who are not yet eligible for Medicare Part D with another viable option to obtain safe, lower-cost drugs 

Legislative Solution: AARP supports the "Pharmaceutical Market Access and Drug Safety Act of 2009," (S. 525 and H.R. 1298), which would legalize personal and wholesale importation of prescription drugs – starting with Canada – and establish a system to ensure the safety of imported drugs.

Preventing Efforts to Delay Access to Generics:  Congress should enact legislation to stop brand name drug companies from paying generic drug companies to delay putting their products on the market.

Background

• There has been a disturbing trend of brand name drug makers resolving patent disputes with generic manufacturers by paying them to delay market entry of the generic drug
• According to the Federal Trade Commission, 50 percent of the settlement agreements between brand name and generic manufacturers resulted in some form of payment to the generic manufacturer and a delay of market entry of the generic drug
• When brand name and generic drug manufacturers agree to delay market entry of a generic drug, consumers, health plans, and taxpayers are forced to continue to pay for the higher cost brand name drug for a longer period of time.

Legislative Solution: AARP supports the "Preserve Access to Affordable Generics Act" (S. 369) and the "Protecting Consumer Access to Generic Drugs Act of 2009" (H.R. 1706), which would bring lower-cost generic drugs to market sooner by preventing abuses in patent settlements between generic and brand name drug companies.