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Sen. Mike Lee wants to undo the Inflation Reduction Act’s medication price caps

AP — Sen. Mike Lee, Senate Judiciary Committee, March 23, 2022
Alex Brandon
/
AP, file
FILE - Sen. Mike Lee, R-Utah, during a Senate Judiciary Committee confirmation hearing on Capitol Hill in Washington, March 23, 2022.

Sen. Mike Lee is looking to reverse provisions that cap prescription drug prices for Medicare and Medicaid patients.

The Inflation Reduction Act, which was signed into law in August, includes the requirement that the Centers for Medicare & Medicaid Services negotiate a maximum price for some prescription name-brand drugs without a generic equivalent.

The Republican senator’s proposed Protect Drug Innovation Act would undo that. It overturns the mandate that drug manufacturers must issue rebates to Medicare patients for medication costs that rise faster than inflation and forgoes the out-of-pocket deductible cap.

Lee claims the cap will lead to medication shortages, stifle pharmaceutical innovation, harm medication quality and reduce the number of life saving drugs produced over the next 30 years.

“Price controls never work. Instead, they exacerbate the problems they seek to resolve. Mandating fixed prescription drug prices will ultimately result in the shortening of American lives,” Lee said in a statement.

To back up his reasoning, Lee pointed to nonpartisan analysis from the Congressional Budget Office and a report released by the Joint Economic Committee’s Republicans.

The Congressional Budget Office analysis did suggest that the number of medications introduced into the U.S. market would be reduced under the Inflation Reduction Act, although it did not specify why. The analysis also doesn’t theorize what kind of medication would be affected and if they would be “life saving” drugs.

In 2021, the nonpartisan nonprofit Utah Health Policy Project enrolled 470 people in Obamacare and helped more than 6,000 people navigate Medicaid programs. Daniel Sloan, a health policy analyst with the project, said it fully supported the medication cap provisions in the Inflation Reduction Act.

Sloan said price caps, especially for name-brand prescriptions, are important for Utahns on fixed incomes, like Medicare customers.

“If they know that there is a cap on the costs for their prescription drugs, they won't have to ration the drugs that they're already using. They won't have the same pressure to maybe cut back on food or paying off other bills,” he said.

Utah has toyed around with price caps at the state level. Republican state Rep. Norm Thurston sponsored the Insulin Access Amendments. He felt the urgency from his constituents to lower the price of insulin.

“I had constituents and others who were contacting me saying, ‘This is killing me. I've got insurance, but I've got a $7,000 deductible and my insulin is $350 a vial. I'm blowing through $7,000 of my own money just to pay for my insulin. So that's not really health insurance. That's just me subsidizing the health care system,’” Thurston said.

The bill gave private insurance providers four options to lower the out-of-pocket cost of insulin, and if they didn’t pick one, the vial price was capped at $30. To his knowledge, no insurance provider opted for the $30 price control option. The bill also provides insulin at a reduced cost for uninsured Utahns or residents on a plan not regulated by the state.

Thurston acknowledged Utah handled lowering the price of insulin differently than how the federal government is dealing with medication price controls. Utah targeted insurance providers, whereas the Inflation Reduction Act is targeting drug manufacturers.

“We told the insurance companies, ‘this is how much you have to help cover,’” Thurston said. “Where a cap would be the government telling the manufacturer, ‘this is how much you can charge.’”

Now, Utahns utilizing the state’s insulin savings program are paying an average of $90 for a vial of insulin instead of more than $300, Thurston said. In some cases, insulin is free or between $25 to $30.

The drop in price didn’t spur insulin rationing or shortages, according to Thurston. Rather, Thurston said it has bolstered insulin innovation — not killed it.

“One of the great things about all of this is that we're seeing new entry into this marketplace,” he said, referring to the new nonprofit Civic Rx.

Civic Rx makes generic injectable medication like insulin and has ties to Utah. Thurston said it is a positive outcome because insulin is “not that hard to produce and people should be able to get that readily accessible.”

Daniel Sloan with the Utah Health Policy Project doesn’t buy Lee’s argument that controlling the price of prescription drugs will cause shortages or negatively impact research and development.

“I think that with the price caps on them, they'll continue to produce and research and develop the products that are needed and the consumers will be there to receive them,” Sloan said.

Saige is a politics reporter and co-host of KUER's State Street politics podcast
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