Biden's victory lap on drug prices is premature

Since President Joe Biden's State of the Union address – and his recent trip to the Suncoast – one thing has become clear: members of both sides of the aisle believe protecting Medicare and lowering seniors' health care costs are critical goals.

That's why Biden and his team have traveled around the country to tout his policy accomplishments, including the drug pricing provisions of the Inflation Reduction Act, which he is seeking to build on with his proposed budget.

When my neighbors ask me if this law will help them, the best I can say is this: "It depends."

If you're in Medicare, and one of the 1.2 million people paying thousands of dollars at the pharmacy counter, you'll reap a major benefit in 2025 when a $2,000 cap on out-of-pocket costs goes into effect. If you're one of the other 49 million people with Medicare prescription drug coverage, however, the benefits aren't as clear.

Biden has touted capping seniors' insulin costs to $35 per month. That's a good thing, but it isn't really new. The Part D Senior Savings Model, a voluntary partnership between drug companies and Part D plans, was announced three years ago during the Trump administration. The millions of people with Medicare who signed up for the drug plans that contained these benefits saved an average of $615-$800 per year. Most people are already enrolled in a participating plan, but the new law will help you if you aren't.

The law also requires drug companies to pay Medicare back if they raise drug prices faster than inflation. Whether or not your costs go down because of this provision remains to be seen.

The law's supporters say its signature accomplishment is allowing Medicare to set prices for prescription drugs. On its face, allowing Medicare to use its purchasing power to "negotiate" lower drug prices sounds like it would obviously benefit seniors. However, this provision is likely to contain several unintended consequences for seniors who rely on prescription drugs.

Today, pharmaceutical manufacturers bring a new drug to market when the evidence shows it will safely improve health, and they can do that even if the drug treats just a small number of people with one type of disease. But even after the drug is approved, companies continue clinical trials to determine if that drug can help even more people with related illnesses. These studies continue until the patent and other exclusive rights granted by the FDA expire, and that's when generic drugs can enter the market.

These new clinical trials often begin three or more years after the drug is first approved and lead to new approved uses eight or more years after launch. However, under the new law, the number of years during which a manufacturer can fully recoup the costs of discovering a new drug will be limited. Additionally, the new law could lead to delays in novel treatments coming to market, especially for people with rarer conditions.

The new law also impacts doctors who treat people with cancer, arthritis and other illnesses. In just a few years, doctors will see their reimbursement for infusing medicines in their office or clinic go down as the cost of the medicine drops. Hospital profits will go up, while Florida doctors who own their own practices may reduce the number of people with Medicare they see; indeed, these physicians may even close their practices.

Since Florida has the second-largest population of Medicare beneficiaries in the country, these unintended consequences will be amplified here.

The bottom line is it is far too early to celebrate the Inflation Reduction Act – let alone double down on it.

John Michael O'Brien lives in Sarasota and is the CEO of the National Pharmaceutical Council, a Washington, D.C.-based health policy research organization.