Democrats Face Tough Messaging War on Prescription Drug Bill

Democrats vent their fury as Joe Manchin shelves action on climate changeSource: Bloomberg, by Alex Ruoff and Zach C. Cohen

Democrats want to go into their August recess telling their constituents they’re lowering what they pay for medicines — but many of their promised changes won’t be felt for years, and only by a fraction of the nation.

Drug-pricing legislation is expected to get a vote in the Senate as soon as this week as part of a larger domestic policy package. The pharmaceutical industry, conservative groups, and Republican lawmakers are already bashing the measure in television ads and in town halls, painting it as ineffective and harmful to drug innovation.

This messaging war could be challenging for Democrats because some of the major benefits of their drug-pricing bill won’t go into effect until 2025, too late for voters in elections this November. Opponents of the drug bill say they’ll try to capitalize on that.

“The administration knows none of this is going to help benefit people anywhere around the country, nobody this year,” said John Barrasso(R-Wyo.), a physician who’s chairman of Senate Republicans’ messaging operation.

The party of the president tends to lose seats during midterm elections, and this November is shaping up to repeat that precedent. President Joe Biden has a low approval rating and Americans report increasing dissatisfaction with the direction of the country and the economy.

The legislation is the culmination of more than a decade of work by Democrats to make good on their promise to reduce prescription drug prices in the US by allowing the government to negotiate with drugmakers.

Democratic leaders say they’ve got the backing of influential groups such as the AARP, who can help spread their message about coming benefits — namely a $2,000 out-of-pocket cap on what seniors pay each year for medicines.

“Of course it will take time to phase out, and of course the opposition will try to cause problems in the meantime, that’s just the nature of it,” said Sen. Debbie Stabenow (D-Mich.), head of the Democratic Policy and Communications Committee. “We just have to tell the story, and work with AARP and everyone else to tell the story of what we’ve done, and explain that relief is coming and it will come as fast as possible.”

Democrats also face concerns within their own party that the drug-pricing bill doesn’t go far enough because it would limit drug negotiations to only a set number of medicines that’ve been on the market for years. Sen. Bernie Sanders (I-Vt.), who caucuses with Democrats, said limiting negotiations is a mistake, and Americans want a more forceful effort to lower drug prices.

“This is a weak bill, which goes nowhere near as far as I think the American people want us to go,” Sanders said.

Attack Ads

Democrats seen as swing votes or who have difficult reelection bids already face attack ads around their drug-pricing bill. Outside groups have spent more than $8.2 million on broadcast ads lambasting the drug-pricing provision since it was unveiled in July, data from media tracker AdImpact show.

The dark-money group American Prosperity Alliance has spent $5.7 million and counting on ads in West Virginia, Georgia, Nevada, and Washington, D.C. The spots falsely claim that this legislation would strip Medicare of $300 billion, misinterpreting projections that the legislation would lower Medicare spending by $288 billion over 10 years.

Sen. Catherine Cortez Masto (D-Nev.), who is up for reelection this November, said last week “hundreds” of Nevadans called her office worried about the policy. “In Reno this past weekend, Nevadans came up to me because they were concerned about these false accusations,” Cortez Masto said on the Senate floor.

The Partnership to Fight Chronic Disease, a political tax-exempt group, has spent more than $1.1 million on ads in West VirginiaGeorgiaNevada, and Washington, D.C., urging key senators not to “mess with” Medicare. And PhRMA, the trade association for pharmaceutical companies, is spending more than $1 million across the country warning “government price-setting could mean fewer medicines in the coming years.”

Supporters of the proposal are outgunned, spending millions of dollars less in the same timeframe on broadcast advertising to celebrate the provisions. Some of this funding comes out of the pockets of Democrats who are on the ballot in November.

AARP is spending $436,000 on ads in Washington, D.C., and West Virginia applauding the plan for “putting money back” in voters’ pockets. Majority Forward, a political nonprofit with ties to Democratic Senate leadership, spent $310,000 thanking Sen. Maggie Hassan (D-N.H.) for her support for the domestic policy measure.

Sens. Chris Van Hollen (D-Md.) and Richard Blumenthal(D-Conn.), who are up for reelection, have both spent thousands of dollars running ads touting their work to cut drug costs.

Pre-Recess Messaging

Democrats will likely keep up that drumbeat over the August recess. House Speaker Nancy Pelosi(D-Calif.) wrote to colleagues last week, encouraging members of her caucus to highlight work to “lower costs,” and the Democratic Congressional Campaign Committee in a pre-recess memo warned a Republican majority would “protect Big Pharma profits over people’s lives.”

House Republican leaders last week distributed communications kits—pamphlets meant to give lawmakers talking points while at home in their districts—that decry a a “Democrat Socialist drug takeover could lead to 135 fewer drugs and cures.”

Rep. Brad Wenstrup (R-Ohio), a physician, said Democrats’ bill would “limit production” and would be a “crushing blow to research and development in the pharmaceutical industry.”

“To me, one lost cure is too many,” Wenstrup said. “And one of the worst parts about this bill: if you’re someone, like most Americans, that pays into Medicare your whole life, this bill is robbing Medicare to go ahead and pay for insurance premiums.”

Both sides of this messaging fight are a bit divorced from the reality of the drug-pricing bill, said Spencer Perlman, director of health-care research for the consultancy Veda Partners.

The Senate drug-pricing bill is the “second-best possible outcome” for the pharmaceutical industry behind no congressional action, Perlman said. It’s weaker than what Democrats have proposed in the past and likely means Congress won’t return to drug pricing for years to come, he said. Meanwhile, drug spending will continue to grow over the next decade, and Democrats’ bill is expected to slow that growth rate by about 15% for Medicare and 12% for the commercial market, Perlman wrote in a recent analysis.

Significant Changes

Democrats are trying to advance one of the most significant changes to Medicare’s drug benefit since it was started in 2006. Some of them will be more apparent than others, researchers who study the program say.

In addition to the out-of-pocket cap, the bill would allow seniors in Medicare to spread out their drug costs over the year, and in 2023 Medicare beneficiaries would have no cost-sharing for adult vaccines, said Tricia Neuman, who heads the Kaiser Family Foundation’s research on Medicare.

In 2024, the bill would also eliminate the 5% coinsurance beneficiaries pay when they hit what’s known as a catastrophic threshold, which was more than $7,000 in out-of-pocket drug spending in 2022, she said. This will help people who take brand-name drugs costing thousands of dollars afford their pricey medicines, she said.

More than 1.3 million Medicare beneficiaries hit the catastrophic threshold for drug spending, and more than 1.4 million beneficiaries spent more than $2,000 on medicines in 2020, Neuman said. But that’s just a fraction of about 48 million enrollees in Medicare’s drug benefit.

“It’s a terrible program for people who need expensive, life-saving drugs,” said Stacie Dusetzina, an associate professor in the Department of Health Policy at Vanderbilt, with some seniors not filling their prescription for crucial medicines because of the cost. Dusetzina was part of an April study that found almost a third of people on Medicare weren’t filling anti-cancer drugs.

Dusetzina, who studies Medicare and drug policy, said the drug bill is a big step forward for Medicare.

“Even if they don’t fully get the public to understand the nature of these changes and why they’re so important, it’s still important to do them because the program is broken and needs to be fixed,” she said.

How Small Business Can Get the Best Health Coverage at Most Affordable Price

Frank Saltzburg, a partner with Healthcare Solutions Team, LLC (www.ushcre.com) outlines his strategies for businesses to lower their health care premiums while providing the most comprehensive health plans:
•  Always use a professional, state-licensed broker or agent who is certified as a health care reform specialist. They are trained and educated to be aware of the best plans in the ever-changing current market, both in the private and public exchanges. It does not cost you any more to use a broker since major medical rates are already approved by your State Insurance Commissioner.
•  Don’t use a public online quote engine as your final answer. It is only a starting point and is susceptible to data breaches leading to identity theft.
•  Be aware of the limitations of public exchange call center navigators who don’t hold a state-issued health insurance license. In many cases, navigators are not state-licensed to represent major medical coverage and are not even government-certified as health care reform specialists in the Affordable Care Act.
•  Use the bundle concept to give you better coverage at a more affordable price with less out-of-pocket financial exposure.

Saltzburg says there has been an influx of online insurance quote engines through the public insurance exchanges. “The problem here is these public exchange quote engines will list  ‘bargain health plans’ that typically have the smallest network of doctors and hospitals. Many people are shocked to learn their plan’s network is limited to one county within their state and their doctors are not part of these networks. A recent Associated Press survey found that most cancer hospitals don’t accept Obamacare,” he stated.

“One big, ongoing concern is that the average deductible is estimated at $5,000. However, what everyone should really be looking at is the out-of-pocket maximum per calendar year. This is the true financial exposure we all experience. We design our plans so that the deductible and the maximum out-of-pocket exposure are no longer a major issue…We bundle our plans to include accidental coverage to pay up to the deductible amount and cover out-of-pocket expenses. Plus, we offer critical illness coverage to also offset the deductible and any out-of-pocket expenses. The critical illness coverage offers the ability to have a lump sum payout allowing the insured to have an extra $5,000 to $200,000 of living expense money. While people are recuperating from their critical illness, they won’t worry about paying daily living bills. Bundling allows the insured to have a more comprehensive plan with true peace of mind,” he said. For more information, visit http://www.ushcre.com.

How HSAs Beat HRAs

BusinessBoxingPeople with HSAs are more likely to engage in cost-conscious behavior compared to those in HRAs, according to a report by the Employee Benefit Research Institute (EBRI). HSA participants are more likely to ask for a generic drug instead of a brand name, check the price of a service before getting care, ask a doctor to recommend less costly precriptions, develop a budget to manage health care expenses, and use an online cost-tracking tool provided by the health plan. Paul Fronstin of EBRI said, “HRAs and HSAs may be similar, but there are some key differences that may produce different incentives …Those with an HSA are more likely to respond to health pricing.” An employee owns the HSA, which is completely portable. With HRAs, an employer is not required to provide the unused balance to a worker when they leave the company. For more information, visit www.ebri.org.

ACA Enrollment Extension Could Dent Insurance Industry

Extending the enrollment period for Americans seeking health coverage under the Affordable Care Act could mean pricing and logistical implications for health insurers, according to Fitch Ratings. According to the Fitch report, “We believe an extension would be a negative for health insurers. Pressure on insurers to extend existing policies is likely less problematic than extending the enrollment period. The current deadline for enrollment is March 31, 2014, although plans will take effect on Jan. 1 for those who sign up earlier.
An extension could increase the number of people who wait until they need healthcare to buy the insurance. The open enrollment period for health insurance plans offered in the insurance exchanges began on Oct. 1 and the process has been plagued with technical problems on websites includingwww.healthcare.gov.

Allowing more time would also create logistical issues with pricing and state participation, which could raise short-term risk for insurers.

Under normal circumstances, insurers set premium rates before the enrollment period based on cost-of-care estimates. When the enrollment period is lengthened, these estimates may no longer be as accurate.

Some state regulators are encouraging insurers to extend existing policies for three months beyond their Jan. 1, 2014 expiration date due to technological problems with exchange websites. Fitch says that this would be less problematic for health insurers than extending the current enrollment period as long as benefits and premiums on the extended policies don’t change from current levels and the extension is effective for a relatively short period.

Nevertheless, such extensions could result in a short-term increase in risk levels of business sourced through the exchanges. Consumers whose policies are extended are likely to have better risk profiles compared to early users of exchange-sourced insurance. The extension could hurt the financial results of insurers whose enrollment is weighted disproportionally toward exchange business.

Fitch also says that an extension would delay the positive benefits that hospitals would see as a result of health reform including higher patient volumes and lower bad debt expenses for treating the uninsured. For more information, visit www.fitchratings.com.

Last Updated 08/10/2022

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