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The new Medicare for All will drastically lower drug prices by busting up Pharma’s monopolies

Rep. Pramila Jayapal (D-WA) has Big Pharma CEOs shaking in their boots. Not only does her new Medicare for All Act of 2019 guarantee all Americans the right to great healthcare, it also has a powerful and comprehensive plan to lower the prices of prescription medicines.

The Medicare for All Act includes a key provision, modeled after the Medicare Negotiation and Competitive Licensing Act, which would lower drug prices for all Americans by allowing the government to negotiate lower drug prices with corporations. 

And if a Pharma corporation refused to lower the price and threatened patients’ lives by threatening their access to the medication, generic competition would be allowed into the marketplace to bust up Pharma’s monopoly using a competitive license.

Yale law professor Amy Kapczynski and Harvard professor Aaron Kesslheim demonstrated that this authority exists and is used across the government. It is simply a matter of applying the same authority to generic pharmaceutical competition. The Department of Defense has used the same authority to purchase “generic” versions of night vision lenses and lead-free bullets and the Department of the Treasury has used the authority to purchase “generic” software.

In the United Kingdom, even though their National Health Service is a single payer, drug companies still massively overcharge for prescription drugs. For instance, the cystic fibrosis medicine Orkambi has been priced in the United Kingdom at £$104,000 per patient, per year. (In U.S. dollars, that’s currently somewhere around $130,000 to $140,000 per year.) The drug is currently not available through the NHS, and patients are forced to pay thousands of dollars each month out-of-pocket.

The UK experience provides a valuable lesson for the US, one that Rep. Jayapal’s new bill has taken to heart: For a Medicare for All system to meaningfully lower prescription drug prices, it must give the government the power to put the patent at risk, not the patient. Otherwise, the government and patients will be forced to continue absorbing higher prescription drug costs or risk not having access to needed drugs.  

In other countries, when competitive licenses are issued, they are deployed rarely and then usually rescinded once drug prices have been lowered. Furthermore, the amount drug companies spend on marketing exceeds the amount they spend on research and development. From 2006 to 2015, big pharmaceutical companies spent more on share buybacks and dividends than they did on research and development.

recent study found that federally funded research contributed to the science that underlies every one of the 210 new drugs approved between 2010 and 2016. Given that the U.S. government, funded by taxpayers, already subsidizes so much research for pharmaceutical companies through the National Institutes of Health, it is a transparent lie for pharmaceutical companies to claim that they need to charge outrageous prices for the purposes of “innovation.”

Indeed, it is entirely possible to completely cut out the pharmaceutical companies by creating a new system where all research and development is publicly funded – and the prescription drugs developed are available at a fair price with no patents or exclusivity. Economist Dean Baker has estimated that the US is likely to spend more than, “$450 billion (2.2 percent of GDP) on prescription drugs this year. We would likely be spending less than $80 billion, a savings of $370 billion annually, if all drugs were sold in a free market without patents or related protections.”

Big pharma is out of excuses. The solutions Rep. Jayapal’s bill lays out for lowering the costs of prescription drugs are thoroughly practical. They will do a much better job at ensuring patients can access their medicines than the current system, which is rigged to benefit pharma CEOs and shareholders.

Lowering the cost of prescription drugs is essential to creating a strong Medicare for All system. With the government taking aggressive action to slash the cost of prescription drugs while making sure no one is unable to get their needed medicines, it will be that much easier to provide improved health care to every American as a fundamental human right.