AARP Stands Behind Inflation Reduction Act of 2022 in Drug Price Negotiations

AARP, an advocacy group for older Americans, alongside the AARP Foundation, recently filed a brief in support of the Inflation Reduction Act of 2022. This comes in response to a lawsuit initiated by several Chambers of Commerce, including the Dayton Chamber of Commerce, arguing against the drug price controls established by the Act.

Opposition from Big Pharma

“Big pharmaceutical companies and their allies are relentless in their fight against Medicare’s drug price negotiations. They want to maintain the highest drug pricing standards in the world,” said William Alvarado Rivera, senior vice president for litigation at AARP Foundation. He stressed that succumbing to these distractions would not serve the public, particularly older adults who have been waiting for affordable drug prices. “Medicare drug price negotiation is a significant step towards ensuring access to lifesaving medications for millions of Americans,” he added.

Chambers of Commerce Challenge Inflation Reduction Act

In June, the Dayton Area Chamber of Commerce joined a lawsuit against the Inflation Reduction Act’s drug price controls. Other plaintiffs include the Ohio Chamber of Commerce, the Michigan Chamber of Commerce, and the U.S. Chamber of Commerce. Learn more about the Dayton Area Chamber of Commerce’s stance on this issue.

Medicare Drug Price Increases

According to a recent AARP report, the list prices for the top 25 brand-name drugs covered by Medicare Part D in 2021 have risen by an average of 226% since they first entered the market. This is more than triple their initial prices.

The Inflation Reduction Act and its Impact

The Inflation Reduction Act mandates the U.S. Department of Health and Human Services to negotiate drug prices with pharmaceutical companies for a limited number of single-source drugs that lack generic competition covered under Medicare Part D and Part B. Read more about the prescription drug provisions in the Inflation Reduction Act here.

Implementation Timeline

Starting in 2026, the federal government will negotiate prices for 10 drugs, with an additional 15 drugs in 2027 and 2028, and another 20 in 2029 onwards. Beginning this year, a monthly cap on insulin cost sharing will be introduced. The cap came into effect on Jan. 1 for insulin covered under Medicare Part D, and will take effect on July 1 for insulin covered under Part B.

The Cost of Delaying Drug Negotiations

AARP’s brief, filed with the U.S. District Court for the Southern District of Ohio Western Division, warned that delaying drug negotiations would prevent older Americans from accessing affordable prescription drugs and lead to billions in taxpayer costs.

Lawsuit Claims and Counterarguments

The lawsuit claims that drug companies are being forced into accepting price cuts they didn’t negotiate or facing penalty fines. It warns that price controls can lead to shortages and rationing, thereby reducing access to new medications and treatments. An analysis shows potential cost reductions through Medicare price negotiations.

Focus on IMBRUVICA

The Dayton Area Chamber of Commerce, which represents over 2,200 businesses and organizations in a 14-county area surrounding Dayton, is part of the lawsuit. It includes members directly affected by the Inflation Reduction Act’s drug price controls, like AbbVie, the marketer of the drug IMBRUVICA. IMBRUVICA, used to treat certain types of cancer involving white blood cells, was also among the top 10 gross annual Part D expenditures for 2021. The government spent $3.15 billion on the drug in 2021, according to CMS data, with the average retail drug price around $16,390, as per GoodRx.