Crypto News: Can drugs be less expensive?

Hi, it's Drew in New York. Today we're going to talk about the "tax the rich" approach to Democrats' drug-price plans that would go after the wealthy, old sales dynasties of the pharmaceutical world. But first…

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Twenty years ago, the government started paying for pharmacy-dispensed prescription drugs in Medicare. Now, for the first time, the program may start negotiating directly with the companies that make them.

Last week, Democrats in the Senate announced a deal to have the federal government negotiate the prices of the 20 drugs the program spends the most on. If the deal becomes law, it would phase in over several years, starting in 2026.

The approach, essentially, is a "tax the rich" plan for the biggest drugs. It doesn't target smaller, newer products. It goes after the biggest, most expensive drugs that have been on the market for at least nine years (13 years in the case of biotechnology drugs). It aims at dynastic wealth — drugs that make tons of money and face no competition.

That will hit products like Merck's Keytruda, one of the best-selling therapies in the world. By 2028 when it would be subject to potential negotiation, its annual sales could be more than $20 billion. Ozempic, a diabetes drug sold by Novo Nordisk, could face negotiations by 2026 on its $6.8 billion in projected sales, according to an analysis by the investment bank SVB Securities. (Along with Part D drugs dispensed through pharmacies, the program would apply to Part B drugs — ones that are administered by a physician.)

There's still a good chance the bill dies — just like every other similar effort since Medicare Part D became law. And while Senator Joe Manchin has signed on, there is another roadblock in the caucus: Arizona Senator Kyrsten Sinema. Democrats may say they've got a deal, but they don't yet have the 50 votes they need.

There are a few other parts of the plan worth noting. Vaccines are excluded, as are drugs for very rare "orphan" conditions, according to the bill language. But in total, it would save taxpayers — and take out of the future revenue of drugmakers — $288 billion over a decade.

It's a good bet Washington is about to see a lobbying frenzy the likes of which is only seen every few years. After all, this is a fight where drugmakers have an undefeated record. —Drew Armstrong

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If you are a wonk and really, really want a long history of Medicare and drug price negotiations, you can read more here.

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