Brian Lehrer: It's the Brian Lehrer Show on WNYC. Good morning, everyone. The amazingly smart and funny and perpetually curious historian and New Yorker Magazine writer, Jill Lepore, is coming up on today's show. That's sure to be a highlight of our week. Who knows what we'll talk about as her new collection of the last 10 years' worth of essays ranges from Frankenstein/artificial intelligence to Barbie/empowerment feminism, to why she wrote a combined essay about her mother, and Jane Franklin, sister of Ben.

Jill Lepore coming up this morning. We start here.

You've been hearing in the news that the Biden administration has announced the first 10 prescription medications that will now be subject to price negotiation between the pharmaceutical companies and Medicare. Your private health insurance company can already do this. Now Medicare can too. I'll give you the list of drugs in a minute and we'll put this in the larger context of healthcare policy wars from Obamacare to next year's presidential race. Here are all the references to healthcare and health insurance, all of them, in last week's Republican presidential debate.

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Brian Lehrer: No, there's nothing wrong with your device. There's nothing wrong with our feed. Little uncomfortable to listen to that silence there. The terms healthcare, health insurance, healthcare costs, and prescription drugs never came up in the debate last week. Yesterday, in President Biden's announcement of these first 10 drugs on the price negotiation list, he said this.

President Joe Biden: Unless you needed the drugs yourself or knew someone who did, it wasn't as real. Boy, we've been fighting big pharma for a long time, a long, long time.

Brian Lehrer: President Biden yesterday. One caveat right off the bat, this could potentially still get stopped. We'll get to that too. With us now, Jonathan Cohn, senior national reporter at HuffPost, who wrote up yesterday's announcement. He's also a lecturer at the University of Michigan's Gerald R. Ford School of Public Policy. He's a good guest for the big picture context as author of the book, The Ten Year War: Obamacare and the Unfinished Crusade for Universal Coverage, published in 2021. Jonathan, thanks for joining. Welcome back to WNYC.

Jonathan Cohn: Thank you for having me.

Brian Lehrer: Since this has been a fight with big pharma for a long time like the President said, what enabled this price negotiation to be announced now?

Jonathan Cohn: Well, the immediate cause was an enactment of the Inflation Reduction Act, that big law that Biden and the Democrats passed last year. It's probably best known for its climate provisions. This is the law that puts all this money into clean energy and electric cars. There's a whole section of the law that deals with healthcare, and the biggest part of it deals with prescription drug prices in Medicare, which as you said, is something Democrats have been working on trying to do something literally for decades. This is one of their longest-standing crusades. A year ago, they finally with the leadership in Congress with President Biden, they finally got something over the finish line.

Brian Lehrer: Will individuals on Medicare save money from this, or will just the government save money for paying for medications for people signed up for the Medicare prescription drug coverage?

Jonathan Cohn: Well, that's a really good question. The answer is both. Just to clarify as a background to start, there are actually several provisions in the Inflation Reduction Act, specifically, that help Medicare beneficiaries with drug costs. There is something called an inflation rebate, which basically penalizes drug companies if they raise the prices of their drugs too quickly year after year.

There is probably the most visible change to beneficiaries will be something that starts next year which is basically a hard limit on how much out-of-pocket spending you can have on your drugs. Right now, there is no limit. You owe copays when you go to the pharmacy. You pay the $5, the $10. It could be $50. It could be $100.

Starting next year, and then phasing in over two years, there will be a hard limit on how much you could ever owe out-of-pocket, which is really huge for people with serious medical conditions. They run up very large bills. That will be the most visible part.

Then there's the negotiation part, which is what we've been talking about this week, the announcement yesterday. All of these will benefit beneficiaries in one way or another. Most of them will also save the government money. In the end, the biggest savings do actually go to the Medicare system. There's really a substantial savings, more than $200 billion over 10 years, which is a big chunk of money according to the Congressional Budget Office.

Of course, saving money for Medicare means sustaining the program for longer. Also, it filters down to beneficiaries in the sense that they're paying less in their premiums because people pay premiums for Medicare on top of what they get from the government. Then of course, all of us as taxpayers will benefit because it's that much less money we have to put into Medicare to keep it going as it is.

Brian Lehrer: Right. Here's the list of these first 10 drugs subject to price negotiation. I'm going to read the version that was published on the health science site, STAT News, because they did a really good job of describing each one very briefly as they list them.

STATS News says the drugs include Bristol Myers Squibb, blood thinner, Eliquis, Boehringer Ingelheim, and Eli Lilly's Diabetes Drug, Jardiance, Johnson & Johnson's blood thinner, Xarelto, Merck's diabetes drug, Januvia, AstraZeneca's diabetes drug, Farxiga, Novartis's heart failure treatment, Entresto, Amgen's rheumatoid arthritis drug, Enbrel, Johnson & Johnson and Avis blood cancer treatment, Imbruvica, don't know if I'm saying that right. I don't know if I'm saying many of these right. Johnson & Johnson's anti-inflammatory medicine, Stelara, and Novo Nordisk insulins that go by the names Fiasp and NovoLog.

Wow, Jonathan, cancer drugs, heart drugs, diabetes drugs, other things. Any surprises there to you or anything notable about which 10 drugs are going first here?

Jonathan Cohn: Yes. Well, first of all, yes, like you said, these are very common conditions. Overall about 9 million seniors take at least one of these drugs. When you think about the amount of spending and the cost of these drugs, the number of people with these conditions, I'm not surprised to see a bunch of heart-related blood-thinner drugs on there.

I'm not surprised to see diabetes treatment on there. I'm not surprised to see an autoimmune arthritis drug on there.

I will say two things. Number one, there were lists running around before this. Analysts were guessing at what the 10 would be. I think they were batting about 700. The first few drugs that you listed, most people expected. Some of the others were a bit of a surprise. Mostly that was because the analysts who were predicting this were using year-old data. The federal government had access to more recent sales data. By law, that's what they had to use. This was all driven by a formula based on sales over the last year.

The one that I think surprised a lot of people was that number, that last one you mentioned, which was the set of insulin products. Few people were expecting to see insulin on this list. Actually, I spoke yesterday to the administrator from what's called the Center for Medicare and Medicaid Services, Chiquita Brooks-LaSure. I asked her, "Was that intentional? Did someone put the thumb on the scale to get insulin?" Because, of course, insulin is really the poster child for, what's wrong with drug prices in this country.

Brian Lehrer: Also wasn't there a separate provision, I think also in the Inflation Reduction Act that limited the monthly cost of insulin out of pocket for people specifically on Medicare?

Jonathan Cohn: Yes. You're exactly right, there is a separate provision. That provision basically said if you are buying insulin through Medicare, you won't have to pay more than $35. Here's the key thing. That was strictly a subsidy. It was strictly the government saying, we are going to cover the cost above $35. We're just going to cap what you, the individual, faces.

The law already protected beneficiaries from having to pay too much for insulin, but it only by the government saying, we'll cover whatever else it charges, the companies- and there's three that control the insulin market- still basically had unlimited power to raise that cost as much as they wanted by putting this class of insulin products on the negotiation list. Because it's on there now, the government can actually start to negotiate down the price so that the government isn't on the hook for so much.

Again, like I said before, when the government isn't paying as much for these drugs, that means the taxpayers, that means Medicare beneficiaries who pay premiums for private Medicare plans, they all save money indirectly because of that.

Brian Lehrer: Listeners, you can help us report this story. What do you pay now for any of the 10 drugs on this list, whether you're on Medicare or private insurance? Or you can ask a question of healthcare reporter, Jonathan Cohn, about the advent of Medicare prescription drug price negotiation, as announced by the President yesterday, or anything about health insurance politics.

As we go, we're going to put this in the context of at least the 12 years or so since Obamacare came into being and look forward to the 2024 presidential and congressional elections. What healthcare policies would you like to see debated in next year's election cycle? You can talk about that too. 212-433-WNYC, 212-433-9692. Call or text that number, or tweet @BrianLehrer for Jonathan Cohn.

Jonathan, all politicians say they are for lower health care costs. Do both parties, by and large support, at least this ability of Medicare to negotiate drug prices?

Jonathan Cohn: They do not. This traditionally has been a big dividing line between the parties, with some exceptions. In general, Democrats have favored giving the government negotiating power over drugs, Republicans have opposed giving the negotiating power to the government. This lines up closely with their philosophical worldviews. Democrats in general, are the party that tend to think there's a place for the government to regulate business, to manage the economy so that more people can afford things so that things are safer so then they are cleaner.

Republicans tend to be the party that look at regulation and say, "Wait a minute. Regulation is going to mess up the market. It's going to deter innovation. Government's going to make poor decisions about what things should cost and will end up with worse products, fewer products. The individual consumers won't have as much choice," which is basically these are the arguments that are now making against government negotiation.

There is definitely a split between the parties. One that I know and you can tell yesterday watching Biden speak, Joe Biden and the Democrats would like nothing more than to have a fight about this in the 2024 election because they think this is a winning issue for them.

Brian Lehrer: Yes. Well, let me key on one of those arguments against that you cited, the innovation one. The pharmaceutical companies argue as you know that cutting their profits, by these tens or hundreds of billions of dollars a year will mean less money for research into innovative new medical treatments, like for President Biden's war on cancer. Fairpoint there?

Jonathan Cohn: I will say I have studied this for a long time, and I'm not even the world's leading expert on this, by far. I read other people who are real researchers into this. This is a complicated debate. I think there is lots of ground for reasonable disagreement among smart people.

There's two extremes. One extreme will have you believe that anything the government does to change prices is going to destroy innovation. The government gets at all involved, and the next thing you know we're not getting the next cure for cancer for 10 years. I don't think that's true.

There's another side of the debate which says, none of this matters. All the important research is done with government funding. The pharmaceutical companies are greedy, they make such huge profits. This doesn't matter at all. Innovation is going to continue without-- There's no reason to worry about this at all. I actually don't think that's true, either. I think this is a complex issue, and there's lots of different factors.

What I do think is true is that when you look at the Inflation Reduction Act, you look at these actual reforms that are going forward, it's a pretty mild form, for better or worse. The government is getting some power, but not nearly as much as they have, say, in the governments overseas. There's all kinds of limits. Some drugs can't be negotiated, because it's a small biotech company, and they're the ones that do the most innovation. The drug companies, none of these drugs are subject to negotiation until they've been on the market for 9 or 13 years, depending on the type of drug, and only if they don't have competition.

When this process all shakes out, most likely, we are still going to be paying much higher prices than they do in other parts of the world for better or worse, again, depending on your perspective. The Congressional Budget Office when it made its best guess, it said, "We think there will be some effect on innovation but at most, a one--" They expect a 1% reduction in the number of drugs brought out. 1%.

Again, that's it's entirely possible that because of the way the law is written, and the way the administration is going to try to implement it, there may actually be a push to get better quality out of the drugs they dissolve so you might have slightly fewer drugs coming offline, but the drugs are actually more likely to be medical breakthroughs.

Now, I don't know for sure. Nobody knows for sure. We'll have to see how this evolves. Like I say, I do think this is a very complex debate. I think there are serious people on both sides of it.

Brian Lehrer: I know you teach in Michigan so you may or may not know what's going on in New York City right now, but there's a different, but we're going to ask you if it's related, big Medicare debate going on in New York City right now having to do with retirees from New York City government jobs. Mary Beth in Hoboken is calling about that. Mary Beth, you're on WNYC with Jonathan Cohn. Hi.

Mary Beth: Hi, hi. I'm one of those retirees that they're trying to push into Medicare Advantage. We do not want it. We know it's really Medicare disadvantage. It's privately run. People should understand that if they're spending millions of dollars for TV ads, they must be getting something out of it. I wish the government would just try to get rid of this idea altogether. We don't need Medicare Advantage. Traditional Medicare is perfect.

Brian Lehrer: Mary Beth, thank you very much. Yes, New York City and some of the municipal unions are trying to shift the city government public employee retirees onto Medicare Advantage plans from traditional Medicare. Let me take one more on this because I think Kitty in Manhattan is going to make one more specific point before we get your response, Jonathan. Kitty, you're on WNYC. Hi.

Kitty: Hi, Brian. Yes, it follows from that. If half of the people have been transferred to privatized care, how might that impact the government's ability to negotiate prices?

Brian Lehrer: Boom. Jonathan, what do you say?

Jonathan Cohn: Oh, good questions, both. I don't know of the New York situation, specifically. I do know about Medicare Advantage. There's been very quietly, the Medicare Advantage, for your listeners, is the private version of Medicare that you can opt into as a choice. It's been around in some form, really, since the 1990s. Very quietly, has grown enormously.

Actually, we're at the point now, I can't remember if we pass it or not, we're actually a majority of people on Medicare are going to be in Medicare Advantage plans. People who like them say, "Hey, they're private sector, they're innovative, they are able to offer all these cool extra benefits, like gym club memberships, or vision that they can't necessarily get through traditional Medicare, even if you pay for a supplemental plan, you still can't get it." Critics say, "Well, the only reason that these plans offer extra things is because they're actually getting extra money from the government they don't deserve."

By the way, there's lots of data coming out to suggest that like private insurance that we're all familiar with for working-age Americans, they're more likely to deny care, they have limited markets. Then there's a lot of skepticism about what's really going on behind the scenes and where these profits are going. I understand the weariness. If you've been on traditional Medicare being shifted into Medicare Advantage, I can understand that.

Medicare Advantage plans will be able to take advantage of these drug prices that are negotiated. In that sense, all Medicare, the entire Medicare drug benefit today is private. The program came into existence during the Bush administration. They were the ones who wrote it.

One of their stipulations along with the Republicans who ran Congress back then, and one of their stipulations was, "If we're going to create a drug benefit for Medicare, it's going to have to be through the private sector." It's been that way ever since. In fact, they were the ones when they wrote it, they actually wrote a clause into the law that said, "By the way, we're creating this Medicare drug benefit, it's going to be run by private insurance, and we're not going to let the government negotiate the price of drugs."

One of the things the Inflation Reduction Act was actually strip that to say, "Hey, no. We're getting rid of that prohibition." That's part of why now we're getting negotiation going forward. Private Medicare plans we'll be able to see benefits from the reduced drug prices. As to whether it's a good idea to put New Yorkers into private Medicare Advantage Plans versus Medicare, well, that depends on what you think of Medicare Advantage.

Brian Lehrer: A couple of texts coming in that are interesting. Let's see. A listener writes, "I'm on both Eliquis and Entresto." Those were two of the drugs on the list. "After the deductible period, I pay about $110 a month for each in copays. Eliquis has been on the market for 10 years, and the patents were due to expire in February this year. They were granted an extension to make up for the time period following the patent during which they were gaining FDA approval. If this decision were reversed, their $600 a month drug would cost about $12 from a generic manufacturer." Jonathan, that listener, I can't tell if they're on Medicare or not, but it obviously raises the issue in the patent period versus once generic versions can be released, right?

Jonathan Cohn: Yes. Again that's part of the way this new negotiating power is designed. You can't end up on the list unless you're exclusive. That's one of the conditions. If there's competition out there for your drug already, then government's not going to bother negotiating the price because you already got market competition. It's only if you face competition, and then again, only after-- The companies still have several years to sell their drugs exclusively.

Now there's an end point on that. It's nine years for what's called a small molecule drug, which is something synthesized from a chemical process. It's 13 years for a biologic, which is something that's manufactured using biological products.

can argue if you're thinking about why are we doing this? Why would you justify giving the government this power? Well, part of the reason is that there is a sense, and a lot of evidence to back up the idea that companies have really, not only are they taking advantage of the patent period, but they've learned to exploit it. They game the system constantly. They come up with ways to extend their patents. They come up with ways to keep other competitors from getting into the market.

There've been attempts over the years to clamp down on that, and there will be more, I'm sure. The reality is those companies are pretty clever. They know what they're doing. They know their way around the law. One of the justifications you could argue for negotiation is to say, "Look, at the end of the day, we want the companies to be able to sell their drugs exclusively for a while. We want them to get back their investment, but we're going to put a limit on that."

When you've had the market for so many years to yourself at that point, you still have it to yourself. You're running up and Medicare is spending tons of money on your drug. Then we're going to come in like any other purchaser would and say, "Hey, we're going to negotiate with you." We're going to say, "Look, your price is too high. Let's get this price down somehow."

Brian Lehrer: We're talking about the news from yesterday, President Biden announcing the first 10 prescription drugs that will be subject to price negotiation. Medicare will be able to negotiate prices with the pharmaceutical companies for people on Medicare, obviously. This is part of the Inflation Reduction Act that passed last year. Duncan in Tewkesbury, you're on WNYC. Hello, Duncan?

Duncan: Hi, Brian. Thank you for all you do. I just wanted to share. I'm a retired pharmaceutical executive with experience both in the US and in Europe, and actually all over the world. Sorry, I just pedaled up a hill.

The short-form message is that there is so much waste in marketing and selling that the ability to negotiate prices is not going to affect R&D at all. I worked on the original study that showed the cost of drug development. There's so many factors in there for probabilities, which are assessed by the people who are trying to promote the high cost of drug development.

For the time value of money, in my opinion this is a great move on the part of the Biden administration, and I hope it's successful. Thank you for listening.

Brian Lehrer: By the way, Duncan you're bicycling in New Jersey in a hilly section?

Duncan: Yes.

Brian Lehrer: I went bicycling in New Jersey last week along the Delaware River in the Lambertville area and around there. It was the first time I had been down there.

Duncan: Oh, is it?

Brian Lehrer: It was great, but it was so flat which made it easy in a way, but I kind of miss the hills. Do you like biking up the hills?

Duncan: I do, yes. Come to Tewksbury Far Hills area. We've got lots of rolling hills and beautiful countryside here. I think you'll enjoy it. I can leave my number if you want to give me a call when you're out.

Brian Lehrer: No, no, no, that's okay. I'll look it up. What do you think your bosses in the pharma industry would have said if you had raised that wasteful spending concern with them, or maybe you did?

Duncan: No, actually, I didn't. I retired eight years ago. Towards the end of my career, that was one of the factors that I just didn't enjoy living with; that, and a lot of corporate churn and reorganization. The interesting thing for me at least is that, when you're in the middle of it, you really don't see what's going on. Our objective was to try and maximize prices and maximize the exclusivity of our markets as much as we could. When you're in that mode you're not really thinking about what's the best thing for civilization or for society. I actually liken that a little bit to some of the good people who worked in the Trump administration and finally decided to leave.

Brian Lehrer: Interesting. Duncan, thank you so much for your call. What do you think about what he laid out there, and whether there's any path to change, Jonathan?

Jonathan Cohn: Well, I'm similarly impressed with Duncan's bike riding and then calling into the show, amazing. I would love to actually speak to him, hear more about his experience at the pharmaceutical companies. What he is saying, and coming from inside pharma is interesting, lines up very closely with what critics on the left have long said about the drug industry, which is that they spend a lot of money on marketing. They're out to make a buck which, look, that's how companies work. Every for-profit company is trying to make a profit. That's how the world works and that's how markets work.

Sometimes that's great, but they have learned to make money in ways that don't necessarily lead to greater welfare. One of the things we've seen over the years just to take an example, companies spend enormous amounts of money developing what are called me-too drugs, drugs that don't really add new therapeutic value. They're not really an improvement over what is out there.

Then because it's on patent, because they have exclusives and then they can market it with these television ads, we all see that we're the only country in the world, there's one other, that allows those ads. They're able to generate huge sales for them, but we're not getting any benefit from those drugs, not really.

What will be interesting to see is when this negotiation takes place, it'll be interesting to see how it unfolds. The law says the federal government, when figuring out the fair price for these drugs, they're supposed to take into account therapeutic value. They're supposed to look and say, "Well, how does this drug do compared to the drugs that are out there already?"

One response might be from a drug company, and I think the response supporters of this law hope will happen. The drug company will say, "Well, you know what? We want to make money. We really have to pay a little more attention to providing drugs that actually get us better quality that do more than the existing drugs." If that happens, you could end up with that world that I was describing before where maybe they're not bringing out quite as many new drugs, but the drugs they bring out are actually better than if we didn't have this negotiation system in place.

Brian Lehrer: Still thinking about the context of Duncan's call. When biking off-road where there's no traffic to worry about from time to time, I have mounted a little handlebar speaker and listen to music while I've been bicycling. I'm imagining now Duncan riding his bike in the Tewkesbury, New Jersey area, pedaling up a hill with a handlebar speaker, and what's he playing? He's not playing some music to motivate him and keep his energy level up, or just that he enjoys. He's listening to the Brian Lehrer Show on his bike. That's crazy.

Jonathan Cohn: That's very, very high praise. I would dine out on that one.

Brian Lehrer: We're going to continue in a minute with Jonathan Cohn and put this into the larger perspective of the period from Obamacare through next year's presidential race. Stay with us.

[MUSIC - Marden Hill: Hijack]

President Joe Biden: Your story is a familiar one. Too many Americans, instead of using all your energy to fight the disease you're fighting insurance, or drug companies for medicines that literally keep you alive. Without them, you're not going to be here.

Brian Lehrer: President Biden, again announcing the first 10 drugs to get a price negotiation between Medicare and the manufacturers yesterday, as we continue with Jonathan Cohn, senior National Reporter at HuffPost who wrote up yesterday's announcement. He's also a lecturer at the University of Michigan's Gerald R. Ford School of Public Policy. As I said in the intro originally, he's a good guest for the big picture context as author of the book, The Ten Year War, Obamacare, and the Unfinished Crusade for Universal Coverage published in 2021. Jonathan, before we get to the 10-year, really, 12-year, 13-year big picture context, I just want to let a couple of listeners more in here with their prescription drug price stories, because for people who don't know this world, it's just eye-popping over and over again. Harry in Fort Greene, you're on WNYC. Hi Harry?

Harry: Good morning. How are you?

Brian Lehrer: Good. You're taking two of the drugs on the list, I see.

Harry: Yes, Eliquis and Entresto. Together, they cost me, my co-pay is about $600 for three months' worth.

Brian Lehrer: $600 a quarter did you say?

Harry: Yes.

Brian Lehrer: Are you on Medicare, or through private insurance, or some other way?

Harry: Now this is Medicare,. I'm 78. I do have Medicare Advantage from Aetna, even. Also, I had some serious problems earlier this year so I am in the dread donut hole. My co-pay will probably go down after the first of the year since I have exhausted the first level of benefits and have to spend another $3,000 before I can get to the second level. In any event--

Brian Lehrer: In any event; it's a stress, right? $600 a quarter. Harry, thank you very much. Here's one more via text message. Jonathan, you have to believe this one. This says, "I am on Medicare with AARP supplemental coverage, and I'm paying $17,000 as a co-pay for one of my three cancer drugs because it is a "specialty drug". I'm an outpatient at a major Upper East Side New York City Cancer Center. I'm told by another Upper East Side major hospital oncologist that her Medicare et cetera patients do not pay anything like that. Can your guest explain?"

We've got two stories there. One is I think this starts to bring us to the larger health insurance question. With Harry's story, people think, "Oh, you have coverage that's great. You're not going to have to pay very much," but even with the coverage, he's paying $600 a quarter just for his medications.

Jonathan Cohn: First of all, I'm glad you brought these up. I do think people don't grasp how hard this is, and seniors in particular. Fixed income, and so many seniors really are just struggling. Remember, lots of seniors are very low income. They're struggling with rent. They're struggling with food.

As you get older, you get into the cost. You have to worry about as you age into assisted living and things like that. It's incredibly scary. Of course, it's not just for the seniors. This filters down to the younger generations into the communities. This is how we got Medicare in the first place, was a recognition that these costs for seniors were impacting everybody.

I don't know about the specifics of that second text message enough to know what's going on there. I will say this, this does, I do think, bring us back to what's probably the most impactful piece of these reforms that's, in theory, hopefully going to help someone in that situation, which is to establish this hard limit on out-of-pocket spending for drugs that you pay for through Medicare. Today, there is no limit.

The first the caller talked about he was in the donut hole I think which is this weird way, the benefit is structured where you get coverage, and then you lose coverage, and then your coverage picks back up again. Basically, it's not uncommon for somebody with serious medical conditions to end up with thousands of dollars of out-of-pocket costs a year, many thousand. Again that second person was $17,000.

The new out-of-pocket limit means that as of 2025, so it's going to take a little while to phase in as these things do, there will be a limit of $2,000 a year you would owe out of pocket. When you hit that, you're done and the government picks up the rest, Medicare picks up the rest. That could make a real difference to people.

Again I hesitate. I don't know that specific situation, and I've learned over the years covering healthcare, there's always there's loopholes, and asterisks, and caveats, that I'm constantly learning about. I can't say for sure that person will benefit or why that person's in that situation now, but in general within about two years now, people will not be facing those steep out-of-pocket costs for drugs if they're on Medicare.

Brian Lehrer: That is if this all stands. I guess I need to ask you what if the two sides can't agree on a price in these negotiations, and what about this ongoing political or legal threat to Medicare negotiating prices for drugs in the first place?

Jonathan Cohn: The way the process works for negotiation is the drug companies have a choice. There's this back and forth and eventually, if they can't agree along the way the government makes it a last offer, basically a take it or leave it. If the company doesn't want to be part of that, doesn't want to negotiate, doesn't want to have that offer, it has two choices. It can pay penalties which are pretty stiff, or it can just stop selling to federal insurance programs altogether.

Now those are pretty unappealing choices for most drug companies. The penalties, as I said, are going to cost them a lot of money if that's what they choose, they decide to withdraw from federal insurance programs. Well, that's a lot of business they're giving up. There's a lot of [crosstalk]--

Brian Lehrer: That's one of the arguments of the pharmaceutical industry against this, that Medicare accounts for so much of the prescription drug market in the United States that it has unfair leverage and could dictate prices that would be ruinous or at least unfair to the manufacturers in these negotiations that's different than the leverage, less leverage that the private health insurance plans presumably have. Do they have a point?

Jonathan Cohn: That is their point. That is their argument. If you talk to most law professors, they will tell you that the drug companies do not have a point. The reason being is that we have a long line of precedence. It's very clearly established that federal government has the right to put whatever conditions it wants on participating in its programs. In the same way defense, the Pentagon can say Hey you can't, we're not going to work with you as a defense contractor unless you do A, B, and C. You have to show that you can handle national security secrets, and you have to guarantee certain quality, whatever their requirements are.

Well, the government has the right to do the same thing with Medicare. It has the right to say, hey, no one's making you sell to Medicare. No one is making you sell to federal insurance programs. That's your choice. Now you want to do it because it's lots of business. That's great, but if you want to do business with us, hey you got to let us negotiate prices, just like private sector does.

If the case law holds, and there's a long line of precedence, then these lawsuits should not work. Now you and I both know, we've been around, we've watched the courts are lasting. You've got a lot of judges, the Federal Courts, lower courts, couple on the Supreme Court who are not just conservatives but they're federal society judges. They have shown themselves more than willing to rewrite doctrine, to junk the old precedents and say hey, we're going to interpret things in a new way differently than we've been doing it for a while. That makes you wonder could this have some legs?

There is this particular argument, this idea, the word they use is coercion, we're being forced, we're being coerced to sell at these prices. Well, there was a similar- philosophically, a similar argument made about Obamacare, the Affordable Care Act, with relation to the way it's Medicaid expansion works. That's the states, that's whether states have to expand Medicaid to cover all low-income people. The argument was that the states made, they said, hey, you're telling us we have to expand or we lose all our Medicaid funding. That's not fair. That's a form of coercion.

Every law professor I know laughed at that. They were like come on, this has always been the case. Federal government can put whatever conditions they want on participation in the program. Lo and behold, John Roberts and actually two of the liberal justices also signed on to this, said actually the states are right, it's a form of coercion. The states don't have to expand Medicaid. The law professors I've interviewed all say no, this is totally different. Who knows with this court? You should never take anything for granted. I think [crosstalk]--

Brian Lehrer: We'll see. That relates it to your book, The Ten Year War: Obamacare and the Unfinished Crusade for Universal Coverage. Republicans used to run on repeal and replace Obamacare. How quickly we forget, that John McCain moment where he prevented the repeal as his last act in public life and Trump trashed him for it. I don't hear repeal and replace Obamacare anymore. Have they come to accept it?

Jonathan Cohn: I think they have come to accept that it is a political loser for them. 2018 midterms, repeal turned out to be hugely unpopular. The Democrats ran on it all, and it's the reason they took back the house, or at least a big reason why.

It turned out that Obamacare was unpopular for a while and, of course, had famously all the problems associated with its implementation and people's changing their insurance. Once it was in place, people really valued the protections it provided like for pre-existing conditions. Many more people got insurance either through Medicaid or subsidized private insurance at places like healthcare.gov. I think the New York one is called Empire State, or I can't remember now.

Brian Lehrer: The Empire Plan.

Jonathan Cohn: You can take that away. It was very unpopular to do that. They don't talk about it anymore. I think many of them would still like to do it. I imagine we will see versions of healthcare reform from the conservative side that try to accomplish what repeal would have accomplished, but they're not going to call it repeal. It's just too politically toxic for them.

Brian Lehrer: Of course, Obamacare was officially called the Affordable Care Act. The very fact that we're still debating healthcare costs as much as we are means it's only accomplished its title goal to a limited degree. Healthcare costs still poll very strongly as an issue for voters up there with other kinds of inflation and abortion rights and crime and democracy itself.

Last question, I noted earlier how the topic of healthcare costs didn't even come up in any way in last week's Republican presidential debate. Do you see the two parties staking out specific positions by the general election campaign season next fall? Then we're out of time.

Jonathan Cohn: Democrats, I think that depends on what questions get asked of the Republicans. Democrats will absolutely stake out their positions. They will make it very clear that they were the ones who brought you this drug price negotiation. They will point out the fact that no Republicans voted for it, that many Republicans have said they want to roll it back. Republicans don't want to talk about this for the same reason they don't want to talk about Obamacare. The public is on the side of the Democrats.

I think a really big question is in these debates we're seeing in the Republican primaries and the general election, when reporters ask these Republican presidential candidates, congressional candidates, I certainly plan to and any reporter who's interviewing a Republican, ask them what they think. Do they support these reforms? Do they support giving the government power to negotiate prices?

Actually, I think the answers will be interesting because I think there are some Republicans out there who may give surprising answers. Believe it or not, Donald Trump, at various times, has said things critical of the pharmaceutical industry. I think this is an important question to ask and potentially an interesting one.

Brian Lehrer: Jonathan Cohn, senior national reporter at HuffPost, an author of The Ten Year War: Obamacare and the Unfinished Crusade for Universal Coverage. Jonathan, thanks so much.

Jonathan Cohn: Thank you for having me.

 

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