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U.S. prescription drug prices have skyrocketed. What does the new Senate bill do to bring the prices down?

A reading list on the price of prescription drugs and what can be done to fix it.

Prescription drugs in America are expensive.

A new Alzheimer’s treatment has a list price of $56,000 a year, and some are paying $1,000 per month for insulin. The high cost of drugs has generated fierce debate over whether the U.S. should intervene more heavily in drug pricing. The Senate bill revealed last week by Sens. Chuck Schumer (D-N.Y.) and Joe Manchin (D-W.Va.) would address one key element of the problem: the prices Medicaid pays for seniors’ drugs.

The bill unveiled last week would allow the federal government, the single largest purchaser of drugs in the U.S., to negotiate drug prices with pharmaceutical companies for the first time, bringing down costs for seniors and the government. Critics warn this government intervention will make drugs less profitable for pharmaceutical companies and in turn drive down research for new drugs. Government projections suggest the impact on new drug development would be negligible.

The new bill would allow the government to negotiate prices only for people over 65, generating significant savings for Medicare recipients and increasing access to the most expensive drugs. It would also save the government a lot of money: $100 billion over 10 years, according to the Congressional Budget Office, which in turn would help pay for other parts of the new bill.

Here are some of Grid’s favorite resources for understanding why drugs are expensive in the U.S., and the benefits and drawbacks of changing drug policy:

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