Prescription drug prices in the United States are the highest in the world and last year they increased by 13 percent. If Congress enacts the Trans Pacific Partnership (TPP) trade deal in its current form, it could increase those expenses for seniors and all Americans dramatically.  

TPP is being negotiated among 12 countries and would unite 40 percent of the world’s economy. Most of what is in the TPP is secret, but some parts of it have leaked, and what has come out is downright scary for seniors, who despite being only 13 percent of the country’s population account for nearly 45 percent of drug spending.  


The problem is something called investor-state dispute settlement, which apparently has a whole chapter in the TPP. Simply put this means that a foreign investor could drag a government into a special foreign tribunal if a regulation or law affects their profits. This threat is not the paranoid rantings of the black helicopter crowd. Large, multinational corporations have learned how to use their foreign subsidiaries to put individual governments at a disadvantage.

Here’s how it would work when it comes to prescription drugs. Right now, there are a lot of ways that governments negotiate a better deal for consumers than individuals could get alone, but a leaked version of the TPP requires that governments pay “competitive, market-driven prices” for drugs and medical devices. That sounds nice until you ask how it would affect the programs retirees use to get their medicine.  

For example, Medicaid has preferred drug lists to control costs and make sure taxpayers aren’t paying for drugs that don’t work. At the top of those lists are generic drugs with proven effectiveness. That’s good for seniors and taxpayers but bad for pharmaceutical companies that could sue for compensation on the grounds that the preferred drug list did not allow them to charge “competitive market-driven prices.” 

The same goes for the Medicaid Drug Rebate Program, which saves taxpayers up to 45 percent off pharmaceutical prices. But because those prices are established by federal law and aren’t “competitive market-driven prices,” drug makers could sue and negate these savings.  

There’s also a law that gives safety-net providers such as public hospitals and clinics that treat patients who aren’t eligible for Medicaid drug prices which are set by a federal formula, not the market.  

We should be working to make drug costs lower and more predictable, not injecting uncertainty and opening the door to higher costs for both seniors and taxpayers by fast tracking the TPP. This is the wrong time to support an agreement that could further increase drug costs to consumers and the government. The members of the Alliance for Retired Americans will be paying close attention to what our leaders do and so should anyone else who needs prescription drugs.

Fiesta is executive director of the Alliance for Retired Americans.