House Speaker Nancy Pelosi released her long-awaited proposal to lower drug prices Thursday morning as Democratic leadership seeks to make the legislation a priority this fall.
The plan, called the Lower Drug Costs Now Act, would let the Department of Health and Human Services negotiate the price of up to 250 drugs that lack competition and would fine pharmaceutical companies when they don’t come to the table to bargain. The savings would extend not just to Medicare beneficiaries but also to people who are covered by private health insurance.
The government would determine the price of a drug by looking at what other countries pay. It would set a price at no more than 1.2 times the average of what Australia, Canada, France, Germany, Japan, and the United Kingdom pay. The secretary would take other factors into consideration, including the cost of development and sales information.
The involvement of Pelosi in the crafting of legislation, which typically first goes through committees, signals how much the party intends to stress the issue with voters heading into 2020. Polling consistently shows that people living in the United States are concerned about what they are paying for their medical care.
Democrats intend to move swiftly on legislation. A hearing is set for Wednesday in the Energy and Commerce Committee’s Health Subcommittee called “Making Prescription Drugs More Affordable: Legislation to Negotiate a Better Deal for Americans.”
The pharmaceutical industry blasted the proposal as “radical” soon after it came out. Stephen Ubl, president and CEO of the Pharmaceutical Research and Manufacturers of America, said the plan would threaten medical innovation.
“It would fundamentally restructure how patients access medicines by giving the federal government unprecedented, sweeping authority to set medicine prices in public and private markets while importing price controls from other countries that restrict access to innovative medicines,” he said.
Other parts of the Pelosi plan would decrease what seniors pay for drugs by setting a cap on what they pay out of pocket to $2,000 a year. The savings from lower Medicare spending would go toward funding medical research. If the savings are particularly significant, then Democrats want to expand Medicare to cover dental and vision care. Those benefits aren’t offered under traditional Medicare but are sometimes covered under Medicare Advantage, which is administered by private plans.
The main difference between the drug pricing plan unveiled Thursday and a draft that leaked this month is the penalty that would be imposed on pharmaceutical companies that don’t negotiate. Under the latest proposal, they would be hit with a 65% tax on a drug’s gross sales, which would increase by 10% every quarter the company refused and hit a maximum of 95%.
In the previous draft, drug companies would have been fine the equivalent of 75% of the gross sales obtained the previous year from the drug in question. The current draft also says a minimum of 25 prescription drugs would need to be negotiated.
Pelosi’s biggest hurdle will be to win over members of the Congressional Progressive Caucus, who want to see the government crack down significantly on pharmaceutical companies.
Democratic Representative Lloyd Doggett of Texas, who has a bill that would let the government negotiate the price of all drugs, said in a statement that the bill was stronger than it would have been without the involvement of progressives but that “more is required,” including protecting patients from spikes in prices. He said the legislation had been presented to progressives as the way to bring President and Republicans along, and said “I await their embrace.”
The plan was panned by House Republican leaders, who called it “socialist” and “partisan,” and said that it “will actually make it harder to get drugs to market.” They urged Democrats to instead advance other measures that committees already had been working on.
If the bill passes in the House, it will be largely symbolic as it would be highly unlikely to be taken up in the GOP-controlled Senate, though some centrist Democrats have argued for passing legislation that President Trump could actually sign.
What still isn’t clear is whether the Prescription Drug Pricing Reduction Act that passed the Senate Finance Committee in July will go to a full floor for a vote or whether the House would be willing to take it up.
That bill would cap what people on Medicare pay for drugs at $3,100 a year beginning in 2022 and would cap drug costs by forcing drug companies to give rebates to Medicare if they increase their prices above inflation, among more than two dozen other provisions.
