By Emmarie Huetteman September
20, 2019
House
Democratic leaders on Thursday unveiled an aggressive plan
to lower drug prices through negotiations between federal health officials and
the makers of some of the most expensive drugs.
Speaker
Nancy Pelosi ushered the proposal through months of closed-door meetings
primarily with other Democrats and experts on drug pricing.
But she
and other Democratic leaders also incorporated ideas from legislation introduced in July
by the top Republican and Democrat on the Senate Finance Committee and backed
by President Donald Trump, including capping drug prices based on the rate of
inflation — a measure that other Republicans said they would not support.
Democrats
are also somewhat divided on this plan. Progressives in the House were quick to
say the plan does not go far enough.
Even if
the proposal never gets a vote, it offers congressional Democrats something
they need with a little more than 13 months left before Election Day: a
unifying message on an issue that most voters say is their biggest health care
concern.
What’s
all the fuss about? Let us walk you through it.
What’s
In This Plan, Anyway?
The
legislation, called the “Lower Drug Costs Now Act,” was formally introduced by
Rep. Frank Pallone (D-N.J.), chairman of the House Energy and Commerce
Committee, one of the panels with jurisdiction over the bill. The measure would
restrict the ability of drugmakers to charge essentially whatever they want on
brand-name drugs that have no competition on the market. Specifically, its
changes would include:
·
A requirement that the secretary of Health and Human Services
negotiate the prices of “as many as possible” of the 250 most expensive drugs
marketed in the United States that lack at least one generic or biosimilar
competitor. HHS would have to negotiate at least 25 drugs annually, addressing
the concern that requiring more could overwhelm health officials.
·
Steep penalties for drugmakers who refuse to negotiate or comply
with the outcome, equivalent to 65% of the drug’s annual gross sales,
escalating up to 95% over time. There would also be penalties for overcharging,
for example.
·
Limits on price increases for drugs covered under Medicare Part B (which includes treatments at doctors’ offices
and dialysis centers) and Part D
(referring to prescription drug plans). Those price increases would be
restricted to the rate of inflation, including retroactively those that have
risen since 2016. Drugmakers could either lower their price or pay the difference
to the government as a rebate.
·
A $2,000 cap on the amount Medicare beneficiaries pay
out-of-pocket for prescription drugs every year.
Outlining
how the HHS secretary would determine which drugs to negotiate, the plan says
HHS would identify the target drugs each year with the highest aggregate cost,
meaning they would take into account the price and the volume of sales.
HHS
would be required to negotiate the price of insulin, the proposal adds,
singling out the lifesaving diabetes medication with sky-high costs that have
spurred outrage at drugmakers this year.
The
legislation would aid negotiations by creating a maximum price called the
Average International Market price. Drawing on the idea of an international
pricing index — which Trump has said he supports but which many Republicans
dislike — the so-called AIM would be the average price of a drug in six
countries (Australia, Canada, France, Germany, Japan and the United Kingdom)
weighted on the basis of sales volume.
The
goal of negotiations would be to establish “a maximum fair price,” which would
be no more than 20% higher than the AIM, the plan says.
Who
Would Benefit From This Plan, And How?
In
short, all Americans would
benefit from the pricing negotiations. The plan says the price would be
available to all payers, not just the federal government, meaning drugmakers
would have to offer the same deal to everyone.
The
rest of the legislation offers benefits largely for Medicare beneficiaries,
even suggesting that, if the drug savings were enough, it could mean expanded
coverage, including adding services for vision, hearing and dental care.
It is
legislation tailor-made for an election year. A Kaiser Family Foundation poll
released last week showed 70% of the public said
lowering prescription drug prices should be a major priority for lawmakers —
more than any other health care issue. (Kaiser Health News is an editorially
independent program of the foundation.)
It also
helps that older Americans tend to be the most reliable voters, a trend that
may explain why Medicare issues often come up
around election season.
What
Are The Critics Saying?
This
legislation puts “politics over progress,” said a statement attributed to every Republican on the House
Energy and Commerce Committee.
It is
“more accurately a ‘dictate or destroy’ price control power that will halt
valuable research into new lifesaving medicines and give foreign countries
dangerous influence over America’s health care system,” said Rep. Kevin Brady
of Texas, the top Republican on the House Ways and Means Committee, which also
would oversee the proposal.
“We do
not need to blow up the current system to make medicines more affordable,” said
Stephen Ubl, head of PhRMA, the pharmaceutical industry’s trade group.
To sum
it up, Republicans and the drug industry generally oppose efforts that would:
·
allow the government to negotiate drug prices.
·
tie drug prices to the lower prices paid overseas.
·
limit how fast drug companies can raise their prices.
They
argue such measures interfere with the free market.
But
Trump has broken with his party on some of these issues. The Office of
Management and Budget is reportedly working on a proposal
to create an international pricing index pilot project after Trump endorsed the
idea. He has also expressed support in the past for empowering the government
to negotiate drug prices.
Shortly
before his inauguration, Trump commented that drug companies have been “getting away with
murder” and vowed to change that, sparking occasional speculation
about a Trump-Pelosi alliance on drug pricing. But with the 2020 presidential
election season underway, it seems unlikely the pair would want to hand each
other a policy victory.
In
addition, progressive Democrats have expressed opposition to the plan, objecting
to how little input they feel they were given in its consideration and its
relatively modest scope by requiring that only 25 drugs be negotiated.
Will
This Become Law?
Let’s
zoom out for a moment. In July, the Senate Finance Committee members considered
their leaders’ more modest drug-pricing proposal that would cap both the prices
paid by Medicare to the rate of inflation and the out-of-pocket drug costs of
seniors, as the Democratic leaders’ plan would.
The
committee’s Republican chairman, Sen. Chuck Grassley of Iowa, a respected and
powerful voice on the issue, had poured his efforts into the legislation, which
incorporated policies Trump had supported.
Still,
most of Grassley’s fellow Republicans warned him they would not support his
measure if the full Senate voted on it.
While
frustrated with his colleagues, Grassley noted during the hearing that he
shared their opposition to two other ideas that would turn up in the eventual
Pelosi plan: the international pricing index and HHS negotiations on drug
prices.
“I
don’t think that you’re going to get 60 votes in the United States Senate,”
Grassley said of the idea of negotiations at
the time.
The
takeaway is that the odds aren’t in Democrats’ favor. There is strong,
established Republican opposition to many of the ideas included in the
Democrats’ plan, with plenty of drugmaker money flowing
into congressional coffers to keep it that way.
What
Happens Next?
The
Energy and Commerce Committee has scheduled a hearing on the bill next week.
Democrats,
who control the House, have said they are hoping for a vote in the next couple
of months. But even if it passes the House, Senate Majority Leader Mitch
McConnell, who controls what comes to the Senate floor, could pass on bringing
it up for a vote at all.
Instead,
the legislation may largely offer Democrats a potent talking point as Election
Day 2020 approaches, giving them an ambitious proposal to point to as evidence
that they are listening to voters’ concerns — just as congressional Democrats
hammered Republicans for not protecting those with preexisting conditions during
the 2018 midterms.
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