Democrats boost bid to lower drug prices
As House Democrats hash out a proposal empowering the federal government’s top health official to negotiate lower drug prices, House Speaker Nancy Pelosi is taking it a step further and pushing a plan that could benefit even those Americans with private health insurance.
A draft plan spearheaded but not yet released by Pelosi and other House Democratic leaders would ensure that prices negotiated on the most expensive drugs would apply not just to the government but to all payers, including employers and insurers, a Democratic aide said.
But first, Democrats must agree on how best to muscle drug companies to the negotiating table, as well as how to prevent Americans from paying more or even losing access to the other drugs they take. Pelosi has faced pressure from progressive House Democrats, who have pushed for a more aggressive approach, including opening up all drugs to negotiations.
However bold a plan Democrats produce, any proposal to invite the federal government into price negotiations looks doomed in the Republican-controlled Senate, where GOP leaders have said they will not let it advance.
Drug prices have been on the rise for decades, and, according to the Kaiser Family Foundation, spending on prescription drugs — adjusted for inflation — increased to $1,025 per capita in 2017 from $90 in 1960. (Kaiser Health News is an editorially independent program of the foundation.)
Experts say the lack of competition is much to blame for high drug costs. The federal patent system, in which companies are granted exclusive control of their drug for years and can exploit loopholes to block competitors, frees them to charge as much as they like. That can leave patients with no choice but to pay exorbitant prices for the drugs they need.
Under the current system, negotiations are conducted on a plan-by-plan basis between drugmakers and pharmacy benefit managers.
Many Democrats argue that the Health and Human Services secretary should negotiate prices, leveraging the power of the federal Centers for Medicare and Medicaid Services, the largest health care payer in the country.
“We want them to address as many as possible, as quickly as possible,” Pelosi said at a recent event after progressives pushed her to include more than the 25 drugs she initially proposed targeting.
The negotiation would begin with a price range set by HHS, the Democratic aide said, with the aim of agreeing on the maximum price that could be charged for a drug.
Details of how the negotiated drug prices would be transferred to the private sector remain to be seen.
Limiting negotiations to the 250 most expensive drugs would tackle a piece of the drug market that accounts for 78 percent of prescription drug spending, according to an analysis by Patients for Affordable Drugs, an advocacy group.
Democratic leaders believe the 250-drug threshold would also keep the list of negotiable drugs to a number HHS could handle.
Otherwise, the HHS secretary could reasonably determine that was more than the agency could manage and potentially cherry-pick which drugs to pursue, the argument goes.
An HHS spokesperson declined to answer questions about how such a proposal would look in practice.
The Congressional Budget Office cautioned last month that negotiations would likely be effective at lowering prices only if the HHS secretary were granted “some source of pressure” to use against drugmakers.
Under the Democratic leadership plan, companies that refuse to comply with negotiations would find themselves slapped with an excise tax equivalent to 50 percent of sales on the drug in the previous year, the aide said.
Although President Donald Trump said during his 2016 campaign that he supports allowing the government to negotiate better drug prices, congressional Republicans broadly oppose the idea.
Sen. Chuck Grassley, an Iowa Republican and chairman of the Finance Committee, said on the Senate floor last month that part of the appeal of Medicare Part D is that seniors can select a plan based on its formulary, allowing them access to the drugs they need.
That choice could disappear if Democrats enable negotiations, he said.
“As the senator who once again chairs the committee with jurisdiction over Medicare policy, I’m not going to let Congress unravel what’s right about Medicare Part D,” Grassley said.