With the 2020 election just over a year away, House Speaker Nancy Pelosi (D-CA) has unveiled the Democratic Party’s answer to public discontent over high prescription drug prices.
A preview of the plan was leaked last week. Today’s announcement doesn’t stray far.
The new plan would have the U.S. Department of Health and Human Services (HHS), which is in charge of the government insurance programs Medicare and Medicaid, negotiate the price of “the bare minimum” of 25 high-priced drugs a year that don’t have generic or biosimilar competition. Insulin would also be included.
In a press conference Thursday, Pelosi (pictured above) said the plan would bring “enormous savings”—the Congressional Budget Office has yet to issue its analysis—that could be spent on improved Medicare benefits, more basic research at the National Institutes of Health, or perhaps to boost the HHS secretary’s capacity to negotiate beyond the 25-drug minimum. That argument about expanded capacity could become key to the bill’s fate, as the 25-drug figure has raised concerns from the party’s left flank, according to a Politico report. Pelosi said the number was selected to produce a result that’s “possible and doable.”
“If there are more resources, then we should make that available,” she said. “I want the biggest number we can possibly get, but I don’t want to promise something that we won’t [deliver] within the next year.”
The Speaker and other House leaders expressed hope Thursday that the Democrats and President Trump could work together on the issue of lower drug prices. “The president is very much the key,” said Rep. Frank Pallone (D-NJ), who chairs the House energy and commerce committee.
Until last year, the Trump administration had addressed public anger over high drug prices mainly through the president’s rhetoric, occasionally bashing drug companies but doing little else. The administration’s “blueprint” began to emerge last year, with ideas such as an international price index, which the Democratic plan now echoes.
The Pelosi plan would set a ceiling determined by a formula that includes the prices of drugs in six foreign countries: Australia, Canada, France, Germany, Japan, and the United Kingdom. US prices couldn’t go beyond 1.2 times the cost based on that international index, which Pelosi touted as a “big drop in cost for the US.”
Once a price is negotiated, the drug maker would not be able to raise prices beyond the rate of inflation. The prices would apply to Medicare, but private insurers would be allowed to pay at those rates, as well, if they wanted.
Drug makers that refuse to negotiate would be slapped with taxes, from 65 percent to 95 percent of the drug’s annual gross sales. Pallone called it “severe” and said the penalty has been set high deliberately to persuade them to come to the negotiating table.
As outlined last week, a drug maker would have to pay retroactive rebates if it has raised a drug’s price beyond the rate of inflation since 2016. The rebates would apply to all drugs, more than 8,000, covered by Medicare Part B (drugs administered in a clinic or hospital, including many cancer drugs) and Part D (prescription drugs).
A third part of the Pelosi plan would cap out-of-pocket spending for Medicare Part D at $2,000 a year. It would also shift some of the costs of “catastrophic” coverage away from the government and onto health plans. The Medicare spending adjustments would start in 2022.
Pelosi said the $2,000 cap was lower than one proposed in a rival Senate bill, sponsored by Senate finance committee chair Chuck Grassley (R-IA). With the Senate considering its own measures to rein in drug prices, Pelosi called her bill “better in many respects” than Grassley’s bill, “but we look forward to working in a bipartisan, bicameral way on this.” Grassley’s bill has eight cosponsors, three of them Democrats.
The House leadership wants to start marking up the bill next month. If Democrats close ranks and pass the bill, compromise with the White House and GOP-led Senate will be inevitable. But one area where Democrats won’t compromise, according to Pelosi, is Medicare negotiation. Similar legislation failed to pass more than 10 years ago. “If only we could have done it then,” she said today.
Photo by Gage Skidmore via Creative Commons 2.0.