Pelosi’s new drug plan pressures Trump on campaign pledge
House Speaker Nancy Pelosi rolled out her much-anticipated drug pricing plan Thursday, calling for Medicare to negotiate prices on at least 25 medicines, with an option for commercial insurers to take advantage of the deals.
The plan is less ambitious than an outline of a bill that was leaked last week, but it will still face fierce opposition from the pharmaceutical industry and could pressure President Donald Trump to take a harder line against drugmakers he has chastised for sky-high prices.
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The government would be directed to target drugs that account for the highest costs to Medicare and the entire health care system, taking into account both the price of medicines and the volume sold in the United States. This means that negotiations would likely focus on drugs taken by large numbers of Americans, potentially excluding those for rare diseases that typically are very costly.
Earlier discussions in Pelosi’s officeenvisioned mandating that 250 drugs be subject to negotiations each year. Instead, 250 would be the ceiling rather than the floor, which disappointed progressives who had complained they were largely shut out of the draftingprocess.
To be eligible for negotiation, the drugs must also lack generic or biosimilar competition. Insulin, which has drawn congressional scrutiny over huge price hikes in recent years, must be included as one of the negotiated drugs.
The plan in part borrows from some of Trump’s drug pricing agenda, particularly on tying the cost of medicines to cheaper prices often paid in other developed countries. Some of the administration’s ideas, however, have been met with skepticism from GOP lawmakers, who are closely aligned with drugmakers.
President Donald Trump hasn’t taken a position on the plan, but he offered encouraging remarks on Twitter Thursday evening.
“I like Sen. [Chuck] Grassley’s drug pricing bill very much, and it’s great to see Speaker Pelosi’s bill today. Let’s get it done in a bipartisan way!” he wrote.
Democrats are hoping to put the package on the House floor this fall, pressuring Republicans to take a tough vote on an issue ranking among voters’ top health care concerns.
Leading House Republicans immediately panned Pelosi’s proposal, warning it would stifle drugmakers’ ability to develop new products. Senate Majority Leader Mitch McConnell said the plan was dead on arrival in the upper chamber, deriding it as “socialist price controls.”
Top Democrats emphasized their willingness to work with the Trump administration on the legislation and argued they could sway Republican lawmakers with the president’s support. But progressives, who have pushed for a tougher crackdown on drugmakers, are skeptical Pelosi’s measure can attract GOP support, and they worry a more moderate approach out of their gate hurts their ability to negotiate a final drug package.
Still, progressives said they were thankful leadership made adjustments they had sought, particularly nixing an earlier idea to use a third-party arbiter to help set prices. They expressed optimism they could influence the plan going forward.
“We very happy with the foundation of what’s there,” said Rep. Mark Pocan (D-Wis.), co-chair of the Congressional Progressive Caucus, who said he’s focused on expanding the number of drugs subject to negotiation. “If we just make sure that people back home are also happy by knowing that their drug is going to be covered, I think we are really in a good spot,” he said.
Democrats’ moderate wing, eager to campaign on a tangible health accomplishment next year, has stressed the need to craft a bill that could become law and isn’t just a messaging document. Some moderates have even expressed interest in bringing the drug industry to the negotiating table.
“Sometimes we believe we know more than everybody else. And the thing that I’m sure of is that we don’t,” said freshman Rep. Jeff Van Drew of New Jersey. “It doesn’t mean you do what they want, I want to be very clear. But should people be at the table? Yeah, I like to hear what people say.”
Trump health Secretary Alex Azar met Thursday with a group of House and Senate Democrats, including Oregon Sen. Ron Wyden, the top Democrat on a bipartisan drug pricing bill in the Senate that’s won White House support.
Azar made a push to “get a bipartisan bill done for the American people,” said Rep. Donna Shalala (D-Fla.), a former health secretary, who attended the meeting. The focus was on the bill from Wyden and Grassley, the Senate Finance Committee chairman, which the panel approved this summer.
House moderates have hinted that the Senate package, which has drawn some opposition from Republican lawmakers, ultimately may be the most viable drug price vehicle. Azar also met with Republican lawmakers Thursday to encourage them to support the Senate plan, according to a person in the meeting.
The Senate Finance Committee’s package includes some aspects of Pelosi’s plan, like capping drug price increases at the rate of inflation and establishing an out-of-pocket cap for seniors with Medicare prescription drug coverage. However, Pelosi was adamant that Democrats will not drop government price negotiations as part of a compromise with Republicans.
“No, absolutely, positively not,” Pelosi said about taking government price negotiations off the table. “That is the central point.”
Meanwhile, top White House policy staff and industry are making a behind-the-scenes push to prevent Trump from throwing his support behind Pelosi’s proposals. The White House declined to comment on this effort.
Hill sources and industry lobbyists said domestic policy chief Joe Groganand his aides, with drug industry input, are working an alternative to one of Trump’s most aggressive drug pricing ideas — tying the cost of medicines to prices paid overseas, where many governments negotiate with drugmakers. Many Republican lawmakers have complained that the idea, which is featured in the Pelosi plan, is tantamount to importing foreign price controls.
Under Pelosi’s plan, the upper limit Medicare pays for drugsmust be no more than 1.2 times the average price in six countries: Australia, Canada, France, Germany, Japan and the United Kingdom. But the goal would be to get to a lower price, according to an outline of the plan, and Medicare Part D prescription drug plans and private Medicare plans could try to get the price even lower than the government rate.
The HHS secretary,who would oversee negotiations, would need to consider a medicine’s research and development and production costs, alternative treatments, the value of the drug and domestic and international sales information. Once the price is negotiated, a drug company cannot raise it above the rate of inflation until sufficient competition develops in the market.
Savings from the lower-priced drugs would be directed to NIH to develop new medicines and toward improvements in Medicare. “If the savings are great enough,” the outline says, Medicare improvements could include coverage for vision, hearing and dental.
The plan released Thursday scaled back an earlier proposed initial penalty on drugmakers that refuse to participate in negotiations or don’t reach an agreement with the government. Thosecompanies would be subject to an excise tax of 65 percent of the manufacturer’s annual gross sales, increasing by 10 percentage points every quarter of noncompliance to a maximum 95 percent. Previous iterations had the tax starting at 75 percent.
“This steep, escalating penalty creates a powerful financial incentive for drug manufacturers to negotiate and abide by the final price, while ensuring that patients maintain uninterrupted access to the medicines they need,” the outline says.
There would also be penalties if the drug company fails to offer the negotiated price to other payers, like commercial insurers and employers.
Manufacturers not subject to negotiations would alsoface penalties if they have raised the price of a drug above the rate of inflation since 2016. They would either need to lower that drug’s costs or refund the amount above inflation back to the government.
The Democratic leadership’s plan would for the first time cap seniors’ annual out-of-pocket spending in the Medicare Part D prescription drug benefit at $2,000, an idea that has been widely supported by both parties in Congress.
It would also drastically reduce the percentage of a medication’s costs paid by the government when seniors enter the catastrophic phase of the Medicare drug program, shifting more to health insurance plans and the drug industry. This idea has also drawn bipartisan support, including from the Trump administration.