The biggest idea in the House to reduce drug costs is to require Medicare to exercise its enormous leverage as the nation’s largest payer for health care and negotiate lower prices with drug companies.
Other Democratic proposals include: ending industry strategies that delay generics; requiring price transparency for drugs discovered with taxpayer money; curbing lucrative industry rebates to insurance companies (which critics call kickbacks); and allowing the import of drugs from Canada.
“A lot of Republicans in the light of day, forced to vote for their constituents or PhRMA, I think they will vote for consumers,’’ said Rep. Peter Welch (D-Vt.), lead co-sponsor of the bill to require Medicare to negotiate drug prices.
Former speaker Paul D. Ryan “protected [GOP] members from even having to vote on this. He kept these bills off the floor.’’
Under normal circumstances, bills passed by Democratic representatives would be long shots to pass a Republican-controlled Senate or win acceptance by a GOP president.
But this White House may not necessarily provide refuge for drug executives. President Trump gleefully bashes them for imposing high prices and engaging in anti-competitive practices. His administration has proposed some price checks and transparency measures, including a Medicare requirement that drugs administered in doctors offices and hospitals be indexed to lower prices overseas.
Trump knows hammering drug companies is a winner with his populist base. Per capita drug spending in the United States has more than doubled over the last 20 years, according to the Kaiser Family Foundation. Drug costs have risen faster than other categories of health spending.
“I think you’re going to see a tremendous reduction in drug prices,” Trump said Wednesday at a Cabinet meeting, as Health and Human Services Secretary Alex Azar sat nearby.
The presumptive firewall for the drug companies, the Republican-controlled Senate, may have some gaps. The Senate Finance Committee that oversees pricing issues in Medicare and Medicaid will now be headed by Chairman Charles E. Grassley (R-Iowa), who has a reputation as a consumer watchdog and often investigates price gouging and consumer rip-offs. Grassley is replacing pharma-friendly Orrin G. Hatch of Utah, who is retiring.
Grassley may not endorse a sweeping government intervention like Medicare negotiations, but he has often advocated for transparency and fair play in health-care markets. In a statement Thursday after he was nominated as finance chairman by his colleagues, he put drug and health executives on notice.
“For far too long, increases in prescription drug prices and health care generally have been causing tremendous difficulties for Americans,’’ he said, citing “barriers’’ to care that especially affect rural and underserved areas. “The Senate Finance Committee has broad jurisdiction to improve access to affordable health care. I intend to use those authorities.’’
More broadly, in the Senate, Republican senators facing reelection in 2020 will be hard-pressed to buck Trump (and the president’s fervent base) if Trump does wind up cutting a deal over drug pricing with House Democrats.
Drugmakers have a well-oiled public relations machine that has helped them weather assaults over prices. Their argument is that slapping curbs on U.S. drug prices will stifle medical innovation and prevent new treatments from reaching patients.
“Congress … would be making a horrible mistake if they adopted policies that drove investors away from the industry, because then people would suffer and die unnecessarily,” James C. Greenwood, chief executive of the Biotechnology Innovation Organization (BIO), said in an interview. “That would be the crime of the century.’’
Seeking to redirect anger, drug companies also are placing blame on other players in the health-care system. Consumer frustrations, Greenwood said, are being driven by high-deductible health insurance plans that expose patients to increasingly bigger bills at the pharmacy counter.
“We can’t price our way out of patients’ out-of-pocket dilemma,’’ he said.
The environment is potentially as volatile as the last time big changes were proposed in health care, when the Obama administration won passage of the Affordable Care Act in 2010. In the year leading up to the ACA’s passage, the pharmaceutical lobby won peace with Democrats. It avoided prescription cost controls in exchange for supporting the bill.
Makers of biologic drugs faced greater upheaval in 2010 because the ACA created a system to approve lower-cost copies of their products. But even biologic drugmakers came out well in a final compromise, winning 12 years of exclusivity before cheaper competition could gain access to the originator drug’s trial data.
The upshot of the ACA was a big victory for drug companies. The government created a system for tens of millions of newly insured Americans to afford their prescriptions, with little pain in return.
However, there are some signs the run of wins could end. This year, as part of a budget deal, Congress levied up to $12 billion over 10 years on drugmakers to help reduce pharmacy co-payments for Medicare beneficiaries.
The final numbers for 2018 are not in, but pharmaceutical and health-products companies were on track to top $300 million in lobbying expenditures for the year, according to data maintained by the nonprofit Center for Responsive Politics. Nearly 1,500 lobbyists reported working on behalf of the industry, and more than 800 of those were “revolving door” lobbyists who previously held jobs in Congress or elsewhere in the federal system.