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Pelosi bill aims to negotiate Medicare prices on top 250 drugs, penalize manufacturers that don’t comply

House Speaker Nancy Pelosi speaks during the Democratic National Committee Summer Meeting in San Francisco on Friday, Aug. 23, 2019. Pelosi is expected to release an ambitious drug pricing bill soon that would allow the federal government to negotiate drug prices on hundreds of drugs in Medicare. (Michael Short/Bloomberg)

House Speaker Nancy Pelosi is expected to release an ambitious drug-pricing bill as early as this week that would allow the federal government to negotiate drug prices on hundreds of drugs in Medicare that do not have competitors and would offer those prices to all consumers, according to a summary of the bill obtained by The Washington Post.

The House bill is a political marker for Democrats eager to show ahead of the 2020 presidential and congressional elections that they are willing to take significant measures to lower skyrocketing drug prices, which consistently poll as a top voter concern. The proposal is unlikely to gain support from Republicans — who oppose allowing the federal government to negotiate because they say it violates free-market principles — and is unlikely to be taken up by the Republican-controlled Senate.

“We continue to engage members across the caucus as the committees of jurisdiction work to develop the boldest, toughest possible bill to lower prescription drug prices for all Americans,” said Pelosi spokesman Henry Connelly.

Yet President Trump is eager to sign legislation taking action on drug prices as he ramps up his 2020 reelection bid. The White House has engaged with Pelosi’s office on the drug-pricing initiative for several months, but senior House Democratic aides said the discussions were to keep the White House informed, rather than engage in negotiations. It remains unclear whether Trump supports the House proposal and, if he does, whether he will be able to pressure Republicans to get on board.

The bill would allow the health and human services secretary to directly negotiate prices on the 250 drugs that pose the greatest total cost to Medicare and the U.S. health system that do not have at least two competitors. That would include some insulins, cancer treatments and specialty drugs. Those negotiated prices would then be available to all consumers, not just Medicare beneficiaries, according to the bill summary.

“Speaker Pelosi put forward a more progressive bill than anticipated and one she knows is dead on arrival in the Senate,” said Chris Meekins, a research analyst at Raymond James, a financial services company and former Health and Human Services official.

“This proposal reiterates our belief that nothing on drug pricing will be done before the 2020 election,” he said.

The legislation would also use an international pricing index that would ensure U.S. consumers do not pay more than beneficiaries in other countries, where prices are often lower because their governments directly negotiate prices. That is similar to a more limited proposal the Trump administration has making its way through the rulemaking process, which would base the price of some drugs in Medicare on the lower prices paid by other countries.

The bill would impose severe penalties on drugmakers that do not reach an agreement with the government or refuse to participate in the negotiation. They would face a noncompliance fee equal to 75 percent of the gross sales of the drug being negotiated from the previous year.

Drug manufacturers would face an inflation rebate and would have to pay the U.S. Treasury money if they raise prices above the rate of inflation on the more than 8,000 drugs in Medicare Part B, which covers expensive physician-administered drugs for cancer, dialysis and other illnesses, and Part D, its prescription drug benefit. If the manufacturer has raised the price above the rate of inflation since 2016, it can either lower the price or pay the price above inflation back to the Treasury, according to the summary. The proposal also aims to use its anticipated savings to cap out-of-pocket costs for seniors, according to the summary.

Those elements of the House proposal echo a drug-pricing package in the Senate, which was unveiled in July and has been endorsed by the White House. The Senate bill would cap seniors’ out-of-pocket costs in Medicare Part D and would limit price increases to the rate of inflation. It also limits price increases in Medicare Part B.

The Senate bill passed through the Senate Finance Committee. But a majority of Republicans on the committee voted against the bill, and it is not yet clear whether Senate Majority Leader Mitch McConnell, who opposes fundamental elements of the bill, will bring it to the Senate floor for a vote.