Oddly enough, however, conservatives and liberals might be closer on this issue than you expect.
One party is calling for price negotiations between the federal government and drug manufacturers; the other is calling for Medicare to unilaterally set prices.
Which one is the Democratic proposal, and which one is Republican?
Counterintuitively, it is President Trump and Health and Human Services Secretary Alex Azar who have proposed federal price controls for drugs. Yes, that’s right: Republicans — the supposed champions of the free market — have proposed tying U.S. drug prices to those set by 16 foreign countries, what Trump and Azar dubbed an “international price index.”
Many of these countries have what conservatives dismiss as “socialistic” health-care systems, including in Britain, Canada, Sweden, Finland and France. And in some of those countries, governments use cost-effectiveness calculations to set their drug prices. Of course, Republicans may never acknowledge that they endorse cost-effectiveness thresholds for drug prices. Yet while unveiling his proposal, Azar called it “more radical” and “more revolutionary” than anything Democrats offered. For those of us who were accused of wanting to create “death panels” in the Affordable Care Act, this is as surreal as it gets.
Democrats, on the other hand, have long proposed empowering the federal government to negotiate Medicare Part D drug prices. Under a bill by Rep. Lloyd Doggett (D-Tex.) that has secured 100 Democratic co-sponsors, if there is no agreement on a fair price, then pharmaceutical manufacturers receive no FDA marketing exclusivity and other manufacturers can immediately market generic versions of the drug.
These are two very different approaches, but they share the same principle: The government needs to play a big role in regulating drug prices.
A cynic might say the Republican proposal is only crass political pandering, given that it was unvieled less than two weeks before the midterm elections. In the 2016 campaign, Trump promised to do something about drug prices, and two years later, not much has changed. Prices for all brand-named drugs increased 8 percent in the first year of Trump’s presidency — more than four times the rate of inflation and twice the rate of other health-care increases. Indeed, drug companies’ stocks rose after the administration announced its proposal to mandate list prices be included in pharmaceutical TV ads, because investors knew Trump’s proposal wouldn’t control prices.
Washington insiders will further note that the administration’s proposal was not a law or even a regulation. Rather, it was an arcane Washington procedure called an advance notice of proposed rulemaking — an announcement about the intention to introduce a regulation that solicits public feedback on the idea. In this case, the proposal suggested that Medicare run a five-year experiment from 2020 to 2025, with half the country paying controlled prices and half paying the usual amount to see which saves more money without undermining access to drugs. It also would apply only to a fraction of Medicare drugs: cancer chemotherapies, anti-inflammatory drugs and others administered by physicians in hospitals or their offices. The majority of all drugs would be unaffected.
An observant skeptic would say the Republican plan is designed to fail. Indeed, the Republican proposal is structured to enrage both drug companies and doctors — a sure way to kill the proposal before it is enacted. Under this plan, physicians would be paid a flat fee regardless of the drug price, while under the current payment formula, they receive a percentage (currently 6 percent) of the drug price.
But we should not embrace the cynic’s perspective too quickly. First, the Republican plan demonstrates that even conservatives are feeling pressure to regulate drug prices. The ideological challenge is how to regulate them. It is going to be difficult for Republicans to repudiate their president and stonewall on the issue over the next few years. Perhaps, with more than 90 percent of Democratic and Republican voters supporting regulation, a bipartisan compromise might emerge.
Second, the Trump-Azar proposal also suggests that there is a growing consensus on including cost-effectiveness as part of determining fair drug prices. Again, it will be difficult for Republicans to oppose this after their leaders put it on the table.
Finally, the timing for regulation is sooner than most people think. Given that pharmaceutical manufacturers keep raising prices well above inflation and are poised to introduce treatments pushing the $1 million price tag, public anger is unlikely to abate. This will force the issue to the top of the 2020 campaign unless something meaningful is done sooner.
After the election, many in Washington will be searching for issues that a Democratic House, a Republican Senate and the White House can work on together. Although this policy seems like a desperate late-campaign ploy, it also signals something important: Drug pricing is one of those rare issues that animates both parties, suggesting a consensus might be possible. This is good news, not only for patients and taxpayers but also for our fractured political system.