Sen. Bernie Sanders, I-Vt., and Rep. Ro Khanna, D-Calif., have taken a page from President Donald Trump's playbook and want the U.S. government to set prices based on what foreign nations pay for their medicines.
The lawmakers also are taking aim at brand-name drug companies' monopolies — a move drug lobbyists said was akin to trying to "steal patents" from biopharmaceutical innovators and "circumventing" the nation's legal protections over drugmakers' intellectual property rights.
"The United States pays, by far, the highest drug prices in the world for one reason: We let drug companies get away with murder," Sanders and Khanna said in a Nov. 20 statement, echoing remarks Trump has repeatedly made about the biopharmaceutical industry.
The lawmakers unveiled new legislation that seeks to allow the government to control Americans' costs of medicines by employing an international price indexing system. This is similar to the Trump Administration's idea for the Medicare Part B program, which pays for injectable medicines for cancer and other complex diseases used by seniors and the disabled.
Sanders' and Khanna's plan, however, would extend to all U.S. drug coverage, both private and government programs.
Their bill also would base its pricing system on the costs of prescription medicines sold in only five foreign countries: Canada, the UK, France, Germany and Japan. The Trump administration is considering using pricing data from 14 nations.
Right now, the Trump administration has only issued an advance notice of proposed rulemaking, a bureaucratic mechanism used to gauge public opinion ahead of making a formal proposal. Opposition against the idea has been growing.
Sanders and Khanna said their bill would save Americans over 40% on the costs of their drugs.
They estimated the cost for a 30-day supply of Pfizer Inc.'s menopause drug Premarin would drop to $94 from $165 and the price of Merck & Co. Inc.'s diabetes medicine Januvia would fall to $248 from $436.
AbbVie Inc.'s price of its top-selling arthritis medicine Humira would be lowered to $1,576 from $2,770, the lawmakers said.
Excessively priced drugs
Sanders' and Khanna's proposal would require the U.S. Department of Health and Human Services to compile an annual list of patent-protected brand-name drugs considered "excessively priced," meaning the costs are higher than those of the five nations outlined in the lawmakers' bill.
If the HHS was unable to determine the median price of a medicine in the other five countries or believes a drug is unaffordable — despite its domestic cost not exceeding that in the five foreign nations — the agency may still label the product "excessively priced" after considering certain factors, such as the size of the affected patient population, if access was impacted and whether the federal government had subsidized the product's research and development.
The HHS also could consider whether the domestic average manufacturer price of the medicine increased during any annual quarter by a percentage greater than the increase of the consumer price index for all urban consumers — or any other factors the secretary deemed appropriate.
Anyone could petition the HHS to review the price of a patented brand-name drug under the Sanders-Khanna bill. HHS would be required to provide a public response within 90 days.
Expedited generic competition
The legislation would give HHS the authority to waive or void any exclusive rights granted to a brand-name drugmaker whose product price has been deemed excessive so that generic drug manufacturers could pursue cheaper versions of the drug.
Under the Sanders-Khanna bill, HHS could grant open, nonexclusive and compulsory licenses to any person, organization or company to make, import or sell the medicine in the U.S., regardless of any applicable patents.
The U.S. Food and Drug Administration also would be required to grant an expedited eight-month review of any generic drug applications seeking to compete with those innovator products.
Any company making a generic version of a brand-name drug deemed excessively priced would be required to pay a "reasonable royalty" set by HHS to the patent holder.
Sanders and Khanna emphasized, however, that under no circumstances should that royalty rate be so high that it would cause the generic drug to be sold at an excessive price.
Opposition
The lawmakers insisted their proposal was "not a radical idea."
But a spokesperson for the Pharmaceutical Research and Manufacturers of America said the legislation would be "circumventing patent rights on medical innovation and allowing foreign governments to set U.S. prices," which she was would be "disastrous for patients."
"It would be unprecedented for the U.S. government to steal patents from biopharmaceutical innovators," the PhRMA spokesperson told S&P Global Market Intelligence in a statement. "No countries that are leaders in innovation have taken such drastic measures."
She said the Sanders-Khanna bill would have the "same devastating impact" as Trump's Medicare Part B proposal, with both threatening America's ability to remain competitive and replicating foreign nation's "flawed policies."
Craig Garthwaite, director of the healthcare program at Northwestern University's Kellogg School of Management, said the legislation and Trump's proposal were nothing more than outsourcing U.S. policy to foreign governments "who will now determine which drugs Americans get access to."
"Last I checked, we fought a war to not let England control our policy making," he tweeted.
"Ultimately, the innovation-price trade-off is a policy discussion we should have," Garthwaite wrote, adding that the 20 years of patent protection granted to brand-name drugmakers may be too long.
"But leaders are meant to lead, not farm out their decisions to a third party," he said.
Simply saying foreign nations have "this figured out, so let's just use their regulations in the U.S. is not what we elect leaders for. It's an abdication of responsibility," Garthwaite said.
"Let's have a vigorous debate about the nature of innovation we desire and how to pay for it," Garthwaite said.