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Pelosi's foreign drug pricing measure puts Trump, Republicans in a tight spot

By mirroring President Donald Trump's idea of using a foreign pricing index for negotiating what Americans would pay for medicines, House Speaker Nancy Pelosi, D-Calif., made a savvy move, which may give her the upper hand in getting legislation adopted or in putting her political rivals in a tight spot, said Evercore ISI public policy analyst Sarah Bianchi.

A six-page document that has been circulating around Washington over the past few days, which Pelosi's office has called an "out-of-date draft," outlines a plan for including an international pricing index in legislation aimed at lowering Americans' prescription drug costs — an idea similar to a proposal the Trump administration first unveiled in October 2018.

SNL ImageHouse Speaker Nancy Pelosi
Source: The Associated Press

If Pelosi sticks with that idea, her plan would set an upper limit for any price negotiations at no more than 1.2 times, or 120%, of the average price paid in six foreign nations — Australia, Canada, France, Germany, Japan and the U.K.

The Trump administration's plan involves employing a demonstration project to test whether using an international pricing index could save the Medicare program money in covering expensive injectable medicines.

The administration has not yet made its proposal formal, though a draft rule has been under consideration at the White House Office of Management and Budget since June.

Trump has frequently complained that foreign countries pay much lower prices than the U.S., Bianchi said in a Sept. 10 research note.

By putting a similar idea into a legislative proposal, Pelosi is trying to fully engage Trump in the speaker's effort to get a drug pricing bill passed on Capitol Hill, the Evercore analyst said.

The only way Pelosi will be able to get any of the bolder drug pricing reforms through Congress is if Trump pushes Senate Majority Leader Mitch McConnell, R-Ky., to move it to his chamber, Bianchi said.

"If he doesn't, then she can question not only the sincerity of Republicans, but the president as well on this issue," Bianchi said.

Key in getting any strong reforms adopted by the Republican-controlled Senate is winning Trump's support, she said.

"The Republican leaders in the House and Senate don't want any of the serious reforms to pass," Bianchi said.

She noted that Sen. Chuck Grassley, R-Iowa, chairman of the Senate Finance Committee, had to rely on Democrats to get his drug pricing bill adopted by the panel when nine members of his own party refused to back the legislation, mostly because of its proposed inflationary cap for medicines covered by Medicare — another idea that the Pelosi draft included, though it varies.

Bianchi said McConnell was more likely to try to add drug pricing legislation to a must-pass bill at the end of the year than to bring any measures up for a vote on the Senate floor.

SNL ImagePresident Donald Trump
Source: The Associated Press

The only possible way that some of the more meaningful provisions will pass is if Trump "goes all in and pushes his leadership to move," she added.

The White House backed the Grassley bill, which the Iowa senator co-authored with Sen. Ron Wyden, D-Ore., the ranking member on the Senate Finance Committee.

"We continue to engage with members of the Senate as well as other members and outside advocates to build support and ensure the president's priorities are advanced," White House spokesman Judd Deere told S&P Global Market Intelligence.

He said administration officials have been in touch with Pelosi's office for many months on the drug pricing issue, but have not seen any text or been provided details of the speaker's plan.

Evercore ISI analyst Umer Raffat questioned whether the "sheer ambitiousness" of the international pricing index plan and the other proposals in the draft Pelosi document, like allowing Medicare to negotiate directly with drugmakers on the 250 most expensive medicines, was intended to get something done on legislation or to "provide armor in an election year?"

The leaders of the Congressional Progressive Caucus — a cadre of more than 70 House Democrats and Sen. Bernie Sanders, I-Vt. — said they were pleased to see some of their ideas included in the draft document, including the plan to let Medicare negotiate prices directly with drugmakers rather than through an arbitration process, which Pelosi had earlier considered.

"However, we still have serious concerns, as we have not yet seen the actual legislation," they said in a Sept. 10 statement. "The proposal needs to go through regular order," they said, adding that they would be watching to see if a final proposal from Pelosi contained the group's articulated priorities.

"There are still many questions that this outline leaves unanswered," they said.