House Speaker Nancy Pelosi, D-Calif., wants Congress to give the federal government the power to negotiate the prices of the most expensive prescription drugs on behalf of the Medicare program and the commercial insurance market, and she is working to get White House support.
It is unclear if the speaker fully has the White House's backing, but in a late-day tweet, President Donald Trump said, "it's great to see Speaker Pelosi's bill today. Let’s get it done in a bipartisan way!"
Pelosi's plan was unveiled on Sept. 19 and would allow the government to set a maximum price on at least 25 medicines and up to 250 that lack competition in the U.S., with Medicare beneficiaries paying no more than $2,000 out of pocket each year for their drugs.
|
The speaker's legislation would set an upper limit for any price negotiations at no more than 1.2 times, or 120%, of the average price paid in Australia, Canada, France, Germany, Japan and the U.K., or the average international market — an idea that mirrors one under consideration by the Trump administration.
Trump has frequently said other countries pay much lower prices than the U.S. does. On July 5, Trump said he planned "very shortly" to issue a "favored nations" executive order that would require drugmakers to offer the U.S. government the lowest prices paid by other foreign countries for prescription medicines.
Under Pelosi's plan, if a drug manufacturer refused to participate in any part of the negotiation process or does not reach agreement with the U.S. Department of Health and Human Services, the company would be charged an escalating penalty based on the drug's gross sales. The penalties start at 65% and rise 10% every quarter the manufacturer is out of compliance, to a maximum of 95%.
That penalty is harsher than the 75% of the drug's gross sales that was set in a draft of Pelosi's plan circulating through Washington on Sept. 9.
Drugmakers that overcharge Medicare or fail to offer the negotiated price to other payers would be penalized 10 times the difference.
The noncompliance fees need to be strict so that violations are not simply calculated by drugmakers into their cost of doing business, Pelosi told reporters during a Sept. 19 news conference.
The speaker also has called for setting inflationary caps in the Medicare Part B and Part D programs for seniors and Americans with disabilities.
This would require drug companies that have raised the price of a drug in Part B or D above the rate of inflation since 2016, to either lower the price or pay the entire price above inflation in a rebate back to the U.S. Treasury.
Legislation adopted in July by the Senate Finance Committee included a provision that would cap price increases for the Medicare program's drug benefits at the rate of inflation.
The White House has backed the Finance Committee's bill.
Criticism
The Pelosi plan came under immediate fire by the drug industry and Republicans on Capitol Hill.
PhRMA CEO Stephen Ubl |
Stephen Ubl, the CEO of the Pharmaceutical Research and Manufacturers of America, called Pelosi's proposed legislation a "radical plan" that would end the current market-based system and would give the government "unprecedented, sweeping authority" to set the prices of medicines.
"It abandons any pretense of allowing a free and fair market system to determine the value of prescription medicines, including for the most innovative medical breakthroughs," added Jim Greenwood, CEO of the Biotechnology Innovation Organization.
PhRMA and BIO represent companies including Pfizer Inc., Merck & Co. Inc. and Amgen Inc.
The Republican members of the House Energy and Commerce Committee called Pelosi's plan a "socialist proposal to appease her most extreme members."
"Every time we want to do something to help the American people, somehow social becomes socialism," Rep. Frank Pallone, D-N.J., the chair of that committee, responded during the Sept. 19 news conference.
His panel's health subcommittee is scheduled to vet Pelosi's bill Sept. 25.
Getting Trump on board
By echoing Trump's idea of using a foreign pricing index for negotiating what Americans would pay for medicines, Pelosi made a savvy move, putting her political rivals in a tight spot.
Getting Trump on board will be key to the success of Pelosi's plan, said Evercore ISI public policy analyst Sarah Bianchi.
|
"We do hope to have White House buy-in because that seems to be the route to getting any votes in the United States Senate," Pelosi told reporters.
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 in a Sept. 19 research note.
While Bianchi doubted Trump would push enough to get some of the controversial provisions through the Senate, she said Pelosi may be successful at engaging him on the foreign pricing index idea.
But, the Evercore analyst said, "We still think this bill doesn't get full consideration on the Senate floor and anything that happens is in an end of the year must-pass bill."

House Speaker Nancy Pelosi
PhRMA CEO Stephen Ubl
President Donald Trump