A document circulated in Washington on Sept. 9 by lobbyists claiming it was the drug pricing plan from House Speaker Nancy Pelosi, D-Calif., quickly sparked interest, but was just as swiftly debunked by her office.
"The document is an out-of-date draft," a Democratic aide told S&P Global Market Intelligence. "Nothing is being distributed to the caucus yet because the committees are still discussing."
Henry Connelly, a spokesman for Pelosi, added that "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."
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Wendell Primus, a senior adviser to Pelosi, confirmed in July that the speaker would unveil her drug pricing legislative package in September, once lawmakers returned from their August recess.
He noted then Democrats always planned to make Medicare price negotiation a key part of the legislation, though he said they wanted more than just the withdrawal of Part D prescription drug program's so-called noninterference clause.
That clause in the 2003 Medicare reform law forbids Health and Human Services from playing any role in negotiating or setting drug prices in the program.
Pelosi wants to make sure the HHS secretary is given a straightforward mandate to do direct negotiating with drugmakers and have clear instructions on how to do that, Primus said at a July 22 forum hosted by the Brookings Institution.
Some of the details in the now-outdated document had already been discussed openly by Pelosi, such as letting HHS directly negotiate the prices on 250 drugs.
"There are about 250 drugs that are very high in cost," Pelosi said during a June 15 press conference in San Francisco.
The outdated draft plan, however, added a new twist of allowing the HHS secretary to also negotiate the prices of the 250 selected drugs on behalf of "all purchasers — not just Medicare beneficiaries."
International price index
The document also outlined a proposal of setting a maximum price for any negotiated drug with an international price index — an idea similar to a plan outlined by the Trump administration in October 2018.
The idea that was being considered by Pelosi — and may still be on the table — would set an upper limit for any negotiation as no more than 1.2 times, or 120%, of the average price paid in Australia, Canada, France, Germany, Japan and the U.K.
The Trump administration's plan — currently being vetted by the White House Office of Management and Budget — involves testing an international pricing index model for expensive injectable medicines covered by Medicare under its Part B program.
Representatives from the Pharmaceutical Research and Manufacturers of America met with officials from OMB, HHS and the Council of Economic Advisers at the White House on Aug. 26 to try to persuade the administration not to move forward with its proposal.
Penalties and caps
Under the Pelosi draft, if a drug manufacturer refused to participate in any part of the negotiation process or does not reach agreement with HHS, the company would have to pay a penalty of 75% of the drug's gross sales from the previous year.
If a manufacturer overcharges Medicare or fails to offer the negotiated price to other payers, the company would penalized 10 times the difference.
Another proposal in the document called for setting inflationary caps in the Medicare Part B and Part D programs.
"If a drug company has raised the price of a drug in Part B or D above the rate of inflation since 2016, they can either lower the price or be required to pay the entire price above inflation in a rebate back to the Treasury," the document stated.
The legislation adopted by the Senate Finance Committee in July included a provision that would cap price increases for the Medicare program's drug benefits at the rate of inflation.
But the Pelosi document noted that setting the base year of inflation as 2016 would wipe out the last three years of price hikes in Medicare Part B and D and would lower prices "further and for more drugs than the Senate Finance inflation rebate."
Skepticism
Cowen & Co. analyst Rick Weissenstein said the document stood little chance of being enacted as originally written, even if President Donald Trump threw his support behind it, "which we think is unlikely."
Walid Gellad, associate professor of medicine and director of the Center for Pharmaceutical Policy and Prescribing at the University of Pittsburgh, said he could not get past how the HHS secretary would negotiate and determine prices for everyone in the U.S. for 250 drugs with no tools for negotiation other than a price cap based on international prices.
"How does that work?" Gellad tweeted.

House Speaker Nancy Pelosi