Pelosi unveils signature plan to lower drug prices

DATE: September 19, 2019

The Hill 

By Peter Sullivan– September 19, 2019

Speaker Nancy Pelosi (D-Calif.) on Thursday unveiled her long-awaited plan to lower prescription drug prices, one of the top priorities for Democrats this year.

The plan would allow the secretary of Health and Human Services to negotiate the price of up to 250 drugs per year, and the lower prices would apply to people both with private insurance and those on Medicare.

The plan is far-reaching and significantly left of center, which would likely make it very difficult to get passed through the Republican-controlled Senate, and there are still some concerns from progressives in the House that the plan does not go far enough.

Pelosi’s office, though, hopes that if President Trump supports the plan it would put pressure on congressional Republicans to support the measure as well. Trump has railed against high drug prices, but his support of the Speaker’s plan is far from assured.

“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 said at a press conference on Thursday.

But House Republicans quickly denounced the proposal, an ominous sign for bipartisan support. All 24 Republicans on the House Energy and Commerce Committee blasted the plan on Thursday, calling it a “socialist” proposal and pushing instead for smaller, bipartisan legislation.

“I don’t see how the president could support this bill,” House GOP Leader Kevin McCarthy (R-Calif.) told reporters Thursday.

As an enforcement mechanism under Pelosi’s plan, if a drug company refused to negotiate a lower price, the company would be hit with a 65 percent tax on the drug’s gross sales, which would escalate up to 95 percent if the company still refused to come to the table.

The plan would also set a maximum price in negotiations of 120 percent of an average of the price in other countries, borrowing an idea Trump himself has proposed to lower drug prices.

Pelosi is aiming for a House vote on the plan by the end of October or early November, sources say.

Progressives in the House have been pushing Pelosi to go farther with the plan for months, and have been frustrated that they have had trouble learning details of the proposal.

Still, they reacted with some cautious praise to a leaked draft of the plan last week, especially applauding that Pelosi dropped an idea to use an outside arbiter to set the price of a drug, something they warned was cumbersome and too weak.

Progressives’ main objection now is that the plan does not allow for negotiation on all drugs, just a cap of 250, and has a bare minimum of just 25 drugs. Progressives say 25 drugs is way too few to bring about meaningful savings.

Pelosi on Thursday expressed some openness to raising the floor from 25 drugs, but cautioned that it depended on how much operational capacity HHS has to negotiate on more drugs. She the issue is an “open point” and said one possibility is increasing funding for HHS to be able to negotiate more drugs.

Supporters of the plan say that operationally the secretary would not have the time and capacity to negotiate for every drug, so it makes sense to target the most expensive drugs.

Pelosi will go to the Congressional Progressive Caucus’s meeting on Thursday afternoon to sell the plan.

She has also been making her pitch to centrists in her caucus, who may fear the plan goes too far and who are likely to be targeted by a lobbying push from powerful drug companies fiercely opposed to the plan. Pelosi met with the centrist groups this week: Blue Dogs on Tuesday and the New Democrats on Wednesday.

The Senate also has a proposal to lower drug prices, from Sens. Chuck Grassley (R-Iowa) and Ron Wyden (D-Ore.), which is much more modest but that has bipartisan support.

Even that more modest proposal, though, has drawn opposition from many Republican senators who object to a cap on price increases in Medicare that the bill would impose, warning of “price controls.”

Grassley, though, has tried to build GOP support for his plan by making the case to Republicans that when compared to Pelosi’s plan, his approach is actually moderate.

Drug companies, as expected, denounced Pelosi’s proposal on Thursday, warning it would harm the development of new cures.

“Speaker Pelosi’s radical plan would end the current market-based system that has made the United States the global leader in developing innovative, lifesaving treatments and cures,” said Steve Ubl, CEO of the Pharmaceutical Research and Manufacturers of America.