House Speaker Nancy Pelosi (D-Calif.) told Democrats on Wednesday night that she will put her weight behind a byzantine proposal aimed at lowering prescription drug prices ― a plan that progressive critics worry will ultimately have little to no effect.
Pelosi’s office has been in private talks with the Trump administration about a prescription drug policy for months. Her decision to proceed with that drug plan surprised her fellow Democrats, coming the same day as a very public spat in which President Donald Trump walked out on a meeting with the speaker and refused to negotiate on an infrastructure bill unless Democrats abandoned investigations into his administration.
Capitol Hill sources tell HuffPost that the prescription drug proposal, which has not been officially released to the public, would empower the secretary of health and human services to negotiate lower prices with pharmaceutical companies for drugs sold in the U.S. If the two parties failed to reach an agreement on an individual medication, the Government Accountability Office would be permitted to set a final price close to the typical amount charged for the drug in other countries.
The Department of Health and Human Services would be required to negotiate on at least 25 drugs each year, and companies that refused to participate would be slapped with a tax equal to 50 percent of their prior year’s sales of the drug. Prices on all drugs covered under Medicare Parts B and D could not be increased going forward, and any company that still did so would have 100% of the price hike taxed away.
A senior Democratic aide who described the plan to HuffPost cautioned that nothing had been set in stone, but said House leadership hoped to move quickly on the proposal after the Memorial Day recess.
Although much still depends on the final details of the legislation, the scheme that Pelosi presented to her colleagues would represent a serious defeat for Democrats concerned about the power of Big Pharma and monopolies writ large. It is not clear, for instance, how HHS would select the 25 drugs in question or how long any lower prices would remain valid.
“Twenty-five drugs is not enough,” said Steven Knievel, an advocate in Public Citizen’s Access to Medicines program. “They need to do more. Our demand is to do all drugs.”
There is also nothing as yet to prevent HHS from simply negotiating bad deals that do not meaningfully lower drug prices. Presidents have long had the authority to set lower prices for costly drugs by issuing compulsory licenses, but Republicans and Democrats alike have failed to act on that power. Pelosi’s plan would make it slightly less cumbersome for presidents who want to lower drug prices to do so, but it does not actually require meaningful changes.
“This is not even close to sufficient,” said Alex Lawson, executive director of Social Security Works, a left-leaning group that focuses on Social Security and Medicare issues. Lawson called the proposal an “extremely narrow” arrangement that eschews “structural reform.”
“The American people are not demanding that some people get slightly lower drug prices at some point in the future,” Lawson said. “People are demanding lower drug prices right now.”
“We think this arbitration proposal adds more rigging to a rigged system,” said John Hassell, national director of advocacy for the AIDS Healthcare Foundation. “It creates this hocus pocus process that isn’t going to lower prescription drug prices. It’s going to nickel and dime it on the sides. ... This is ridiculous.”
The GAO’s role in the Pelosi proposal is unusual. The nonpartisan oversight agency examines government programs and serves as a kind of in-house think tank for Congress. It also plays an oversight role in the government contracting process and can investigate whether federal contracts have been improperly awarded. But the agency has no experience regulating industries or setting prices. Pelosi’s team settled on a role for the GAO after initially proposing a private-sector arbitration firm ― a plan that elicited outrage from progressives in Congress.
“The American people are not demanding that some people get slightly lower drug prices at some point in the future. People are demanding lower drug prices right now.”
Under current law, the government grants pharmaceutical firms a monopoly on new drugs, allowing them to charge prices without regard to either market competition or government regulation. As a result, the United States boasts by far the highest drug prices in the world. Americans pay about $1,200 per person per year for medication, more than double the rate in the U.K. and nearly double the rate in France, according to the Organization for Economic Cooperation and Development.
Several Democrats have introduced bills attacking pharmaceutical monopolies over the past year. All of them involve threatening to open markets to generic versions of patented drugs as leverage in talks with Big Pharma.
The most ambitious version is a plan from Rep. Ro Khanna (D-Calif.) and Sen. Bernie Sanders (I-Vt.) that would automatically lower prescription drug prices, including those covered by private insurance plans, to the median rates in five other developed countries if drugmakers did not agree to lower prices in talks with HHS. The bill imposes a formula for the agency to follow, circumventing the HHS secretary’s discretion to cut a pharma-friendly deal.
The leaders of the Congressional Progressive Caucus, however, have united behind a more moderate bill introduced by Rep. Lloyd Doggett (D-Texas), chairman of the House Ways and Means Committee’s health subcommittee. Doggett’s legislation would empower Medicare to negotiate lower drug prices under the program and would require the HHS secretary to authorize low-cost generics if pharmaceutical companies refused to comply.
For months, Pelosi and Democratic leadership have ignored Doggett’s bill, with little public protest from either its chief sponsor or the progressive caucus, of which he is a longstanding member.
The dismissive attitude of Rep. Anna Eshoo (D-Calif.), chairwoman of the House Energy and Commerce Committee’s health subcommittee and a recipient of over $1.6 million from the pharmaceutical industry over the course of her career, typifies the way senior members have treated Doggett’s legislation. Although Doggett introduced the bill in July 2018 and it had amassed over 100 co-sponsors by the end of the last Congress, Eshoo told HuffPost in late February that she was unfamiliar with the bill.
“I haven’t read it. I haven’t seen it,” she said.
Whether the Congressional Progressive Caucus is willing or able to stand up to this kind of condescension could be a key test of its relevance in this Congress.
“The progressive caucus should not take any crap from leadership here,” Minnesota Attorney General Keith Ellison (D), a co-chair of that caucus when he was in the House last year, told HuffPost in late April.
Thus far, the Congressional Progressive Caucus has let activist groups do most of the talking about drug prices. In the group’s formal endorsement of Doggett’s bill last month, the caucus co-chairs insisted that to “gain the full support of the CPC,” prescription drug legislation would need to give the federal government an adequate “backstop” in the event of an impasse with drugmakers.
The Congressional Progressive Caucus could not immediately be reached for comment on Thursday. Khanna, a vice chair of the caucus who has been vocal on drug price legislation in the past, did not immediately respond to a request for comment either.
Doggett said in a Thursday statement that he was withholding judgment on Pelosi’s proposal until more details came out.
“We need the same type of transparency in writing drug pricing legislation as for pricing drugs,” he said. “I support whichever plan will truly deliver on our promise from last year to negotiate prices down.”
Lowering prescription drug prices was the Democratic Party’s top campaign pledge during the 2018 midterm elections. The current legislative fight highlights an intraparty dispute over what tactics to employ when you control only one chamber of Congress.
Pelosi’s team places significant value on passing bipartisan legislation and is willing to make substantial policy sacrifices to win Trump’s signature. But some critics of Big Pharma would prefer to see Democrats pass strong legislation and use it against Trump on the campaign trail if he refuses to sign.
On Thursday, Doggett warned against trying to “go small in an attempt to satisfy a president who cannot be satisfied. After Trump’s recent tantrum, it seems unlikely that we can count on any purported Administration legislative endorsement.”