The push to bring down prescription drug prices through government action will take a step forward Tuesday when a key lawmaker, Senate Finance Committee Chair Ron Wyden (D-Ore.), issues a loose framework for legislation he hopes the chamber will pass this year.
The “principles of reform,” which Wyden’s office shared with HuffPost before publication, include several ideas that progressives have long championed ― among them, giving the federal government power to negotiate prices directly with drug manufacturers. The governments of other developed nations have this kind of authority, and it’s the main reason that the price of name-brand drugs overseas are so much lower than in the U.S.
Other key principles include creating an inducement for drug manufacturers to negotiate, rebates to mitigate year-to-year price hikes and, most important, an extension of the negotiated prices beyond Medicare recipients to private insurers and their beneficiaries.
That way even Americans who aren’t on Medicare would benefit through lower out-of-pocket prices at the pharmacy, lower insurance premiums or both.
Wyden’s intentions matter because the Finance Committee’s jurisdiction over Medicare makes it the likeliest venue for crafting Senate legislation.
And although Wyden has indicated support for most of these ideas in a variety of interviews and public appearances in the past few months, this new document formalizes his commitment to putting them in legislation.
It also reflects Wyden’s sense that passing a bill with these features is possible, following what he described Monday as “a lot of sweat equity … into finding a majority on drug pricing in the Senate.”
“I have had a lot of conversations with senators from both political parties,” Wyden said in an interview with HuffPost, “and I’m putting down on paper where I believe we need to go, to get a consensus to pass a bill in both chambers.”
Clarity About Intentions But Not About Details
That consensus still does not exist. And it takes only a quick glance at Wyden’s document to notice the lack of specifics.
The principles don’t indicate, for example, exactly how Wyden thinks the federal government should go about negotiating drug prices. There are a variety of ways to do it, each one with its own pros and cons ― and each one with its own set of advocates and critics.
An example is “international reference pricing,” a model that would use the prices that foreign governments pay for drugs as one guide for setting U.S. prices.
The idea has the support of many progressives and is likely to be part of whatever prescription legislation emerges from the House, since international reference pricing was part of a prescription drug bill that passed that chamber back in 2019.
That proposal died when the Senate, then under Republican control, refused to consider it. The hope is that a new version of the House bill can get through the Senate this time, now that Democrats are in the majority.
But international reference pricing already has some strong critics among Senate Democrats, as Wyden confirmed in his interview.
“I’ve heard from some of my colleagues that using international prices as a basis for negotiation is not their favorite approach,” Wyden said. “They consider it passing the buck. They want an American system for America.”
But, Wyden added, “I want it understood: I’m not taking any policy approach off the table.”
And if the Wyden document leaves open many questions about policy detail, it’s clarifying in another respect. It confirms that Wyden wants legislation that goes far beyond the bipartisan bill he negotiated previously with Sen. Charles Grassley (R-Iowa), the ranking Republican on the Finance Committee.
That bill included a measure to limit year-to-year inflation in drug prices but stopped short of more aggressive measures, including government negotiation of prices, because Republicans would not support them.
As it turned out, even that scaled-back compromise bill was too much for GOP leaders. They refused to take up the Grassley-Wyden bill, just as they had refused to consider the one they got from House Democrats.
Now that Democrats control the Senate, Wyden hopes the more ambitious legislation he has preferred all along can pass.
One progressive activist who had seen an advance version of Wyden’s framework told HuffPost he was pleased with both the substance and the signal it sends.
“The policy buckets are great,” said Alex Lawson, executive director of Social Security Works.
Lawson noted in particular the commitment to both negotiated prices and extending those beyond Medicare, and making sure all Americans see savings at the pharmacy. “We have some details that we’re going to have to worry about,” Lawson said, “but this is as good a starting point as we could ask for in the Senate.”
The Challenges Of Constructing A Majority
Given the slim prospects of getting significant Republican support for the kind of legislation Wyden envisions, its most probable path to enactment would be through the “budget reconciliation” process, in which a simple majority can approve legislation that affects the federal budget with no threat of a filibuster.
But because Democrats have exactly 50 seats in the Senate, a single defection could kill ambitious prescription drug reforms. And it’s easy to imagine that happening.
In addition to conservative senators who are traditionally more skeptical of government intervention in the economy, there are Democratic senators, such as Tom Carper of Delaware and Robert Menendez of New Jersey, who represent states with large pharmaceutical manufacturers and who have close ties to the industry.
Forging agreement among these factions would almost certainly require a strong push from the White House. And President Joe Biden didn’t include specific figures for prescription drug legislation in his budget proposal, creating widespread doubt about his commitment to the project.
But Biden endorsed ambitious reforms in his joint address to Congress in April, mentioning specifically that he wants to give the federal government the power to negotiate prices and that the private sector, not just Medicare, should be able to get those prices. Wyden on Monday said that statement was consistent with what he’s heard from Biden directly.
“He was signaling ― and he’s told me ― that he’s going to be all in on this fight,” Wyden said.
The Opportunity That Democrats Have
One reason legislation has a chance of passing, despite all of the obstacles and the long history of failure, is that Democrats have extra motivation this time around.
An effective bill would yield significant budget savings, on the order of hundreds of billions of dollars over 10 years, that Democrats can use ― and desperately need ― to finance other health care programs, such as adding a dental benefit to Medicare or insuring low-income residents in states where Republicans have blocked expansions of Medicaid.
Another reason Democrats might succeed is that ideas like government negotiation of drug prices have proved consistently popular in the polls, even among Republican voters.
Critics of the kind of legislation that Wyden envisions have long said that government limits on drug prices would reduce innovation by giving drug companies less incentive to invest in the development of new drugs.
In both his document and in Monday’s interview, Wyden talked about the importance of innovation ― and the need to craft price negotiation policy carefully in order to take account of the actual value drugs provide. The document also mentions increasing government funding of research, with particular attention to small biotech firms that do much of the most important drug development nowadays.
But Wyden on Monday emphatically rejected claims that negotiation would inevitably lead to fewer breakthroughs, arguing “industry overstates how innovative it is. It always equates innovation with the number of new treatments, regardless of whether they are me-too drugs or truly novel.”
An example of a drug providing dubious value is a new Alzheimer’s treatment that got federal approval last week and that will sell for $56,000 a year, per patient, despite scant evidence that it slows disease progression.
Wyden was among the first to call the price outrageous after Biogen announced it, and he explained to HuffPost why it made him so angry: His mother, a librarian, suffered from Alzheimer’s-related dementia in her final years.
“I saw what a toll it was taking on her and others. This is deeply personal to me. I heard about this drug, I saw how skimpy the evidence was … the price to me is unconscionable for what was on offer.”