Dems Still Seek Balance on Drug Prices 06/12 09:17
WASHINGTON (AP) -- Democrats are committed to passing legislation this year
to curb prescription drug prices, but they're still disagreeing on how to cut
costs for patients and taxpayers while preserving profits that lure investors
to back potentially promising treatments.
It boils down to finding a balance: How big a stick should Medicare have to
negotiate prices with pharmaceutical companies?
With hundreds of billions of dollars in potential savings, the stakes are
enormous. Medicare spends upward of $200 billion a year on prescription drugs,
a category that keeps growing as costly new drugs enter the market. An
Alzheimer's medication approved this past week comes with a price of $56,000 a
year, for example, and co-payments could skyrocket for patients who use it.
A successful bill would advance a key plank of President Joe Biden's
domestic agenda even as Democrats struggle to make progress on other fronts.
Allowing Medicare to negotiate drug prices consistently wins strong public
support in opinion polls.
In the House, Speaker Nancy Pelosi, D-Calif., is steering legislation that
imposes a steep tax on drugmakers that refuse to deal with Medicare, while
using an average of prices in other economically advanced countries as a
reference point for fair rates here. Her bill would limit price increases and
allow private health plans to receive Medicare's negotiated rates.
In the Senate, Finance Committee Chairman Ron Wyden, D-Ore, is also working
to craft legislation. His starting point is a less ambitious bipartisan bill
from a previous Congress. It would have limited price increases for drugs
already on the market, but not initial prices. It would have capped Medicare
recipients' out-of-pocket costs for pharmacy drugs, which is in the Pelosi bill.
Wyden said he personally is convinced that "it's long past time to give
Medicare the authority to negotiate better prices for prescription drugs." But
cajoling enough votes in the Senate is another matter. It's unclear whether
Wyden can even count on all the Democrats in the divided chamber or whether any
Republicans would sign on.
Progressives such as Sen. Bernie Sanders, I-Vt., want to use Medicare's
savings to create new benefits for dental, vision and hearing coverage. That
would represent an historic expansion of a program that's under a lengthening
financial shadow, its giant inpatient trust fund projected to be in the red in
Democrats are talking privately among themselves and organizing coalitions
around different approaches. In public, they still sound like they can overcome
"Democrats are going to pass Medicare prescription drug reform and I'm going
to be part of it," Rep. Jake Auchincloss, D-Mass., told The Associated Press.
The first-term lawmaker has raised concerns that Pelosi's approach is not a
negotiation but a price control system. His voice matters because Auchincloss
is helping lead a group of like-minded Democrats, and Pelosi can't afford to
lose many votes.
The powerful and deep-pocketed drug industry lobby is closely engaged.
Already, ads are stirring fears that government price controls will squelch
development of breakthrough treatments.
Stephen Ubl, CEO of the Pharmaceutical Research and Manufacturers of
America, said the industry wants to see lower out-of-pocket costs for patients,
and believes that insurers and companies that manage prescription benefits must
be scrutinized as well.
"We would like to see a balanced drug pricing bill emerge from the Congress
this year," Ubl told AP in a recent interview. He later added that "our
industry understands that there is going to be some pain involved in the
But so far the industry has given no indication that it's willing to accept
Medicare negotiations or significant curbs to its pricing power.
Health economist Len Nichols, who has advised Democrats in health care
policy debates, said there is a logic behind the basic elements of Pelosi's
"You've got to have that reference price that is somewhat objective as a
basis for negotiation, and then you have to have a way to compel the drug
companies to come to the table," he said. "It's directionally correct."
That said, getting the balance right would be critical.
"We've just experienced an amazing example of incredibly effective
innovation," Nichols said, referring to COVID-19 vaccines that have pushed back
a deadly pandemic in this country. "Innovation is important, and the structure
of any bargaining arrangement has to balance the need for affordability with
the need to incentivize innovation."
The industry's success with COVID-19 vaccines comes with a big asterisk:
Taxpayers have invested about $20 billion in research and development,
manufacturing, and supply of vaccine candidates. That's according to estimates
by the nonpartisan Committee for a Responsible Federal Budget, which advocates
for reducing federal deficits. Still, the money went to companies that knew
what they were doing and they delivered.
Joshua Gordon, director of health policy for the budget group, said there is
a clear trade-off between restraining drug prices and reducing incentives for
innovation. But that doesn't mean a better balance can't be found.
"Obviously the government creates a market for drugs through patents and
(Food and Drug Administration) exclusivity, and there are clearly areas where
the companies are taking advantage," he said.
Lawmakers aren't necessarily tied to the approaches now on the table, Gordon
added. They could follow of the example of Germany, where drugmakers set the
initial price of a medication, but then a review process determines if it's
worth to keep paying that.
One of Pelosi's top lieutenants said recently that he is open to discussing
different approaches, but they have to include negotiating authority for
"We can't veer away from the basic idea that the government ... should have
the right to negotiate prices," Rep. Frank Pallone, D-N.J., said on a call
sponsored by the advocacy group Protect Our Care. "I believe that the Democrats
as a whole and some of the Republicans in the Senate will vote for that."