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Republican FTC Official Backs Medicare Negotiating Drug Prices (1)

Jan. 16, 2020, 5:49 PMUpdated: Jan. 16, 2020, 6:54 PM

A Republican Federal Trade Commissioner said Medicare should have more power to negotiate drug costs.

Speaking Thursday at a health-care conference, Christine Wilson was asked how the federal government can address situations where there is little competition in drug markets. “I think part of the problem is that the federal government has not been able to negotiate under certain parts of Medicare and Medicaid for pharmaceutical prices,” she said.

The federal government accounting for about a third of pharmaceutical spending “is essentially a price taker, and that seems to be a problem to me,” Wilson said.

Wilson’s remarks stand out because Democrats for years have been pushing for Medicare to be given the ability to negotiate drug prices, but with little support from Republicans.

Wilson acknowledged that she may be hitting the “third rail"—meaning her position would likely be controversial.

Republicans and Health and Human Services Secretary Alex Azar have strongly opposed Democratic proposals that would allow Medicare to negotiate drug prices.

They argue that doing so would essentially allow Medicare to set drug prices and stifle development of innovative new drugs.

She referred to H.R. 3 , the Democrats’ signature drug pricing bill, which was the House approved in December. The measure would require the Centers for Medicare & Medicaid Services to negotiate maximum prices for insulin products and at least 25 single-source brand-name names that don’t have generic competition. The CMS is currently prohibited from negotiating drug prices.

“I think that’s great,” Wilson said. “I’d like to see it expanded.”

Remove ‘Disincentives’ to Competition

She also said she would like to see “disincentives” to market competition “lifted from this sector.”

A “troubling trend that we’ve seen is the growing use of anticompetitive strategies” by manufacturers of expensive biologic drugs to “squelch competition from biosimilars,” Wilson said. Biologics are cheaper versions that could be sold on the market once patent exclusivity is no longer in force for the biologic drugs.

Fewer than 2% of Americans use biologic drugs, but they account for 40% of total spending for prescriptions, Wilson said.

Re-Examine Mergers

Wilson also said she favors the FTC conducting retrospective examinations of mergers, such as among hospitals, to look at “whether prices increased and whether the anticipated efficiencies and cost-savings and quality improvements were met.”

Many in the health-care industry, including the Coalition for Affordable Health Coverage, have said hospital consolidation has led to higher prices without improving quality. The coalition sponsored the conference where Wilson was speaking.

Wilson commended President Donald Trump’s 2019 executive order directing federal agencies to find ways to make the health-care system more competitive, and she said she plans to spend more time on health-care competition issues in 2020.

Wilson also called for states to take action to improve health-care competition. She called for states to remove laws that restrict hospital competition, known as “certificate of need” requirements. The required certifications make it harder to open new facilities, limiting the number that can operate in states.

(Updates with additional details throughout.)

To contact the reporter on this story: Sara Hansard in Washington at shansard@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com; Brent Bierman at bbierman@bloomberglaw.com

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