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Democrats Dig In on Measure to Compel Drug-Pricing Negotiations

May 4, 2021, 7:12 PM

Democratic leaders of a key House committee insisted they would push to empower the government to negotiate with drugmakers, saying it was essential to lowering Americans’ pharmacy expenses.

The Democrats’ goal of passing a drug price negotiation measure (H.R. 3) confronts widespread opposition from Republicans and further hurdles in the Senate. Anything short of their bill wouldn’t be enough, Democrats said Tuesday, suggesting limited room for bipartisan negotiation.

The legislation is the “comprehensive solution this country needs to fix our broken market for prescription drugs,” Frank Pallone (D-N.J.) said. “We need to act on H.R. 3,” he said during a hearing of the House Energy and Commerce Committee, of which he is the chairman.

Rep. Frank Pallone (D-N.J.) speaks during a news conference at the U.S. Capitol in June 2020.
Photographer: Al Drago/Bloomberg via Getty Images

Rep. Michael Burgess (R-Texas) denounced the legislation as a “partisan” exercise. Other Republicans called for simply placing a cap on what seniors in Medicare pay each year for medicines, and to stop some anti-competitive practices common among some drugmakers.

Pallone told reporters Tuesday he and other House committee leaders plan to mark up and pass H.R. 3 this year, but didn’t give a more specific timeline.

Democrats’ Push on Drug-Price Goals Excluded From Biden Plan

Cap Drug Prices

The legislation would direct the government to negotiate the price of insulin, as well as a list of pharmaceutical and biological products that lack competition. It would penalize drugmakers that don’t come to the bargaining table. It would also cap the prices of those drugs at 1.2 times their average price in Australia, Canada, France, Germany, Japan, and the U.K., where medicines are generally priced at a fraction of what Americans pay.

And the legislation would limit to $2,000 per year what people on Medicare’s prescription drug benefit pay for medicines.

Republicans focused on the benefits of capping out-of-pocket costs for patients. But Democrats pushed for the more comprehensive plan laid out in H.R. 3—which Rachel Sachs, an associate professor of law at Washington University in St. Louis, also backed.

“Although capping out-of-pocket costs is important to help patients, it doesn’t actually lower prices or spending, it just moves money around in the system,” Sachs said at Tuesday’s hearing.

Biden Puts Onus for Lowering Drug Prices in Congress’s Hands

Higher Overall Spending

Only lowering out-of-pocket costs for patients could actually slightly increase premiums and Medicare spending overall, according to projections from the Medicare Payment Advisory Commission, which advises Congress about health policy, she said.

“Although is important to lower out-of-pocket costs, that needs to be coupled with other reforms which would directly address those high prices,” Sachs said.

Capping what individuals pay at the pharmacy counter is also the preferred policy for the drug industry.

In Pfizer Inc.‘s quarterly earnings call on Tuesday, company leaders said they would like the White House and Congress to focus on “rebate reform, capping beneficiary cost-sharing in Medicare Part D, and incentivizing the uptake of biosimilars.”

To contact the reporters on this story: Alex Ruoff in Washington at aruoff@bgov.com; Jacquie Lee in Washington at jlee1@bloomberglaw.com

To contact the editors responsible for this story: Robin Meszoly at rmeszoly@bgov.com; Anna Yukhananov at ayukhananov@bloombergindustry.com

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