House Speaker Nancy Pelosi’s drug pricing reform bill passed the House of Representatives in a mostly party-line vote and will now head to the U.S. Senate, where its chances of moving forward in the Republican-led chamber are slim.
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House Speaker Nancy Pelosi’s drug pricing reform bill passed the House of Representatives in a mostly party-line vote and will now head to the U.S. Senate, where its chances of moving forward in the Republican-led chamber are slim.
The Speaker’s legislation will give the United States the ability to negotiate lower prices on the high-priced drugs each year. Current rules prohibit the government from negotiating the price of drugs. The House plan, which was unveiled in September, was modified ahead of its approval to gain the support of the more progressive members of the Democratic Caucus who believed the plan did not go far enough. The plan calls for the government to negotiate the prices of up to 250 of the most expensive drugs covered by Medicare through an international pricing index in order to bring the prices of drugs covered by government programs in line with those prices paid by other countries. Additionally, the plan places stiff penalties on the companies of up to 65% of the gross sales of the drug in question. That penalty will increase by 10% each quarter that the company fails to comply with the agreement.
Pelosi called the legislation, which passed the House 230 to 192, “transformational” and called on the Senate to “show they are serious about reducing drug prices by holding a vote on this commonsense legislation.” In a statement ahead of its passage, Pelosi pointed to the high costs of insulin and said the legislation would significantly lower the out-of-pocket expenses paid by older Americans on Medicare.
The bill had been strongly opposed by the pharmaceutical industry on the grounds that the price controls would stifle innovation in the development of new life-saving therapies.
Mike Guerra, president and chief executive officer of the California Life Sciences Association, one of the multiple state life science trade groups opposes, said he was deeply disappointed in the bill. Tying the price of medications to an international pricing list will result in a “catastrophic impact on patient choice and access to medicines” and also impair “the development of new treatments for unmet medical needs,” he said in a statement.
Guerra added that industry data suggests tying prices to an international pricing index would cause a 58% reduction in industry revenue and reduce the amount of capital available for partnerships and licensing agreements with emerging companies. That, in turn, would lead to an 88% reduction in new medicines developed by small U.S. biotech companies, he said. Also, Guerra said the legislation is a job-killer and would eliminate more than 80,000 high-paying biotech R&D jobs nationwide.
Last month an analysis conducted at the behest of the Pharmaceutical Research and Manufacturers of America (PhRMA), the Biotechnology Innovation Organization (BIO) and the Council of State Bioscience Associations showed that the Speaker’s plan would result in at least 56 fewer new medicines for patients over the next 10 years.
Pelosi countered that argument ahead of the vote by saying that the money saved by the government through the negotiation of prices would be reinvested into new treatments and cures for various diseases. The Congressional Budget Office has estimated that the Pelosi plan if it becomes law, would save Medicare $456 billion over the next 10 years – the funds Pelosi said could go to funding new discoveries. However, the CBO also said the legislation will prevent approximately eight new drugs from coming to the U.S. market.
The White House, which initially called for the government to negotiate the price of prescription drugs, said last week that Pelosi’s plan would lead to a loss of 100 drugs entering the U.S. market over the next decade. Additionally, citing the Executive Branch’s Council of Economic Advisers, the White House said the loss of those drugs would reduce Americans’ average life expectancy by about four months.
As the House takes up impeachment today, it’s unlikely that the partisan divide will move the Speaker’s drug pricing proposal forward in the Senate. The Senate though, is expected to put forward its own drug price reduction plan ahead of the 2020 election.
