Democratic Candidate Buttigieg Calls for Stiff Penalties on Drug Companies that Do Not Negotiate Drug Prices

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The high costs of prescription drugs are a dominant theme in Washington and presidential hopeful Pete Buttigieg is capitalizing on the outcry with his own plan to lower prices should he become president.

This morning the Democratic hopeful released a plan to lower the cost of prescription drugs in the United States. The proposal, which is similar to a prescription drug plan put forth by House Speaker Nancy Pelosi last month, also aims to boost new federal investments in drug development and manufacturing. The plan is a “Medicare for All” program to keep costs low, the Indiana mayor said on his website. The plan would include an out-of-pocket drug spending cap of $250 for people participating in the government-funded plan.

While there are many life-saving treatments on the market, Buttigieg said too many people are denied access due to the costs. On average, Buttigieg said Americans pay $600 more for their medications than people in other developed countries. At the same time, Buttigieg said that “pharmaceutical companies are enjoying record profits and remain the most profitable companies in the entire health industry.”

He exclaimed: “Families across the country face difficult choices: medicine or child care for my two-year-old? Medicine or making rent on time? Medicine to treat my diabetes or to control my cholesterol?”

Buttigieg’s plan would, like Pelosi’s and even Donald Trump’s plans, give the federal government the authority to negotiate drug prices with companies for medications covered by government-funded plans. Pharmaceutical companies will be heavily penalized if they refuse to participate in negotiations or leave the negotiation before a fair price is agreed upon. Companies will face a 65% tax on sales of the drugs. That tax will increase 10% each quarter until the company agrees to negotiate.

The first drugs for negotiation will include those to treat diabetes, asthma, arthritis, HIV, and cancer, he said in his announcement.

But Buttigieg’s plan goes much further in taking on the pharmaceutical industry than penalizing companies that refuse to negotiate with the government. For those companies that refuse to negotiate, Buttigieg would use the government’s right of Eminent Domain to target drug patents. Buttigieg noted that some pharmaceutical companies have abused the patent system in order to protect their cash-cows from competition and his plan would address that. Under certain circumstances, Buttigieg said, the federal government has the power to acquire intellectual property rights from pharmaceutical companies. Some of those situations where the government could exercise that right include if companies refuse to negotiate, or in cases of national disasters or public health emergencies.

The Buttigieg plan also calls for an increase in the annual Branded Prescription Drug Fee on drug manufacturers and importers. The revenue from the fee would jump from $3 billion per year to about $8 billion annually. The revenue collected from this fee increase will be used to help fund American’s access to affordable prescription drugs, he said.

Price increases will also be taken on by the Buttigieg plan. The proposal will implement pricing protections against “outrageous drug price inflation” for those drugs covered by the public plan. Each quarter, pharmaceutical companies that market branded drugs will be required to pay a rebate for drugs that increase faster than inflation. All drug companies participating in the public plan will be required to report to the federal government information related to their balance sheets, including sales and spread pricing, Buttigieg said.

One of more than 20 candidates for the Democratic nomination for president, Buttigieg is currently polling at about 6%, according to a CNN poll conducted at the end of September.