Speaker Pelosi Unveils Plan to Negotiate Lower Drug Prices

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House Speaker Nancy Pelosi unveiled her plan to negotiate lower prices on up to 250 prescription drugs covered by government-backed plans such as Medicare. The plan also calls for stiff financial penalties on companies that refuse to negotiate with the government.

The proposal, which was released Thursday morning to members of the legislature, calls for the government to use the International Pricing Index to bring the prices of drugs covered by government programs in line with those prices paid by other countries. Currently, the government does not have the authority to negotiate drug prices with manufacturers as private insurers do. As BioSpace noted last week, in some ways the Pelosi plan mirrors proposals that have been put forth by the Trump administration. In July, President Donald Trump proposed a “favored nations clause” which essentially ties drugs paid for by government programs to the prices paid for by other governments. That followed the 2018 proposal of a price-negotiation plan for Medicare-supported infused and injected drugs that the administration claimed could save $17 billion over five years.

To ensure the drugmakers negotiate with the government, the Pelosi plan places stiff penalties on the companies of up to 65% of the gross sales of the drug in question, CNBC said this morning. That penalty will increase by 10% each quarter the company fails to reach an agreement with the government, according to the report.

The proposal, which has been guided by Pelosi herself for the past several months, has been a top legislative priority for House Democrats, as well as the White House. In addition to giving the government the power to negotiate prices and levy penalties on companies, the Pelosi plan also creates an “out-of-pocket maximum of $2,000 for Medicare beneficiaries” and will “reinvest savings from negotiated prices on finding new treatments at NIH (National Institutes of Health),” according to the report.

“The status quo on prescription drug prices is broken,” House leaders say in the summary, as reported by CNBC. “Prescription drug companies are charging Americans prices that are three, four, or even ten times higher than what they charge for the same drugs in other countries.”

Many Republican lawmakers, as well as the pharmaceutical industry, have raised opposition to government negotiations on the price of drugs. PhRMA, a powerful drug lobbying agency, is opposed to the idea. Previously, PhRMA Chief Executive Officer Stephen Ubl said the plan would “end the current market-based system that has made the U.S. the global leader” in developing drugs and life-saving treatments. Jim Greenwood, CEO of BIO, has also decried the plan.

Earlier this year, the U.S. Chamber of Commerce unveiled a study that also opposed the idea of tying drugs to the IPI. The study predicted dire consequences that could limit options for many patients, including cancer patients.

While the Pelosi plan calls for actions that lawmakers within the Democratic Party have championed over the past few years, there are multiple reports that indicate Pelosi doesn’t have the full support of her caucus. Many of the more progressive members of the Democratic caucus want to see more stringent price controls, according to the reports.

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