October 31, 2019

Update: What Are the Chances for Legislating Medicare’s Pharmaceutical Drug Prices?

While working in clearly opposing camps, some staff of Nancy Pelosi (D-CA, Speaker of the House of Representatives) and some White House aides are serving as go-betweens as their bosses struggle to find a compromise on pharmaceutical drug pricing. Their quiet exchanges are ongoing even though, as the Washington Post put it,Pelosi and Trump “have reached new levels of animosity in recent weeks, as she pursues an impeachment inquiry while he tweets angry insults at her.”

Pelosi’s bill, HR 3, would enable the federal government to negotiate directly with pharmaceutical companies to lower the cost of drugs available though Medicare’s prescription program. If passed, the bill would also ensure that Medicare enrollees’ out-of-pocket prescription drug expenses would be capped at $2,000 per year. One quarter of people with HIV in this country rely on Medicare and would be directly affected by such legislation.

The bill has not yet been brought up for a full vote in the House. Some House members are concerned that the newly-renamed “Elijah E. Cummings Lower Drug Costs Now Act” does not go far enough, specifically with regard to the number of drugs subjected to price negotiation. In its current form, HR 3 requires that the “government negotiate lower prices for at least 35 drugs per year but no more than 250.” Some think that the number negotiated should be higher and some reject altogether the idea of an upper limit, arguing that all high drug prices should be negotiated.

Meanwhile, on the Senate side, Chuck Grassley (R-IA) is has introduced a bill to reduce drug prices without requiring direct pricing negotiations between DHHS and pharmaceutical corporations. Instead, it proposes measures such as simplifying the Medicare program design, capping prices on out-of-pocket spending and “protecting the program from rampant manufacturer drug price increases.” Grassley’s office is in ongoing dicussion with both Pelosi’s office and the White House in the hope of developing a compromise package, despite Grassley’s conviction that a “call for the government to negotiate drug prices is a non-starter for conservatives.”

The view in the White House, meanwhile, has evolved. Back in 2016, candidate Trump advocated strongly for change in this area. On the campaign trail, he said he would “negotiate like crazy” to bring down Medicare prescription drug prices. But post-election, his position shifted. In 2018, his administration released its “DHHS Blueprint to Lower Drug Prices and Reduce Out-0f-Pocket Costs.” It outlines a combination of strategies for this, none of which involve direct negotiation with industry to lower Medicare drug prices.

Hill observers predict that a deal between the White House and the House of Representatives – if at all possible – might be struck in the weeks before Thanksgiving. Senate Majority Leader Mitch McConnell said in September that such a bill would be “dead on arrival” in the Senate. But changes in the political tides since then may influence how Republican senators choose to ally themselves.

A recent Kaiser Family Foundation survey found that 80% of respondents believe that pharmaceutical costs are unreasonable. In light of this, Rodney Whitlock, a former health policy aide to Sen. Chuck Grassley (R-Iowa) observed that, “It shouldn’t be that surprising that staff are working to see what is possible. Given the policy overlap, compromise is clearly plausible.”