Pelosi Unveils Plan to Lower Prescription Drug Prices

Regulatory NewsRegulatory News | 19 September 2019 |  By 

As Sen. Chuck Grassley (R-IA) continues to push his own competing drug pricing legislation in the Senate, House Speaker Nancy Pelosi (D-CA) unveiled her proposal to lower prescription drug prices on Thursday, with a plan likely to please more liberal Democrats and further distance Republicans.

At the heart of Pelosi’s plan is the idea to allow Health and Human Services Secretary Alex Azar to select between 25 and 250 drugs annually and directly negotiate with manufacturers to establish a maximum price.

But those negotiations would be based on prices established in Australia, Canada, France, Germany, Japan and the UK, which is an idea that mirrors an HHS plan known as the International Pricing Index (IPI). The IPI is fiercely opposed by the pharmaceutical industry and Republicans, who deride the proposal as a step toward socialism and price controls.

And if manufacturers refuse to enter negotiations, the Pelosi bill would assess a tax on the manufacturer’s annual gross sales starting at 65% and increasing by 10% every quarter that the manufacturer is out of compliance (to a maximum of 95%).

“Given drug prices in the United States are so much higher than in other industrialized countries, a penalty of this magnitude is needed to ensure manufacturers come to the table to negotiate,” a leaked legislative summary of the bill says.

In addition to the new negotiating, the Pelosi plan also would penalize companies for raising the prices of drugs in Medicare Part B and D.

“If a drug company has raised the price of a drug in Part B or D above the rate of inflation since 2016, they can either lower the price or be required to pay the entire price above inflation in a rebate back to the Treasury,” the summary says.

The bill also caps out-of-pocket costs for Medicare Part D beneficiaries at $2,000 annually.

Next Wednesday, the House Energy & Commerce Committee will review the legislation. Rep. Greg Walden (R-OR), speaking at a different hearing on Thursday, lamented the fact that he has yet to see a copy of the Pelosi bill and said he hopes to see a copy before the hearing next week. 

Pelosi said at a press conference on Thursday that she hopes to win support for the bill from the White House as that's one of the only ways the bill would come up for a vote in the Senate.

Meanwhile in the Senate, Grassley continues to push Senate Majority Leader Mitch McConnell (R-KY) to bring his bill to the floor.

“I’m trying to tell Senate Republicans that they ought to consider this a moderate position, because it would be easy for the president to join Pelosi,” Grassley said in a statement last week.

Meanwhile, industry groups are already taking issue with the Pelosi bill.

Jim Greenwood, the President and CEO of the Biotechnology Innovation Organization (BIO), said in a statement: “It is deeply unfortunate House leaders have chosen an extreme approach that will make it harder to deliver meaningful reform for patients.”

He also said the plan “would surrender to foreign bureaucracies the power to dictate the value of medicines and the treatments available to America’s patients. If this proposal were to become law, it will upend our country’s ability to lead the world in biomedical innovation.”

Bill Text 

Updated on 9/19 with comment from Pelosi, Walden and Greenwood and the text of the bill, HR 3.


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