On June 22, 2021, Senate Finance Committee Chairman Ron Wyden released principles lowering prescription drug prices. In the document released by Senator Wyden, he notes that while the “root causes of high drug prices are numerous,” we still “urgently need reforms that provide real solutions.” He believes that his set of five principles will help make prescription drugs more affordable while encouraging innovation and scientific breakthroughs.
The five principles are: (1) Medicare must have the authority to negotiate with pharmaceutical companies, especially where competition and market practices are not keeping prices in check; (2) American consumers must pay less at the pharmacy counter; (3) prices of drugs that increase at a rate faster than inflation will not be subsidized by patients and taxpayers; (4) drug pricing reforms that keeps prices and patient costs in check should extend beyond Medicare; (5) drug pricing reforms should reward scientific innovation, not “patent games.”
Under the first principle, Wyden believes that Congress must establish clear criteria for what constitutes “market failure” and for which drugs the price can be negotiated, as well as to define what constitutes a “fair price” in those circumstances. The HHS Secretary must be given both tools and guidelines to negotiate a fair price and create the right incentives to ensure pharmaceutical company participation in the negotiation process.
Under the second principle, legislation will need to include and build upon existing bipartisan proposals to restructure the Medicare Part D benefit to realign incentives to direct patients towards lower-cost drugs and reduce high patient out-of-pocket spending to more affordable monthly limits. Wyden also called for the “Rebate Rule” proposed by the Trump Administration to be blocked as he does not believe it properly addresses the middleman problem, where formularies do not always pass savings from drug companies to patients.
Under the third principle, Wyden notes that Americans are paying more than ever for the same drugs they’ve been using for years, and in response, he would like to require rebates on price hikes above inflation to rein in those raises.
Under the fourth principle, Wyden wants to extend drug pricing reforms to all Americans, including those covered by employer and commercial health plans. To that end, he wants to work within the Finance Committee and with other committees of jurisdiction to ensure the reforms apply to as many Americans as possible.
Under the fifth and final principle, Wyden aims to reward scientific innovation, noting that government funding for research and development should continue to receive strong support but taxpayers should not be paying twice for the research when a drug comes to market with high prices. He also called for policies to be tailored to the scale of pharmaceutical companies, also taking additional factors that affect their access to capital into account.
“Congress has critical work in the weeks ahead to craft legislation that will finally deliver relief to Americans who are paying too much for their prescription drugs,” Wyden said in a press release. “Today’s release reflects the core principles that will guide my work this summer: let Medicare negotiate, limit price gouging, provide relief to consumers at the pharmacy counter, ensure those with individual and employer insurance also benefit, and reward scientific research for those who are truly innovating. I look forward to working with members of the Senate and the House to deliver true drug pricing reform to President Biden’s desk this year, as he called for in his joint address to Congress.”