A supposed draft plan summary to lower drug prices by House Speaker Nancy Pelosi has been circulating around Capitol Hill recently. While it isn’t clear what changes, if any, have been made since the draft was created or what will be changed before a formal introduction of the proposal, the draft summary is much bolder than anticipated.
The plan would allow the Health and Human Services (HHS) Secretary to directly negotiate prices on the top 250 drugs with the greatest total cost to Medicare and the entire United States health system without competition from at least two generic, biosimilar, or interchangeable biologics on the market. The power would allow for negotiating as many as possible of the most costly 250 drugs annually. In just the first year, the proposal alleges that drugs representing nearly half of total Medicare Part D spending (covering tens of millions of patients) would be subject to the negotiation process, including insulins.
The draft proposal would allow for prices negotiated by the HHS Secretary to apply not just to Medicare but also the private market and would include a high penalty for drug companies that do not negotiate with HHS – a fee equal to 75% of the gross sales of the drug in question from the prior year. Such a steep penalty is an attempt to persuade drug manufacturers to negotiate and abide by the final price. According to the draft proposal, “the penalty gives the HHS Secretary leverage without resorting to a restrictive formulary and without the interruptions of contracting, building and approving a whole new production line.”
The plan also seems to abandon Speaker Pelosi’s previous desire to use an outside arbiter to set the price of a drug, perhaps due to the outcry from the progressive wing of her party who aired concerns that such a plan was too cumbersome and not strong enough of a mechanism.
Perhaps in a bid to garner support from the right-leaning side of the political aisle, the proposal incorporates an idea previously mentioned by President Donald Trump – tying drug prices to the lower prices paid in other countries, setting a ceiling in the negotiations based on the drug price paid in other countries.
A senior Democratic aide noted that “[t]he document is an out-of-date draft. Nothing is being distributed to the caucus yet because the committees are still discussing.” Henry Connelly, a spokesman for Speaker Pelosi, said the speaker’s office continues “to engage members across the caucus as the committees of jurisdiction work to develop the boldest, toughest possible bill to lower prescription drug prices for all Americans.”
Speaker Pelosi’s office expects the official proposal to be released sometime this month, though the exact timing remains unclear.
Reactions from all sides of the political spectrum – especially those on the progressive end of Speaker Pelosi’s caucus and on from the White House – are expected to come out in the coming weeks. While it may be a relatively safe assumption that the proposal could pass the Pelosi- and democrat-controlled House, getting any measure through the GOP-controlled Senate is likely to be an uphill battle.