On Thursday, September 19th, Speaker of the House, Nancy Pelosi (D-California), unveiled a sweeping new proposal to lower drug prices known as H.R. 3, the Lower Drug Costs Now Act of 2019. Speaker Pelosi remarked that the bill was “transformative” and “We do hope to have the White House buy-in.” Here are the provisions of the bill:
- The Secretary of Health and Human Services would have the authority to directly negotiate prices for the 250 most expensive drugs that don’t have at least two generic competitors. These negotiated prices would be available for Medicare and Medicaid recipients as well as those who have a private insurance plan. Under current law, the Department of Health and Human Services cannot negotiate drug prices. Private insurers use pharmacy benefit managers to negotiate drug rebates from pharmaceutical manufacturers in exchange for better coverage.
- The drugs would be priced in accordance with an “international price index” that will compare the cost of the drug here in the US to its cost in other countries, which is usually much cheaper.
- If pharmaceutical companies refuse to take part in price negotiations or cannot reach an agreement with the HHS Secretary, they would face a fine, starting at 65% of the gross sales of the specific drug from the prior year. For every quarter that the company does not engage, the penalty goes up by 10 percentage points, until it hits 95 percent of a drug’s gross sales.
- The resolution calls for reinvesting the taxpayer funds saved through negotiations back into drug research at the National Institutes of Health.
- The Congressional Budget Office estimates that if the bill is passed and signed into law, it will save Medicare $345 billion over 10 years. Though the savings would not begin until 2023.
- A $2,000 out-of-pocket cap on prescription drugs for Medicare beneficiaries and the disabled are included.
According to a poll taken in 2018 by the Kaiser Family Foundation, 63 percent of voters think there needs to be more regulation of drug prices, including 72 percent of Democrats and 53 percent of Republicans. According to data provided to us by the AARP in 2017, 32% of Alabama residents stopped taking their medications as prescribed due to the cost. But the data is even more troubling than that. 539,841 Alabamians have been diagnosed with cancer, 587,856 have pre-diabetes or diabetes, and 206,211 have heart disease. Between 2012-2017, the following drug prices have increased:
a drug used to treat certain forms of cancer, increased from $147,413 per year
to $247,496 per year.
a drug used to treat diabetes increased from $2,907 per year to $4,702 per
a drug used to treat heart disease has increased from $3,030 per year to $5,930
The Interim State Director of Communications for the AARP, Evey Owen, remarked, “We did find that in 2016, 35 percent of Alabamians stopped taking their prescriptions as prescribed by doctors, and that’s actually fifth in the nation,” said Owen. “So, we have the fifth-highest amount of people not taking their prescriptions as they’re prescribed by the doctors just because of the high cost.”
If Speaker Pelosi’s bill was passed and signed into law by President Trump, Alabamians would be among its top beneficiaries. When he ran for President in 2016, President Trump backed the idea of a government body like Medicare negotiating drug prices. “We don’t do it,” he said. “Why? Because of the drug companies.” However, he backed off of this proposal after meeting with pharmaceutical industry lobbyists and executives in January of 2017, opting instead for market deregulation of the pharmaceutical industry.
To no surprise, Speaker Pelosi’s bill is facing fierce opposition from the pharmaceutical industry. The CEO of the Pharmaceutical Research and Manufacturers of America (PhRMA) Steve Ubl stated, “If H.R. 3 becomes law, it is lights out for a lot of very small biotech companies that are pre-revenue and depend on attracting capital.” Ubl fears that Pelosi’s bill has a strong chance of becoming law and is preparing a strong response. “This type of policy would have a devastating effect on the industry and the patients that we serve and we’re going to continue to take it very seriously and engage with policymakers accordingly,” remarked Ubl. But Speaker Pelosi isn’t buying this objection. “It’s not going to hurt innovation,” Pelosi said. I suspect that the majority of Americans won’t buy Mr. Ubl’s objection either. According to a Gallup poll taken back in September, 58% of Americans have a negative view of the pharmaceutical industry compared to 27% of Americans who have a positive view and 15% who have a neutral view.
Speaker Pelosi’s bill has been approved by three committees and is expected to come to a full House floor vote at any time. The Senate Majority Leader, Mitch McConnell (R-Kentucky) is unlikely to bring it up for a vote and even he did and the bill passed the Senate, President Trump is unlikely to sign it. For the foreseeable future, it seems that the status quo in Alabama will persist.