A jog down memory lane: How many times have Democrats tried and failed to win drug price negotiations?
After more than a decade of failed attempts at passing a bill to allow Medicare to negotiate drug prices, Democrats this autumn may be on the cusp of vanquishing their past.
Since at least 2007, various forms of drug pricing legislation have lingered and seen extensive opposition from Republicans, who’ve long maintained that major cuts to Big Pharma profits could spell the end of the next promising drug before it even begins to be developed.
Two major things have changed between 2007 and now: One, Democrats only need a simple majority (and they have a simple majority) in the Senate to pass a bill, via a process known as reconciliation. That’s a must-have, considering how many Republicans will likely oppose a bill that provides the government with negotiating power.
The other key: the amount of money at stake, in terms of not only slowing down biopharma R&D in some capacity, as PhRMA will explain to anyone who will listen, but on the other side too: government savings and potentially more money in patients’ pockets.
So how much might the government save with these types of negotiations? The nonpartisan CBO recently estimated that negotiation provisions in House Speaker Nancy Pelosi’s drug pricing bill (which, so far, still remains in the graveyard of drug price negotiation bills), would reduce federal spending by about $450 billion over the next decade.
Taking a step back, and to better frame what may or may not end up being an impactful autumn in the land of drug pricing, here’s what’s been introduced in recent years, why we’re in this current position, and why Democrats have been eager to realize these potential savings, despite the many unknowns around R&D pressure.
Multiple, unsuccessful attempts
The government’s inability to negotiate drug prices began with a law from almost 20 years ago, known as the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, which expressly forbids government drug price negotiations, stating in its so-called “noninterference” clause, “the [HHS] Secretary may not interfere with the negotiations between drug manufacturers and pharmacies and PDP sponsors and may not require a particular formulary or institute a price structure for the reimbursement of covered part D drugs.”
Ever since, allowing Medicare negotiations between the government and biopharma companies has been a pet project of Democrats, particularly as it might lead to these potentially significant savings. In addition to federal savings, Democrats may be looking to bring down the prices of specialty drugs, which according to a 2019 Congressional Research Service report, are about 1% of Part D prescriptions but account for more than 25% of spending, which is an increase from 6% in 2007.
Sen. Ron Wyden (D-OR), who’s taking the lead in crafting the Democrats’ drug pricing proposal for this fall, previously crafted a bipartisan drug pricing bill in 2019 with Sen. Chuck Grassley (R-IA) but that bill did not include Medicare negotiations. Wyden has been working on the issue since at least 2007, when he received word from the CBO that the federal government can’t just use carrots but may also need a stick to get lower prices.
“Negotiation is likely to be effective only if it is accompanied by some source of pressure on drug manufacturers to secure price concessions. The authority to establish a formulary, set prices administratively, or take other regulatory actions against firms failing to offer price reductions could give the Secretary the ability to obtain significant discounts in negotiations with drug manufacturers,” the CBO said in 2007.
That same year, the House actually passed former Michigan Rep. John Dingell’s Medicare Prescription Drug Price Negotiation Act of 2007, which would’ve reversed the earlier law and allowed the HHS secretary to negotiate Part D prices with pharmaceutical manufacturers, including on discounts, rebates and other price concessions. The vote was 255 to 170 in favor, with 24 Republicans joining 231 Democrats in approving the bill.
But former President George W. Bush threatened a veto, his HHS secretary said he wouldn’t even negotiate if he had the power, and on the Senate side, as the New York Times explained, the Democrats “could not muster the 60 votes needed to take up the legislation in the face of staunch opposition from Republicans, who said that private insurers and their agents, known as pharmacy benefit managers, were already negotiating large discounts for Medicare beneficiaries.”
Three years later, Vermont Democrat Peter Welch and 61 of his peers in the House introduced the Medicare Prescription Drug Price Negotiation Act of 2010, with projected savings of more than $150 billion over 10 years. While the bill failed to pass, Welch has been at the forefront of drug price negotiation bills, sponsoring or co-sponsoring multiple drug price negotiation bills over the last decade.
Welch also worked with Reps. Lloyd Doggett and civil rights advocate Elijah Cummings to introduce The Medicare Negotiation and Competitive Licensing Act of 2019. As House Oversight committee chair, Cummings put a lot of time and effort into going after egregious pharma companies, investigating massive price spikes from the likes of the now-imprisoned Martin Shkreli in 2016 (although not as a result of the Oversight investigation), Biogen’s MS drug (see Tweet below), and the infamous Valeant Pharmaceuticals back in 2015.
.@realDonaldTrump, Mr. President, you promised to lower drug prices, but companies are charging $87k/yr for a drug YOU own. Please act now!
— Elijah E. Cummings (@RepCummings) September 28, 2017
But the whack-a-mole approach to combating overnight drug price spikes has not resulted in substantial savings nationwide.
In 2019, the same year Cummings died, Pelosi was able to pull together enough votes to pass her Medicare price negotiation bill, named in honor of Cummings as the Elijah E. Cummings Lower Drug Costs Now Act. The bill passed by a vote of 230 to 192, with an even slimmer margin than Dingell’s bill. Again, however, the Republican-controlled Senate failed to take up Pelosi’s bill.
This year, Pelosi’s bill has been floated as an outline for Senate Democrats’ direction. Republicans also may be keen to build off the overwhelming public support for cracking down on drug prices. A West Health/Gallup survey of more than 3,700 adults from June found nearly all Democrats (97%), Independents (80%), and the majority of Republicans (61%) support empowering the federal government to negotiate lower prices of brand-name prescription drugs covered by Medicare.
But lobbying groups like PhRMA are desperately trying to re-frame the conversation, buying up ads to drive away support for any bill that includes Medicare negotiations.
“They call it negotiation, but it really means the government decides what medicines I can get,” a woman named Sue with type 1 diabetes said in a recent PhRMA ad attacking the pricing legislation.
Democrats have trouble brewing among some of their own ranks too, as New Jersey Sen. Bob Menendez, whose district includes biopharma companies, said in July that he had reservations about allowing Medicare to negotiate. Arizona Sen. Kyrsten Sinema also has been showered with pharma dollars.