The Center for American Progress proposes allowing Medicare and other insurers to negotiate drug prices with the use of independent comparative-effectiveness research and, if necessary, an arbitration process.
The paper released Monday would also allow the HHS secretary to request a pricing review for already established drugs after the availability of new treatments or a significant price increase. Congress has recently highlighted the rising cost of the EpiPen as an example of problematic drug pricing.
Drug companies have faced intense scrutiny over the high prices of certain drugs for rare diseases as well as increased prices on some generic drugs that have no competition. A 2014 study in JAMA found that comparative-effectiveness data was available for less than half of approved therapies.
Democratic presidential nominee Hillary Clinton has also suggested allowing Medicare to negotiate drug prices. She proposes a federal panel that would examine price increases on established prescription drugs and increased funding for comparative-effectiveness research.
Her rival Donald Trump at one point on the campaign trail suggested letting Medicare negotiate drug prices but has not included that on the brief healthcare agenda on his website. That agenda does, however, advocate importing drugs from foreign countries at a lower cost.
The Center for American Progress suggests that three months after a drug company sets its price upon FDA approval, the HHS secretary will have the option to refer the drug to comparative-effectiveness review based on its price, usage, prevalence and available alternative treatments.
Two certified research organizations would conduct the comparative-effectiveness review and recommend an average manufacturer price. The price range established would then inform negotiations between drug companies and payers, including Medicare.
If the price offered to the payer remains above the suggested range after negotiations, the drug manufacturer would have to justify its list price with information on patient use, company profits and the costs of manufacturing and marketing the drug. Any payer could then request binding arbitration from a predetermined list of arbitrators created by the Government Accountability Office.
The Pharmaceutical Research and Manufacturers of America rejected CAP's proposal.
"The Center for American Progress's framework is deeply flawed as it would impede patient access to innovative treatments and cures and chill progress at a time when policymakers are working to accelerate advances against cancer and spur personalized medicine," spokeswoman Holly Campbell said. "Instead of focusing on proposals that will stifle innovation, we need to pursue alternative reforms to value-driven health care that are truly patient-centered. In doing so, we will enhance the private market and address costs holistically."