An ambitious draft plan from House Speaker Nancy Pelosi (D-Calif.) to allow government price negotiation on a swath of expensive drugs has shifted Washington's contentious policy debate leftward at a critical point for Democratic negotiations with Senate Republicans and the White House.
The draft outline was leaked to reporters by lobbyists on Monday night. A senior Democratic aide stressed that it's outdated, and Pelosi's office hasn't yet confirmed when an official version of the bill will be released.
Progressive Democrats and reform-minded advocates were optimistic for where the legislation is headed, particularly since it would allow the HHS secretary to negotiate prices directly with manufacturers instead of opting for arbitration.
The draft doesn't specify which drugs the legislation would cover, only that the government could negotiate the prices of 250 medications, including insulin, that have the greatest cost for Medicare and the "entire U.S. health system."
The negotiated prices would extend beyond Medicare to the commercial insurance market. The plan also harnesses President Donald Trump's international price index proposal to set a ceiling price for any negotiated drug, imposing steep fines on any company that would refuse to follow the terms.
For pharma critics, the draft is a sign that a big overhaul could be on the table.
"The days of (pharma) running the House are behind us, and if you have Pelosi and the president on the same page about bringing down prices, that's a powerful combination," said Rep. Peter Welch (D-Vt.). "In my view, I've seen some questions about the politics (of this), and whether Democrats want to give Trump a victory. But I want to give the American people a victory."
Rep. Mark Pocan (D-Wis.), who co-chairs the Congressional Progressive Caucus, said he's been told the draft is a working document and not final, and he has plenty of questions about specifics — including which prices can be negotiated — but he's happy with the direction Pelosi appears to be going with direct negotiation.
One lobbyist familiar with House leaders' strategy said if the House passes this bill, it tees up negotiations for a significant year-end deal with Senate Republicans on pharmaceutical prices.
"This bill is the high water mark," the lobbyist said. "It makes the Grassley/Wyden bill look more reasonable and even 'small.' The hope is that the final bill is somewhere in between."
However, he acknowledged, the strategic success of the draft legislation all depends on House Democratic leaders' ability to win over their members.
"If they can pass the bill out of the House, Dem leaders see it as a win/win/win," he said. "Either it improves chances for a decent compromise bill, or it drives a deep wedge between the president and Hill Republicans on drugs, or it makes all Republicans look weak on drugs in the next election. Any of those outcomes is good for Democrats. But it has to pass the House."
But for the pharmaceutical industry, the draft — even though it isn't final —raises the stakes in already high-stakes negotiations with both Congress and the White House. One industry lobbyist denounced it as a political maneuver.
"It's so extreme in what they're proposing, it doesn't seem to want to have a constructive debate about drug pricing," one pharmaceutical industry lobbyist said. "How do you pair this with the Senate Finance Committee bill? These are very difficult provisions to negotiate because for the most part these proposals are just nonstarters."
In Congress, pharma has been fighting the bipartisan Senate Finance Committee's proposal to cap annual increases in Medicare Part D's drug payments at inflation. This policy, opposed by most of the GOP committee members despite White House backing, appeared to be in trouble when Congress left for August recess despite a strong push by Senate Finance Committee Chair Chuck Grassley (R-Iowa). The position of Senate Majority Leader Mitch McConnell (R-Ky.) is unclear.
But the Pelosi draft plan adds another obstacle as manufacturers also try to fend off the Trump administration's international reference pricing plan. This hasn't yet been proposed but, according to comments from Trump, it could include both Medicare Part B and Part D. According to Biotechnology Industry Organization CEO Jim Greenwood, the pharmaceutical sector is taking the Trump administration's threat of an international reference price for Medicare drugs "very seriously."
On Monday ahead of the leak of Pelosi's draft plan, a BIO lobbyist said the industry hadn't yet factored the House bill into its ongoing negotiations with policymakers.
"It's a fluid situation," said Jeanne Haggerty, BIO's senior vice president of federal government relations.
On Tuesday morning, Pelosi and Democratic House leaders hadn't yet briefed their Democratic members on the plan and no legislative hearings have been set. Lawmakers were also confused about how close this draft will be to the final version.
"We're still talking to everybody to see exactly what the proposal would be," said Energy and Commerce Chair Frank Pallone (D-N.J.).
Pelosi spokesman Henry Connelly said in a statement that leaders "continue 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."
The next phase depends on what happens in the White House and among Senate Republican leaders. A White House spokesperson did not immediately respond to a request for comment. But people on both sides of the debate are watching for the administration's move.
"The whole goal has been to make sure this is something that could actually get signed into law," Pocan said on Tuesday."If the president has meant (it) any of the many times he said he would address prescription drug pricing, this is a policy he should be supportive of. But the again, Donald Trump, as you all know — within 24 hours you can get two to three answers on any issue."