House Democrats introduced a bill Thursday that would allow the federal government to negotiate with pharmaceutical companies for lower prices on drugs covered by Medicare, a long-held goal for the party that has its best chance in passing Congress in years.
Still, substantial drug pricing reform appears to be an uphill battle with Democrats' narrow majorities in the House and Senate, mixed signals on whether President Joe Biden is ready to back such legislation this year, and lobbying by the powerful pharmaceutical industry.
House Speaker Nancy Pelosi (D-Calif.) has said some version of the bill, called HR3, will be included in the infrastructure bill Congress is working on, but she is facing pushback from Republicans and some moderate Democrats, complicating the path forward.
While Pelosi said she wants infrastructure to be bipartisan, Republicans oppose Medicare price negotiation, and moderate Democrats like Sen. Joe Manchin (D-W.Va.) have chafed at using reconciliation again to subvert the Senate filibuster and bypass the need for bipartisan support.
Under current law, the federal government cannot have a direct role in negotiating or setting prices for drugs covered by Medicare Part B and D. The provision was meant to promote competition in the free market, but Democrats argue it does the opposite by allowing drug companies to raise prices because it knows Medicare must accept it.
"The days of unfair price gouging of Americans at the pharmacy counter must come to an end," the chairmen of three House committees with jurisdiction over healthcare issues said in a statement Thursday.
"This legislation will dramatically rein in costs and finally empower the federal government to negotiate fair prescription drug prices, decrease consumers' out-of-pocket costs, and reduce Medicare and private health insurance premiums," said Rep. Frank Pallone (D-N.J.), chair of the Energy & Commerce Committee, Richard Neal (D-Mass.), chair of the Ways & Means Committee, and Bobby Scott (D-Va.), chair of the Education & Labor Committee.
The bill would require the HHS secretary to negotiate prices for a selected group of drugs, with new prices not exceeding 120% of the average prices paid by six other countries, including Australia and Canada. Those negotiated prices would also be made available to commercial health insurance plans.
An analysis by the nonpartisan Congressional Budget Office of a previous version of the drug pricing bill estimated that the negotiation provision would save the federal government $450 billion over 10 years. Those savings entice Democratic leadership to include it in the infrastructure package so it can be used to pay for other priorities, like making permanent changes to Affordable Care Act subsidies.
But while Biden ran for president on allowing Medicare to negotiate drug prices, rumors swirled in Washington this week that the second half of his infrastructure and jobs bill, which is expected to be released this month and touch on healthcare issues, will make no mention of drug pricing reform.
Biden's proposals are meant as high-level guidance for Congress as it pieces together what's expected to be a multitrillion-dollar infrastructure package.
"We look forward to working with the Biden administration to pass this critical legislation to lower the soaring cost of prescription drugs for the people," the committee chairmen said in a statement.
Congress doesn't need a green light from Biden to include drug pricing provisions in the package, but it certainly helps as some moderate Democrats have expressed concern recently about Medicare price negotiation and its impact on innovation in the industry.
Pharmaceutical companies argue their profits are poured back into research and development of new drugs, and point to the COVID-19 vaccines that were brought to the market in only a year.
If drug companies make less money that could lead to fewer new drugs being introduced, they argue.
The CBO report found the bill could result in eight fewer drugs coming to market over a 10-year period.
But supporters of price negotiation argue those drugs are likely modest improvements over ones already on the market and that most breakthroughs are funded and developed by the federal government.
Pelosi noted Thursday that drug companies have been profitable during the pandemic and Americans are still paying "three times more for prescription drugs for the very same drugs that are sold at one-third of that cost overseas."
The bill would also provide billions of funding to National Institutes of Health for biomedical research.
Pelosi has indicated some version of HR3 will be included in an infrastructure package Congress is working on, which they say they want to be bipartisan.
But Republicans are unlikely to support price negotiation, which they call government price controls.
Republicans are mostly opposed to the price negotiation provision, but there are some parts of HR3 that could have bipartisan support.
It would cap out-of-pocket drug costs for seniors at $2,000 per year and require drug companies pay a rebate back to the federal government if their prices increase faster than inflation. Both of those provisions are similar to a bill introduced last year by Sens. Ron Wyden (D-Ore.) and Chuck Grassley (R-Iowa) .