The U.S. House of Representatives on Thursday passed a government drug-price negotiation bill pushed by House Speaker Nancy Pelosi (D-Calif.) on a largely party-line vote, but it's already considered dead on arrival.
Senate Mitch Majority Leader Mitch McConnell (R-Ky.) said the upper chamber will not take up the legislation and the White House has threatened to veto it.
The centerpiece of House Democrats' Elijah E. Cummings Lower Drug Costs Now Act is a provision that would allow the HHS secretary to negotiate prices for up to 250 high-spend drugs with little competition. The negotiations would be bounded by an index of drug prices in other developed countries. The negotiated price would also have to be offered to private payers.
"Negotiation is the heart of the matter," Pelosi said.
All House Democrats and two Republicans, Reps. Brian Fitzpatrick of Pennsylvania and Jamie Herrera Beutler of Washington, voted for the bill, which passed on a 230-192 vote.
The bill's detractors, including drugmakers, claim that the mechanism is not a true negotiation process. If drugmakers fail to agree to a price below an international index, the government would impose an excise tax of up to 95% of the previous year's sales of the drug in question.
"With today's vote, the House prioritized politics at the expense of innovation, American jobs and hope for patients. The bill is unprecedented in size and scope and just one part of the legislation would reduce revenue to the biopharmaceutical industry by $1 trillion," said Pharmaceutical Research and Manufacturers of America spokesperson Holly Campbell.
But the excise tax enabled the Congressional Budget Office to estimate that the price negotiation mechanism would save the federal government $456 billion over the next 10 years.
Other provisions would cap seniors' out-of-pocket costs in Medicare Part D at $2,000 per year and would make drugmakers pay back Medicare, and potentially private payers, for hiking prices at a rate higher than inflation. The CBO estimated that the inflationary rebates would save the federal government $36 billion over 10 years. The Part D redesign, however, would cost more than $9 billion.
John Arnold, a billionaire who has financed several organizations and initiatives pushing for lower prescription drug prices, lauded the bill's potential positive impact on patients.
"It takes courage to stand up to Big Pharma and to resist the industry's scare tactics. We are pleased to see lawmakers stepping up and putting their constituents' needs first," Arnold said.
Pelosi earlier this week cut a deal to appease progressives who threatened to stall the bill by adding provisions that would apply the inflationary rebates to the private market and would include more drugs in negotiations with the HHS secretary.
House Democrats opted to use the bills' savings to expand Medicare benefits, increase financial assistance for low-income beneficiaries, fund community health centers, bolster research at the National Institutes of Health, combat drug shortages and fund other healthcare priorities.
Lawmakers added several minor amendments on the House floor, including one that would provide grant funding for HHS to pay start-up costs for hospitals in rural and underserved areas to create graduate medical education programs. Another would establish a grant program for states to reduce the burden of administrative work in healthcare and call for HHS to reduce administrative costs by 50% over a decade.
A GOP alternative drug-pricing bill unveiled on Monday was defeated on a 201-223 vote.
The legislation offered by House Republican committee leaders also includes a redesign of the Medicare Part D benefit, but would set a higher cap on beneficiary out-of-pocket costs at $3,100 like a bipartisan Senate proposal.
The Republican alternative would also create a monthly co-pay cap for insulin costs, cap add-on payments for some physician-administered drugs, require drugmakers to disclose list prices in television ads, and create a position with the Office of the U.S. Trade Representative titled the "chief pharmaceutical negotiator" to represent American drugmakers' interests abroad.
But Pelosi dismissed House GOP leaders' bill as nibbling around the edges of the issue.
"I think it is appropriate that Republicans have an opportunity to put an alternative on the floor. Incremental pieces. Not going to the heart of the matter," Pelosi said.
A major drug-pricing bill passed by the Senate Finance Committee does not include government drug-price negotiation, but its inclusion of the inflationary rebates in Medicare Parts B and D have alienated GOP senators. The bill has so far stalled, but some provisions could be used as offsets in a must-pass government funding deal.
Senate Finance Chair Chuck Grassley (R-Iowa) said he thinks the House took the wrong approach to addressing high drug prices, but commended House Democrats and Republicans for engaging on the issue and called for the Senate to pass the legislation he co-authored with Finance Ranking Democrat Ron Wyden of Oregon.
"I know some Democrats would prefer a different approach, as would some Republicans. But the moment is ripe for compromise," Grassley said. "The House has acted, and now the Senate must act."
