House Speaker Nancy Pelosi on Thursday revealed a sweeping plan aimed at lowering drug prices, harnessing aspects of President Donald Trump's controversial international reference pricing idea to cap the price the government could negotiate for up to 250 expensive brand drugs.
The Trump administration has yet to release its own fleshed-out policy, which the president unveiled last October, but Trump has signaled in remarks that it would extend beyond Medicare Part B and into Medicare Part D.
The White House did not immediately respond to a request for comment on the speaker's plan, but leading Republicans including House Minority Leader Kevin McCarthy (R-Calif.) are panning the proposal. McCarthy told reporters he doesn't see the president supporting the bill.
According to the California Democrat's legislative outline, the price negotiated by the HHS secretary and drugmakers for brand-name drugs with no generic or biosimilar competitor would be capped at 120% of the average price paid by Australia, Canada, France, Germany, Japan and the U.K. The HHS secretary would have to negotiate the price of at least 25 drugs per year, out of the 250 drugs identified as costing the government the most.
This government-negotiated price would apply to Medicare and the commercial market. Medicare Advantage and Medicare Part D insurers would be given tools to force prices even lower.
Flanked by her house committee leaders Thursday morning, Pelosi said the plan sets the goal for the Democrats' signature "Medicare negotiation" bill but that many of the details will be worked out through committee hearings and markups.
The House Energy and Commerce Committee will host a hearing on the proposal next week, along with three other Democratic bills to authorize Medicare negotiation.
All 24 Republicans of that panel have already blasted the proposal as "socialist" and characterized it as a "political stunt." They are echoing some of the criticisms by pharmaceutical trade groups, which are also decrying the plan.
But House Energy and Commerce Chair Frank Pallone (D-N.J.) said he hopes the committee process will help "convince (committee Republicans) that this is the way" to lower prices.
"We do think we can get Republican support, and the president is key," Pallone said.
Pallone and Ways and Means Chair Richard Neal (D-Mass.) repeatedly invoked Trump's own rhetoric lamenting that the U.S. pays far higher prices than people in other countries whose governments limit what manufacturers can charge.
Neal also reminded reporters Thursday that Trump early this year in his State of the Union address called for strong legislation on drug prices and specifically made note of the fact that Americans see higher prices.
The House proposal also adopts more drastic versions of policies from the bipartisan proposal in the Senate Finance Committee, including a mandatory rebate of any increases in Medicare Part B or Part D drugs that manufacturers have put in place since 2016. The Senate provision would only affect price hikes in effect after July 2019 when the legislation was first introduced.
Like the Senate Finance Committee legislation, Pelosi's bill would restructure Medicare Part D to put a cap on patients' out-of-pocket spending once they hit the catastrophic coverage phase. But the House proposal would set the cap for beneficiary spending even lower than the Senate did, at $2,000.
The government share in spending for drugs in the catastrophic phase would shrink from 80% under current law to 20%, while insurers would be responsible for 50% — less than the 60% they would have to pay under the Senate bill. Drug manufacturers would be on the hook for the remaining 30%, and they would also have to pay 10% of the costs for patients in the initial Part D coverage phase.
Jim Greenwood, CEO of the Biotechnology Innovation Organization, said the bill "crushes the desperate hopes of patients and their families that life science innovators will be the answer to their prayers."
And Steve Ubl, CEO of the Pharmaceutical Research and Manufacturers of America, called it a "radical" plan that would "end the current market-based system that has made the United States the global leader" in developing medicines.
Insurers on the other hand signaled they want to work with the committees as the proposals move forward.
"We commend the House leadership for a bold reform proposal recognizing the problem is the price of drugs — set and controlled exclusively by manufacturers — and that drug makers must be held accountable to lower prices for consumers and patients," Matt Eyles, CEO of America's Health Insurance Plans, said in a statement.
The Energy and Commerce and Ways and Means committees plan to develop the legislation and hold votes next month.
From there, Pelosi acknowledged that a final agreement on a compromise that could pass the Senate is up to Trump, although her proposal throws down the gauntlet for ideas that are unlikely to get anywhere with Senate Republicans.
"We do hope to have White House buy-in, because that seems to be at the root to getting any votes in the United States Senate," she said.
Senate Finance Committee Chair Chuck Grassley (R-Iowa), who has been struggling to win his own GOP colleagues over to his committee's legislation and is a sharp critic of Medicare negotiation and the president's international reference price model, has raised the specter of Trump siding with Pelosi on this issue as a way to get Senate Republicans on board with his plan.
In a potentially dismal sign for what's in store for negotiations with the GOP, Sen. John Cornyn (R-Texas) lambasted Pelosi's bill on the Senate floor shortly after its release.
"The speaker's plan is just the latest example of a partisan messaging document masquerading as legislation, and it has absolutely no chance — zero, zip, nada — no chance of passing the Senate or becoming law," Cornyn said.