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Odd bedfellows share concerns over Pelosi drug plan

Conservatives and progressives wary of drug price arbitration, but for different reasons

Speaker of the House Nancy Pelosi, D-Calif., is developing a drug price plan that focuses on drug price arbitration. (Photo By Bill Clark/CQ Roll Call)
Speaker of the House Nancy Pelosi, D-Calif., is developing a drug price plan that focuses on drug price arbitration. (Photo By Bill Clark/CQ Roll Call)

Progressive Democrats are amplifying their criticism of an evolving leadership-driven plan to bring government negotiation to Medicare’s prescription drug benefit, raising issues that echo conservative opposition.

The liberal wing says a plan being developed by Speaker Nancy Pelosi of California doesn’t goes far enough in ensuring that the government would be able to negotiate lower prices than the private insurance plans that currently operate Medicare’s prescription drug benefit, Part D.

Pelosi told the leaders of various party factions Wednesday evening that her arbitration proposal had been turned over to the Energy and Commerce and Ways and Means committees for further development. No formal announcement is expected before the July Fourth recess, Wisconsin Democrat Mark Pocan told reporters Wednesday.

[Sen. King calls out drugmakers suing to keep drug list prices out of TV ads]

While progressives want Medicare to directly negotiate with drugmakers for all of their products or risk losing their patents, Pelosi is trying to focus on the most expensive drugs and use other consequences for leverage. As a backstop if negotiations fail, lawmakers and aides say the leadership plan would use the Government Accountability Office as an arbitrator to determine a fair price, and if a drugmaker declines to accept, it would face a tax penalty.

Even after winning a concession from Pelosi to expand the scope of her plan from negotiating for 25 drugs a year to at least 250 drugs, the Congressional Progressive Caucus now suggests that the drug industry will easily be able to use the system to its advantage, and that Medicare beneficiaries might lose access to certain treatments.

CPC co-chairs Pramila Jayapal, D-Wash., and Pocan this week both invoked Germany as an example of a country where drugmakers choose not to sell their products in response to government attempts to secure lower prices. They say something similar could happen under the arbitration proposal, especially if the process gets dragged out by drugmakers and delays patient access. 

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“Arbitration is a very lengthy process,” Jayapal told CQ Roll Call Wednesday. “If that’s still the main piece of how we get these drug prices down, I’m concerned that we may not have the ability to take on a lot of drugs.”

Conservatives similarly invoke concerns about access in their opposition to Medicare Part D government negotiation.

“The only way you can negotiate is if you have some leverage, and the only leverage that a negotiator has is to say I’m not going to buy your drug,” former Congressional Budget Office Director Douglas Holtz-Eakin, president of the free-market think tank American Action Forum, said Thursday at a Capitol Hill event hosted by his organization and the Information Technology and Innovation Foundation.

“In the absence of that, you don’t have negotiation, you have the government setting prices,” he said.

Conservatives and progressives also both dislike arbitration, though for different reasons. The conservative argument relates to their views on government price-setting.

“This comes down to government setting the price, just because someone is going to have to pick the arbitrator, and in doing so, you will start setting the prices by political mechanisms,” Holtz-Eakin said.

Progressives say that arbitration will simply be another route for the drug industry to game the system by leveraging their lawyers and lobbyists.

“The solution has to maintain access to the drug and also be scary enough to these corporations that they deal in good faith,” Alex Lawson, executive director of Social Security Works, which supports stronger Medicare drug price negotiation, said at a drug event held by the CPC Thursday. “If you give them any situation, they’re going to march in with people making a million dollars a year and they’re going to have an army of them and their whole job is going to be to run circles around whatever we can bring to an arbitration process.”

For its part, the drug industry’s main lobbying group, the Pharmaceutical Research and Manufacturers of America, also opposes arbitration.

“Under government arbitration, a government employee, without necessarily any medical background, would make the decision about whether a Medicare beneficiary could access the medicines that their doctors prescribed,” PhRMA spokeswoman Juliet Johnson wrote in a blog post last week. She also cited the Germany example, saying, “Patients wait years longer for new breakthroughs.”

The progressives’ preferred negotiation bill, by Texas Democrat Lloyd Doggett, would strip patent protections from drugmakers that refuse to negotiate with the government, so that other drugmakers could manufacture products at the government’s desired price.

Doggett and Pocan reiterated threats Thursday that progressives would reject party leaders’ drug price effort if it wasn’t more robust than the arbitration plan.

“It’s not a guarantee that progressive caucus members will be for any old bill,” Pocan said. “It would be awful for the Democrats to not be able to accomplish what we promised” in last year’s campaign, he added.

Pelosi’s efforts suggest she is trying to appeal to more than just progressive members in her caucus, as some members of more moderate groups such as the New Democrats and Blue Dogs are concerned about the government stripping intellectual property from drugmakers.

Progressives say Pelosi is crafting the proposal with an eye toward attracting Senate Republican support. But since Republicans like Finance Committee Chairman Charles E. Grassley, R-Iowa, adamantly oppose government negotiation in Part D, progressives wonder why she’s bothering.

“If you could convince me that we need to compromise for some form of arbitration because we’re going to get [Senate Majority Leader Mitch] McConnell to go along with it and pass it in the Senate and we’re going to get the president to sign it, maybe I would consider some compromise,” Rep. Ro Khanna, D-Calif., said. “I just don’t get the politics here.”

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