Pelosi's Draft Plan Would Negotiate Prices for Hundreds of Drugs. It Is An Excellent Beginning

Speaker Nancy Pelosi's draft plan to lower prescription drug costs would give the federal government the power to negotiate lower prices for hundreds of prescription drugs, not just for Medicare but also for private health plans. This proposal is still being finalized, but the plan is ambitious and envisions a strong role for the government in ensuring that drugs are affordable. It is a long overdue and welcome reform, and we look forward to the final bill.

The draft bill, HR. 3, states that "Every year, the HHS [Health and Human Services] Secretary would be empowered to directly negotiate prices on the top 250 drugs with the greatest total cost to Medicare and the entire U.S. health system without competition from at lest two generic, biosimilar or interchangeable biologics on the market...to deliver maximum savings for the greatest number of Americans, the price determined by the negotiation process would be available to all purchasers -- not just Medicare beneficiaries."

And if drug companies refuse to negotiate with HHS or fail to reach an agreement, they will have to pay a non-compliance fee equivalent to 75% of the drug's sales during the previous year. This tough penalty will bring pharmaceutical companies to the table, providing a powerful incentive for them to strike bargains with the government.

Additionally, the bill would require all drugs in Medicare Part B and D to face a new inflation rebate. Drug companies that increase the prices of drugs in those programs above the rate of inflation would have to A) Lower the price of the drug to the rate of inflation or B) pay the entire price above inflation in a rebate back to the Treasury. This provision would curb price gouging.

In the past, Trump has stated he supports allowing Medicare to negotiate lower drug prices, and said that the drug companies are getting away with murder. Pelosi's plan is more moderate and less far-reaching than the bill sponsored by Rep. Lloyd Doggett, but it is still a sweeping reform. It is unclear whether the Trump administration will endorse the proposal, and many Republicans are strongly opposed to giving Medicare the power to negotiate lower prices for any medicines.

We also recognize that HR. 3 is still being drafted and it will likely undergo revisions and edits. But Pelosi's draft plan is excellent and will lower prices for both Medicare beneficiaries and consumers. Americans are struggling to afford prescription drugs-three out of ten adults reported that they haven't taken a medicine as prescribed in the last year because of costs. And the problem is getting worse. Over 3,400 drugs increased their list prices in the first six months of 2019, a 17% increase from 2018.

Speaker Pelosi's draft plan would reduce drug costs and provide much needed relief for American consumers. We hope that the final bill is similar to the draft, and urge the House and Senate to strengthen this program instead of weakening it.