Pharma Blocks Democrats’ Drug Pricing Plan

In a move that revealed just how difficult it is to craft policies designed to curb industry pricing practices, Democrats failed to gain sufficient support this week to advance long-debated legislation to permit Medicare drug price negotiations. Three centrist Democrats opposed the measure in debate on Sept. 15, 2021, sufficient to block the bill from moving out of the key House Energy and Commerce Committee.

The vote put a temporary halt on efforts to approve the Democrats’ lead proposal to permit government negotiations of reimbursement for certain medicines covered by Medicare, a key provision to help pay for the $3.5 trillion budget package on a tight schedule for moving through Congress. Opposition from Reps. Kurt Schrader (D-Or), Scott Peters (D-Ca), and Kathleen Rice (D-NY) has sent party leaders back to the drawing boards in search of drug pricing reform provisions more acceptable to moderates in both the House and Senate. The spending bill may move forward without this provision from the House Ways & Means Committee, which continues to debate related health care spending provisions.

The three centrists offered a more modest drug pricing measure, which they claim would lower consumer out-of-pocket costs, while also maintaining incentives for private investment and innovation. A major change here would limit price negotiations to fewer medicines covered by Medicare Part B—only those drugs that lack competition or patent exclusivity. Such a revision would raise much less revenue and is adamantly opposed by progressive Democrats. They see it as caving in to Big Pharma and severely limiting savings for patients.

These developments on drug pricing legislation reflects the success of industry in raising fears that such measures will block patient access to needed medicines and dry up investment in important R&D on new therapies. Pharmaceutical Research and Manufacturers of America (PhRMA) is spending more than $1 million on TV ads as part of a massive lobbying and communications campaign emphasizing the potential harm to patients seeking cures for deadly diseases. A PhRMA full-page ad in The Washington Post ran on Sept. 15, 2021 to highlight how Medicare price negotiations threatens “patient’s ability to get the medicines they need” and that one legislative proposal “would cut $1.5 trillion from innovative research companies” over 10 years. In countries with such price controls, claims the letter signed by all of PhRMA’s members, new cancer therapies and breakthroughs are “either delayed or not available at all.”

Smaller biotech firms and financial investors similarly emphasize that drug price negotiations won’t just harm Big Pharma but will dry up investment in vital R&D operations. A letter to the White House and to House and Senate leaders on September 8, which was signed by 400 small biotech company heads and leading investment companies in the field, emphasized that “draconian” price negotiation legislation “would immediately halt private funding of drug discovery and development."

Meanwhile, legislators backing the Medicare price negotiation plan counter-charge that industry is exploiting consumer fears and using its vast resources to block any fair and reasonable cost-cutting efforts. But opposition to the Democrats’ main price cutting proposal already is stronger in the Senate, where many key members have voiced concerns about government interference in private sector investment. The situation sets the stage for intense negotiations and Congressional infighting in the coming weeks.

About the author

Jill Wechsler is Pharmaceutical Technology's Washington editor.