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News / Health / Health Wire

House empowers Medicare to negotiate drug costs

Published: December 12, 2019, 12:56pm

WASHINGTON — Sharpening their 2020 election message, House Democrats on Thursday pushed through legislation that would empower Medicare to negotiate prescription drug prices and offer new benefits for seniors.

The vote along party lines was 230-192.

Speaker Nancy Pelosi’s bill would cap Medicare recipients’out-of-pocket costs for medicines at $2,000 a year. It would use about $360 billion of its projected 10-year savings from lower drug costs to establish Medicare coverage for dental care, hearing, and vision, filling major gaps for seniors.

But the legislation has no chance of passing the Republican-controlled Senate, and the White House has issued a veto threat. Still, Democrats saw a victory in the message their bill sends to voters.

“I think that it is going to be too hot to handle for the Republicans,” said Pelosi, D-Calif.

She is claiming bragging rights because her bill would deliver on the promise that Donald Trump made as a candidate in 2016, when he said he would “negotiate like crazy” to lower prescription drug prices for Medicare recipients. It’s a pledge that Trump has backed away from as president.

For months, Pelosi’s office and the White House had talked privately about Medicare negotiations. But the sides went their own ways partly because administration officials concluded her approach could never win support among congressional Republicans. Trump now favors a bipartisan compromise in the Senate that would limit drug price increases and cap what seniors pay out-of-pocket, but would not authorize Medicare negotiations.

Negotiations are “the heart of the matter,” Pelosi insisted.

High prescription drug prices consistently register as the public’s top health care concern. But it’s unclear in a capital divided over Trump’s impeachment that any major legislation will pass before next year’s elections.

Pelosi’s bill “is a serious proposal but everyone knows that the Senate isn’t going to go for it,” said John Rother, CEO of the National Coalition on Health.

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“It is about legislating, but even more it’s about establishing a platform that Democrats can run on going into the next election cycle and lays the groundwork for legislative activity in 2021,” Rother said. His organization is an umbrella group that represents health care industry groups and consumers.

The pharmaceutical industry is strongly opposed to the bill. Among the groups backing it is AARP.

Medicare’s popular prescription drug benefit is delivered through private insurers. Republicans say the government has no business setting prices for medicines. They argue that the hit on the pharmaceutical industry’s bottom line will stifle innovation, discouraging investment in the hunt for cures for Alzheimer’s and other intractable illnesses.

“Drugs that save lives will not be around,” said Rep. Greg Walden, R-Ore. “Innovation goes on the rocks; lives will be lost.”

House Republican leader Kevin McCarthy of California accused Democrats of putting politics over solutions, “catering to their progressive base by opening the door to a government takeover of our prescription drug market.”

Republicans point to a major concern about the legislation: that it would result in fewer drugs coming to market. But there’s debate about the extent of the expected impact.

The nonpartisan Congressional Budget Office estimates about 3% to 10% fewer new drugs. The White House Council of Economic Advisers says it could be much higher, up to one-third of new medications.

Rep. Bobby Scott, D-Va., who helped write the Pelosi bill, said Republicans predicting the drug pipeline will dry up are using scare tactics.

“Any drug that’s out there, we’re going to have access to,” he said. “The U.S. would still be the biggest market.”

The bipartisan Senate bill the White House is now backing steers clear of negotiations. It would cap seniors’ out-of-pocket costs, at $3,100 a year, and require drugmakers to pay Medicare rebates if companies raise prices above inflation. Senate Majority Leader Mitch McConnell, R-Ky., hasn’t said if or when he’ll bring it to the floor.

Inflation rebates are included in Pelosi’s bill as well, so there’s considerable overlap. But Pelosi’s measure goes further with several unique features, including:

• Medicare would be authorized to negotiate prices for costly medications, using a formula based on lower prices paid in other economically advanced countries.

• Drugmakers that refuse to negotiate would be hit with steep sales taxes for the medication at issue. Republicans say proposed taxes as high as 95% are unconstitutional. The budget office projects that most pharmaceutical companies would opt to accept lower prices from Medicare.

• Private health insurance plans would be able to receive Medicare’s discounted prices.

Congressional budget experts estimate the price negotiations provisions of Pelosi’s bill would save $456 billion over 10 years. After subtracting for new Medicare benefits, that still leaves money for medical research, community health centers, and countering the opioid epidemic.

Democrats have named the drug legislation after the late Rep. Elijah Cummings, D-Md., who early on sought a dialogue with Trump on drug prices. Cummings, as chairman of the House Oversight and Reform Committee, was a target of Trump outbursts on Twitter.