Reducing the cost of prescription drugs has become a major focus of both President Trump and Speaker of the House Nancy Pelosi (D-Calif.). We have written about the Pelosi bill (H.R.3) that is currently making its way through the House of Representatives.
The bill is controversial and as a result no Republican House members have signed on to the bill and Senate Majority Leader Mitch McConnell (R- Ky.) has indicated he will not bring the bill up for debate in the Senate even if the House passes it.
President Trump has not taken a position on the bill and in fact White House officials have met with personnel from the Speaker's office to discuss the bill. There is hope in the House leadership that the President will either support the Pelosi bill or something close to it.
However, the pharmaceutical industry has launched an all-out multi-million dollar advertising and lobbying campaign to defeat the Pelosi bill, as well as other bills now in Congress that do some of the same things the Pelosi’s bill would do. You may well have seen or heard some of those ads.
There is even a fear among the big drug companies that the President will act on his own to rein in drug prices for seniors. Trump has said that he's working on a "most-favored nation" approach that also assures that Medicare Part D beneficiaries don't pay more than in European countries. The Trump administration also has worked on a pilot program that would set some drug prices based on an index reflecting prices paid in other advanced economies.
According to Investor's Business Daily, “Generally, the GOP has opposed price controls. Republicans have tended to side with Big Pharma. Both have argued that government price controls will harm private incentives to develop new cures at a high cost. Yet Trump apparently has an America First view of the issue. That's because high drug prices for Americans essentially subsidize the cost paid in other countries.”
According to the Chief Executive Officer of Pharma, the big drug companies' large lobbying organization, the Pelosi bill “... creates a windfall for the government and insurance companies without providing any guarantee that patients can get the medicines they need.”
He also points out that the bi-partisan Congressional Budget Office (CBO) said the plan “would result in lower spending on research and development and thus reduce the introduction of new drugs.”
At the same time, however, the CBO also said the Pelosi bill could save Medicare $345 billion over a six year period.
However, Dr. Peter B. Bach, the director of the Drug Pricing Lab at Memorial Sloan Kettering Cancer Center in New York City disagrees. According to Dr. Bach, six of the largest drug companies are based in other countries, including such familiar companies as Novartis, Glaxo Smith Kline, and Astra Zeneca.
He addresses the talking points being made by Pharma, including the argument that, in his words, “U.S. patients, taxpayers, and employers must pay higher prices for medications than citizens of other countries because that is why the U.S. has successful pharmaceutical companies.”
He also points out, “That Roche and Novartis are dominant players and based in Switzerland exposes the false logic of this point, as drug prices are 75% lower in Switzerland than in the U.S., according to the House Ways and Means Committee. Drug prices in France, the United Kingdom, and Japan are lower, too. The pharmaceutical industry is global, and our overpaying for medications in the U.S. explains no more of New Jersey-based Merck’s successes than it does of Takeda’s, half a world away.”
Dr. Bach goes on to say, “Given that the countries in the Speaker’s bill have longer life expectancies than the U.S., better health system performance by nearly every measure, offer all their residents health insurance, and pay less per capita for health care, that might not be a bad outcome. But, it does make me wonder what other attributes of these countries might slip across our borders. Will looking at French prices improve our wines and our men’s soccer team? That would certainly be nice.”
He then concludes this way: “In Washington, talking points are generally not intended to persuade anyone. Instead, they mostly serve to backfill rationales into minds that are already made up. But for prescription drugs we need serious reform of both pricing and insurance coverage. It’s not just one or the other. There will be tradeoffs too, but if you want to know what they are, don’t read PhRMA’s talking points.”
The health care system in the United States is extremely complicated and difficult to understand, much less try to explain. The arguments on both sides of the Pelosi bill, or any legislation that involves the government negotiating and/or trying to lower drug prices, are important to understand.
TSCL is studies these bills carefully and works to do what is best for America's seniors.