This week a lot of important things happened in Washington that have nothing to do with impeachment. Congress voted on funding for the federal government for the rest of the 2020, a public fight broke out between two powerful Republican Senators over legislation to lower prescription drug prices, and the Department of Health and Human Services announced a plan to import drugs from Canada.
Congress avoided another government shut-down by passing legislation to fully fund the federal government for the rest of the current fiscal year (which ends on Sept. 30th 2020). Besides keeping the government open there was some important legislation included regarding prescription drugs.
The purpose of the drug price-related measure is to encourage the production of more generic medicines, one of the few drug-pricing bills most lawmakers agree on.
The big pharmaceutical companies were supposed to be giving large enough samples of their medications to generic drug companies to allow those companies to conduct trials regarding safety and effectiveness. But, the big drug companies developed a system to avoid that so they could keep making more money. The new legislation is aimed at ending that abuse and is expected to cut government spending by about $4 billion.
A study from 2018 estimated that the delays in gaining access to samples have delayed generic market entry for 47 medicines, at a cost of $13.4 billion in lost savings to the U.S. health-care system a year.
Supporters say the new legislation will lower the cost of medicine by bringing more generics to market and fight unfair practices by drug manufacturers.
* * * *
Seems fighting about how to lower the cost of prescription drugs is non-partisan. Last week we reported that not only are the Democrats and Republicans fighting over what legislation to support to try and lower drug prices, but that both the Democrats and the Republicans were fighting among themselves over the issue, and that there was fighting within the Trump administration over the same thing.
This week the fight among Senate Republicans got louder when Senate Finance Committee Chairman Chuck Grassley (R-IA) accused Senate Majority Leader Mitch McConnell (R-KY) of blocking progress on his bill to lower drug prices.
Grassley together with Sen. Ron Wyden (D-Ore.), the top Democrat on the Finance Committee, developed a bi-partisan bill to lower drug prices. But many Republican senators, not just McConnell, have objected to a provision in the bill that would limit Medicare drug price hikes to the rate of inflation, something many Republicans view as a “price control.”
However, President Trump, supports the Grassley-Wyden bill and Grassley accused McConnell of hindering Trump’s policy priorities.
Both the House and the Senate have adjourned for the year and so there will be no new legislation being considered until after the first of next year.
* * * *
The Department of Health and Human Services announced this week that it’s considering allowing sellers of drugs in the United States to import cheaper medications from Canada. However, the regulations are nowhere near final. It would apply to a limited set of drugs, and it would require initiative from pharmacies, states, and drug wholesalers and manufacturers for the new regulations to have any effect at all.
This is only the second proposal the administration has been able to advance amid internal fighting (which we mention in previous updates), technical and regulatory issues, and heavy push back from the drug industry.
According to one report, the reason lowering drug prices is so hard for the President and other Republicans is that they don’t want the U.S. government to directly force drug makers to lower their prices. Instead, they want to force a price reduction by linking them to strict controls foreign governments impose on their own pharmaceutical industries.
One way to do that is by tying what Medicare pays for drugs to lower average prices in other countries. And, one of the ways to do that is by importing drugs from Canada. Drug prices are lower in Canada because a government review board sets a price ceiling for medications based on prices in seven other countries. As an example, Canada spent $772 on drugs per person in 2014, while the United States spent $1,112, according to a report by the Organization for Economic Cooperation and Development.
Under this new proposal individual states, pharmacies, drug wholesalers and other sellers of drugs could buy Canadian drugs at lower prices and bring them back to the United States to sell to patients directly. To do this, they could request permission to import a select number of drugs that are similar versions of FDA-approved drugs.
However, it must be asked why pharmaceutical makers would seek FDA permission to import cheaper versions of their own medications that they’re currently selling in Canada. They now enjoy the higher prices they’re allowed to charge in the United States.
There's also the issue of Canada itself. There have already been discussions of this in the Canadian press. There are widespread fears that if American wholesalers start buying drugs in Canada — a much smaller country — it could quickly lead to widespread shortages.
TSCL has long supported drug importation, as long as there are proper safeguards, as one of the solutions to lower drug prices. But it's obvious there are still issues to be worked out before that can become a reality.
* * * *
When it comes to the debate over lowering drug prices, here are some things that are worth considering.
- The drug industry and many members of Congress oppose allowing the government, meaning Medicare, to negotiate drug prices. They say that lower drug prices would cut into pharmaceutical research and development (R&D). But drug R&D is already generously subsidized by the federal government,
- The lobbying arm of the pharmaceutical companies, Pharma, spends nearly 20 times more on advertising and lobbying than developing new medications. And some of the $456 billion in savings from Medicare drug price negotiations would be re-invested in federal drug research.
- The Department of Veterans Affairs has been negotiating prices with drug makers for years, paying some 40 percent less than Medicare does.
For progress updates or for more information about these and other bills that would strengthen Social Security and Medicare programs, visit the Bill Tracking section of our website or follow TSCL on Twitter.