With the new Congress mostly in place, now split between a Democratic House and a Republican Senate, a new dynamic is in place. Any legislation, including efforts to rein in drug prices, will need to have bipartisan support to move forward. Bringing pricing restraint to the costliest prescription drugs should be a bipartisan priority, especially given President Trump’s public pledges to act on drug prices and the negative impact of costly drugs on the federal budget, not to mention on the budgets of families and employers. The change in the House should provide a new political dynamic that offers possibilities for real action on drug prices.
Trump campaigned on a promise to lower “astronomical” drug prices, and called for giving Medicare more negotiating power. He summoned CEOs from the big pharmaceutical firms to the Oval Office shortly after he was sworn in, brought in the TV cameras, and promised to do something about drug prices.
Today is a perfect time to take stock of what the Trump administration and the previous Congress have done to lower drug prices. As we tally up those actions, we are dismayed by how little progress has actually been made to lower the inflated prices Americans pay for many brand-name drugs.
The president appointed highly qualified professionals to lead important agencies such as the Food and Drug Administration and HHS, but the initiatives they have announced, although constructive, won’t directly restrain high drug prices for most people. The latest proposal, which is limited to Medicare Part B, would benefit relatively few Medicare beneficiaries and would take five years to implement fully.
Americans want big bites taken out of the ever-bigger price tags for the expensive prescription drugs they take most often, which are eating bigger shares of their family budgets, paychecks, and retirement savings. The current Congress has done almost nothing to tackle the problem. Its inaction might have something to do with the record lobbying expenditures and campaign contributions given by big pharmaceutical companies.
While the rhetoric on price restraint has been tough, the action to date has not. In fact, it’s been just the opposite. Let’s start with the biggest win and windfall granted to the drug industry: the corporate tax cuts enacted last year, which have been estimated to deliver more than $6 billion to five of the top pharmaceutical companies in 2018. Not only was the corporate tax rate slashed from 35 percent to 21 percent, but the tax on profits held outside of the U.S. and repatriated back to the U.S. was also cut — a boon for big multinational drug companies. Drug manufacturers could have used this money to moderate prices, invest in more research and development, raise wages, or even create more U.S. jobs. But they have not.
The drug industry scored another big win in the freshly inked NAFTA replacement, known as the United States-Mexico-Canada Agreement. The treaty would extend monopoly protections for certain drugs and force both Canada and Mexico to follow suit. So the proposed treaty will actually increase drug costs for all three countries.
The Trump administration has also delayed a rule that would put a ceiling on prices for drugs sold to so-called safety-net hospitals and clinics, putting another win in the drug companies’ column. In addition, the president’s drug pricing “blueprint,” released in May, hints that it may take action to limit drug discounts for public and nonprofit hospitals and clinics, raising costs for taxpayers and the cost of insurance.
Not content with these gifts, drug lobbyists are demanding that congressional leaders lower drug manufacturers’ discounts for seniors who fall in the Medicare “donut hole.” Beware of post-Halloween mischief: Congress comes back to Washington after the midterm elections to pass spending bills without hearings or bill language the public can see. Retiring or defeated members of Congress, perhaps looking for their next jobs, may decide to include this goodie for the drug industry at the expense of Medicare and its beneficiaries.
When tallied next to the big wins or potential wins for the drug industry, the recent proposal to experiment with Medicare Part B drug prices, although welcome, is only a start. Modest proposals to require inclusion of list prices in drug TV advertisements and to give Medicare plans a few tools to boost their negotiating leverage would likely not threaten the status quo of high prices — now coupled with low taxes and more favorable trade terms.
High health care costs, led by high drug prices, were a top issue for voters as they headed to the polls for the midterm election. Getting lower drug prices, however, will take congressional leaders willing to stand up to the drug lobby and a president determined to deliver on his campaign promise.
The next Congress has the opportunity to take meaningful action to make real the rhetorical promises of more affordable medications. They simply can’t afford to fail.
John Rother is the CEO and president of the National Coalition on Health Care. David Durenberger served as U.S. senator (R) from Minnesota from 1978 to 1995, and is now a board member for the National Coalition on Health Care.