WASHINGTON — South Bend, Ind., Mayor Pete Buttigieg on Monday unveiled a sweeping plan aimed at lowering prescription drug prices — and though he’s one of the most moderate Democrats in the 2020 presidential race, the plan is anything but.
Buttigieg’s proposal includes a number of drug pricing ideas once seen as radical, including a policy change that would force pharmaceutical manufacturers to forfeit as much as 95% of a drug’s revenue if the company refuses to negotiate prices. “Worst offender” drug companies could also forfeit their patent rights.
“It’s time for a new era of leadership in Washington ready and eager to make drugs affordable and take on pharmaceutical companies,” states a policy paper that the Buttigieg campaign shared with STAT. “Pete has the courage to break with the status quo by focusing on real solutions that will lower costs and make needed—even life-saving—prescription drugs available to all Americans.”
Buttigieg’s drug pricing plan is the latest sign that while Democrats differ dramatically in their vision for the American health insurance landscape, they are far closer together in their willingness to take on the pharmaceutical industry. While Buttigieg has sought a middle ground on health coverage via his “Medicare for all who want it” proposal, his drug pricing plan displays an appetite for aggressive drug industry reforms on par with that of candidates like Sens. Bernie Sanders (Vt.) and Elizabeth Warren (Mass.).
Buttigieg’s plan for negotiating the price of drugs is very similar to a high-profile plan released by House Speaker Nancy Pelosi last month. Both would direct the HHS secretary to negotiate lower prices for expensive drugs and would penalize drug companies with rapidly escalating taxes if they couldn’t agree with the federal government on a price. As under Pelosi’s plan, a drug company that refused to comply could face a tax on the drug’s revenues beginning at 65% and escalating to 95% with continued noncompliance.
Perhaps most striking about Buttigieg’s plan is his embrace of so-called “march-in rights” — an idea to empower the government to approve generic drugs in situations when the brand drug maker still has a valid patent, citing the same law Pelosi forebodingly referenced in a summer 2018 meeting with the lobbying group PhRMA. The idea has been embraced by the progressive wing of the Democratic party, but is still controversial among more pro-business Democrats.
“For ‘worst offender’ pharmaceutical companies that continue to price in a way that harms patients due to unaffordability, when attempts at direct negotiation are rebuffed, and in cases of national emergency related to either a natural disaster or a public health emergency, Pete will judiciously exercise these rights,” the plan states.
In a seeming recognition that the government has been unwilling to use these rights previously, Buttigieg also pledges to appoint an attorney general “willing and able to defend these rights.”
While the plan hits the drug industry hardest, other industries aren’t spared either: Buttigieg pledges to require that drug industry middlemen, for example, report a slew of currently secret information to the federal government, including the amount of rebates they receive from drug makers.
Buttigieg’s plan is also among the most detailed of any presidential candidate to date. In addition to big-picture ideas like negotiating drug prices, it includes smaller policy changes like including generic and biosimilar drugs on the lowest insurance formulary tiers, capping seniors’ out of pocket drug costs, and cracking down on pay-for-delay patent settlements.
Buttigieg’s plan is so wonky that it even gives a special shout out to the Netflix “subscription” model being piloted in Louisiana to pay for costly hepatitis C drugs, and details the national security risks associated with drug shortages.
The plan tackles drug research, too, albeit in its own way: Buttigieg pledges sustained investing in the Biomedical Advanced Research and Development Authority and the Army Futures Command, two largely unknown military-aligned research centers.
He also pledges increased funding for the Food and Drug Administration’s bioequivalence research, which examines the physiological differences between patients taking generic and brand drugs.