A bill that would require the Centers for Medicare and Medicaid Services to negotiate prices for certain drugs has passed in the House of Representatives, though President Donald Trump has said he would veto it.
The House voted 230-192, largely along party lines, to pass the Elijah E. Cummings Lower Drug Costs Now Act, with only two Republicans voting for the bill and eight members – four from each party – not voting. The bill would require CMS to negotiate prices on insulin, at least 25 drugs that don’t have generic competition and that are among the 125 that account for most national spending on prescription drugs. It would also require drugmakers to issue rebates to CMS for drugs that cost $100 or more and whose price increases faster than inflation, while reducing the annual out-of-pocket spending threshold and eliminating beneficiary cost-sharing that goes above it.
Although Medicare covers prescription drugs for beneficiaries under Part D, it is prohibited by statute from negotiating drug prices. That stands in contrast with other Western countries, which have national agencies to negotiate prices with manufacturers before their healthcare systems cover them. For example, in the U.K., the National Institute of Health and Care Excellence, or NICE, negotiates prices on behalf of the National Health Service, usually by obtaining confidential discounts and rebates on top of the list price.
However, critics of allowing CMS – the largest purchaser of drugs in the country – to negotiate drug prices have contended that doing so would harm innovation, echoing the drug industry’s frequent refrain in opposing CMS drug price negotiations. In a Dec. 3 statement ahead of the House vote, the White House said the drug pricing bill post such a threat. The bill “may share the Trump Administration’s first goal of lowering prices, but the threat it poses to continued medical innovation will harm American patients in ways that far outweigh any benefits.”
Indeed, the tension between access and innovation has been a persistent theme in the debate over how to tackle the issue of high drug prices and what policy prescriptions should be used.
In a review of the literature published in August in the Journal of Medical Economics, California State University economist and professor Roger Lee Mendoza wrote that while high drug prices are claimed as the price of innovation, that link only partially accounts for the problem. Rather, Mendoza cited high risk aversion due to uncertainty, predatory business models and “reverse predatory strategies” like efforts to maintain product exclusivity without adding clinical benefits and to thwart generic competition. Health policy in the U.S., he wrote, should consider “charting a middle course” that would introduce regulatory price control in some form while encouraging competition.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
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