Democrats have campaigned for 30 years on promises to let Medicare directly negotiate the price of prescription drugs — and after all this time, they may finally be getting it.
Why it matters: The Senate reconciliation bill would open negotiations on only a small number of drugs, but even that is a threshold Democrats have never been able to cross. And that opens the door to more aggressive policies in the future.
Flashback: Then-President Bill Clinton proposed direct negotiations between pharmaceutical companies and the federal government in 1993.
- Clinton, Al Gore, Barack Obama, Hillary Clinton, Joe Biden—and even Donald Trump—each embraced the idea while in office or as a candidate, only to be thwarted by arguments that it would impede the development of new drugs or will limit the choices of the elderly.
- Federal law has prohibited Medicare from directly negotiating how much it will pay for drugs since 2003.
“Ultimately lifting the ban and empowering the secretary to negotiate is a historic precedent and something that should be protected and strengthened over time,” said Chris Jennings, health policy adviser to Presidents Clinton and Obama.
Yes, but: The version of price negotiations contained in the Senate bill is much narrower than most of these ambitious campaign proposals.
- “Baby steps is how I would describe it,” said Zeke Emanuel, a health policy adviser to former President Obama and chair of the Department of Medical Ethics and Health Policy at the University of Pennsylvania.
- “We are talking about 10 drugs and moving towards the end of the decade to as many as 20 drugs.” And unless they can get insulin on board, I think how many people are going to be affected is a big question,” he said.
However, if the negotiations now become law, future administrations and Congress could expand them and make more drugs subject to negotiations.
- And despite the restrictions built into the measure, the pharmaceutical industry still warns that it will have a catastrophic impact.
The other side: The drug industry and its allies have long argued that these kinds of policies — which they say look more like price controls than price negotiations — would weaken the incentives for smaller biotech firms to take the scientific risks needed to develop new drugs.
- The Congressional Budget Office estimated that under the Democrats’ plan, the number of drugs introduced to the U.S. market would decrease by about 2 over the next decade and by about 5 the decade after that.
But the industry’s arguments don’t resonate as much now, with prices still rising and the public gripped by broader inflationary fears. Polls show that large majorities support giving the government the power to negotiate prices.
- “At a time when not only health care costs but also inflation is the issue of the day, this policy resonates like never before,” Jennings said.
The bottom line: “We only rush things when there’s a war, a major economic upheaval, a once-in-a-century pandemic,” Emanuel said. “There’s only so long that when 90 percent of voters, Democrats and Republicans, say we want negotiations on prices, that Congress can stand in the way … that shows you that at some point it ends.”
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