Why it matters: The Senate reconciliation bill would only open negotiations on a small number of drugs, but even that is a threshold that Democrats have never been able to cross in the past. And it opens the door to more aggressive policies in the future. Flashback: Then-President Bill Clinton proposed direct negotiations between drug companies and the federal government in 1993.
Clinton, Al Gore, Barack Obama, Hillary Clinton, Joe Biden — even Donald Trump — embraced the idea while in office or as a candidate, only to fend off arguments that it would prevent the development of new drugs or it would limit the choices of the elderly. Federal law has prohibited Medicare from directly negotiating how much it will pay for drugs since 2003.
“Finally eliminating the ban and giving the secretary the authority to negotiate is a historic precedent, and it’s 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 more limited than most of these ambitious campaign proposals.
“A baby 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 we are increasing at the end of the decade to 20 drugs. And if they can’t get including insulin, how many people are going to be affected is, I think, a big question,” he said.
However, if the negotiations become law now, future administrations and Congress could expand them and put more drugs under negotiation.
And despite the restrictions built into the measure, the drug industry still warns it will have a devastating impact.
The flip 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 incentives for smaller biotech companies to take scientific risks that are required for the development of new drugs.
The Congressional Budget Office estimated that under the Democrats’ plan, the number of drugs entering the U.S. market would decrease by about 2 over the next decade and by about 5 in the decade after that.
But the industry’s arguments don’t hold as much weight now, with prices continuing to rise and the public reeling from broader inflation fears. Polls show a large majority support giving the government the power to negotiate prices.
“At a time when not only the cost of health care, but 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 war, great economic turmoil, a once-in-a-century pandemic,” Emanuel said. “There’s only so long that when 90 percent of the voters, Democrats and Republicans, say we want to negotiate prices, Congress can stand in the way … that tells you that at some point that ends.”
