WASHINGTON >> House Speaker Nancy Pelosi today released her long-awaited plan to curb soaring prices of prescription drugs, a political chess move that could prod the Senate to move and heat up congressional negotiations with the White House on a popular but elusive goal.
Pelosi’s plan, which she was to lay out at a morning news conference, would allow the government to negotiate the price of as many as 250 name-brand drugs for Medicare beneficiaries — an idea that many Republicans hate but that President Donald Trump embraced during his 2016 campaign. Drug companies would also have to offer the agreed-on prices to private insurers or face harsh penalties, which could give the package broader appeal with voters.
The hit to noncompliant companies would be even stiffer than the penalty in a draft of her plan that circulated last week. The penalty extracted from a company unwilling to comply would be equal to 65% of the previous year’s sales of the drug in question, but would gradually increase by 10 percentage points every quarter that the company refused to offer the government’s price, to a maximum of 95%.
The bill’s main competition for now is a bipartisan but embattled drug-pricing package from the leaders of the Senate Finance Committee, Sens. Charles Grassley, R-Iowa, and Ron Wyden, D-Ore., who are lobbying fiercely to build support for it.
Most notably, the bill would require drug companies to pay rebates to Medicare if they raised prices faster than inflation, and it would cap out-of-pocket drug costs for Medicare beneficiaries, proposals that are also in the Pelosi bill. Most Republicans on the committee voted against it, saying it smacked of government price fixing. But Grassley has been working hard to win more support, using Pelosi’s bill as a cudgel as he warns that the speaker’s prescriptions could succeed if his fail.
The speaker could also prompt the president to act. He has made drug prices a major theme of his reelection campaign, but has not scored an accomplishment to take on the trail next year. The question now is whether he will get behind the Finance Committee bill, stepping up pressure on Sen. Mitch McConnell, the majority leader, or possibly even side with Pelosi, whose bill includes a version of an idea he really likes: to base the price Americans would pay for some drugs on the lower prices paid in other countries.
Last week, a White House spokesman described the White House as “supportive” of the Senate Finance package. But the spokesman, Judd Deere, added that Trump “welcomes the speaker’s ideas to help build bipartisan, bicameral consensus for the American people.”
Trump could also go his own way, following through on a promise to put out a proposed rule or executive order basing the prices for certain drugs in Medicare on those in other countries. That idea makes Republicans in Congress just as queasy as letting Medicare negotiate with drug companies, but it appeals to Trump’s “America First” sensibility and would be more limited.
“There is clearly a Venn diagram between them that is grounds for policy compromise,” said Rodney Whitlock, a former aide to Grassley who is now a vice president at McDermott & Consulting, a lobbying group. “Time will tell if there is an overlap that will allow for political compromise.”
Pelosi would first have to bring both liberals and centrists in her caucus on board; she has already worked to win liberals by dropping an initial proposal that would have let the Government Accountability Office, an independent investigative arm of Congress, decide a drug’s price if the government and manufacturer could not agree. Liberals did not want to farm that job out to a third party.
But some liberals may still be unsatisfied with the number of drugs designated for annual price negotiations, for one thing; the bill would allow for a minimum of 25 per year and a maximum of 250.
A far bigger challenge would be getting her bill through the Senate, where it could die a fast death given the Republican aversion to several of its main provisions. In that, Trump is a wild card: His administration has been discussing drug pricing with Pelosi’s office for months, according to Deere.
Another big question is whether the pharmaceutical industry, which has been fighting fiercely against all of the ideas in play, spending millions on ad campaigns and direct lobbying, will thwart a deal. Chances of a drug-pricing deal could also crumble if a federal appeals court decides this fall to uphold a lower court decision invaliding the entire Affordable Care Act, which would create a crisis for Trump and his party and become the central rallying cry for Democrats.