Democrats have been campaigning for 30 years on promises they'd let Medicare directly negotiate the cost of prescription drugs — and after all that time, they might finally be about to achieve it.
Why it matters: The Senate's reconciliation bill would only open up negotiations for a small number of drugs, but even that is a threshold Democrats have never before been able to cross. 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 — and even Donald Trump — each embraced the idea while in office or as candidates, only to be thwarted by arguments it would squelch new drug development or limit seniors’ choices.
- Federal law has prohibited Medicare from directly negotiating how much it will pay for drugs since 2003.
“Finally eliminating the prohibition and empowering the secretary to negotiate is a historic precedent, and is something to protect and strengthen over time,” said Chris Jennings, a health policy advisor to Presidents Clinton and Obama.
Yes, but: The version of price negotiations contained in the Senate's bill is much narrower than most of those ambitious campaign proposals.
- “A baby step is the way I would describe this,” said Zeke Emanuel, a health policy advisor to former President Obama and chair of the department of medical ethics and health policy at the University of Pennsylvania.
- “We’re talking about 10 drugs and moving up at the end of the decade to a whopping 20 drugs. And unless they can get insulin included, how many people are going to be affected is, I think, a big question," he said.
If negotiations make it into law now, however, future administrations and Congress could expand them and make more drugs subject to negotiations.
- And despite the limitations built into the measure, the drug industry is still warning that it will have a disastrous impact.
The other side: The drug industry and its allies have long argued that these sorts of policies — which they say are more like price controls than price negotiations — would weaken the incentives for smaller biotech firms to the take scientific risks required to develop new drugs.
- The Congressional Budget Office estimated that under Democrats’ plan, the number of drugs introduced to the U.S. market would fall by about 2 over the next decade, and by about 5 over the subsequent decade.
But the industry’s arguments aren't resonating as much now, with prices still on the rise and the public gripped by broader inflationary fears. Polls show large majorities support giving the government the power to negotiate prices.
- “In a moment where not just health care costs, but inflation, is the issue of the day, this policy resonates like never before.” Jennings said.
The bottom line: “We only pass things in a hurry when there’s a war, major economic upheaval, a once-in-a-century pandemic,” Emanuel said. “There’s only so long that when 90% of voters, Democrat and Republican, say we want price negotiation, that Congress can stand in the way … this shows you that at some point, that ends.”
