Nancy Pelosi's Drug Price Compromise Is Bad Policy and Worse Politics

By Libby Watson | May 24, 2019 | 3:41pm

Healthcare

Mere weeks ago, we brought you the news that progressive House Democrats were joyful that Democratic leadership was not “wedded” to a terrible drug pricing proposal that would appoint an arbitrator to set drug prices. This is what I wrote at the time:

Today, Politico Pro (paywalled) reports that progressive Dems who support the Doggett proposal were “bullish” after a meeting with health committee leaders yesterday, and that Reps. “Pallone and Neal appeared to have reassured the caucus that neither had settled on arbitration.”

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Still, the article reports that Neal said he was not “wedded” to arbitration, which is not exactly encouraging; it’s a sad state of affairs if progressive members are excited and mollified just by being told their policy isn’t totally off the table.

It brings me no pleasure to report that I was right. HuffPost reported last night that House Speaker Nancy Pelosi “will put her weight behind a byzantine proposal aimed at lowering prescription drug prices,” a plan that includes an arbitrator and also, incredibly, sucks even more than I previously suspected it would.

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HuffPost reported the details of the plan:

The Department of Health and Human Services would be required to negotiate on at least 25 drugs each year, and companies that refused to participate would be slapped with a tax equal to 50 percent of their prior year’s sales of the drug. Prices on all drugs covered under Medicare Parts B and D could not be increased going forward, and any company that still did so would have 100% of the price hike taxed away.

Starting with the last part first: Halting price increases on drugs going forward is not enough. It is cool and fine to threaten to tax away the benefit of any price increases, but this does not address the fact that drugs are already too expensive. They need to go down, not just stop going up.

Yet the part that does address the current cost of drugs is also absurdly limited. 25 drugs is, and I am checking my notes here, not the precise number of drugs in this country that are too expensive. There are many, many more drugs that need to be reduced in price. (Let’s just put aside for a second the fact that the way we pay for healthcare in this country needs to change entirely to ensure that individuals don’t pay more for drugs just because their conditions are harder to treat, which the Medicare for All bills would address.)

The top 20 most expensive outpatient drugs in this country all cost more than $25,000 per month, and the prices do not fall off a cliff at number 21. The price of the world’s best-selling drug, Humira, is more than $38,000 per patient per year, after rebates. Almost no patients pay the list prices themselves, but the percentage of that price they do pay depends on their insurance plan, and overall, the high list price of these drugs drives up insurance premiums (and government spending) for everyone.

This is a long way of saying that allowing HHS to negotiate the prices of 25 drugs is like opening a Wile. E. Coyote cocktail umbrella under a waterfall.

As HuffPost pointed out, there is also absolutely no guarantee that HHS actually would negotiate these prices, or that they would negotiate the prices well: presidents “have long had the authority to set lower prices for costly drugs by issuing compulsory licenses,” but they just don’t. And HHS could easily decide to settle on a price that still doesn’t allow consumers to actually afford the drugs.

Why is Democratic leadership pursuing such a laughably weak bill? Well, first, Pelosi healthcare aide Wendell Primus is involved, and Wendell Primus is very bad. Politico reported in February that Primus was “searching for an approach that could both significantly lower drug prices and potentially win support from the Trump administration.” This is strikingly similar to what HuffPost reported yesterday—that Pelosi’s team “places significant value on passing bipartisan legislation and is willing to make substantial policy sacrifices to win Trump’s signature.”

Here are my questions. Why would Pelosi want to give Trump a victory on drug prices at all? More specifically, why would she pursue a bill that plainly sucks in order to provide this victory? Why would she give up the moral and political high ground on drug prices—something that Republicans do not genuinely want to address, because it would require regulating businesses—and propose something that no voter is going to be motivated by, under a Republican administration who will take credit for it? In the impossible scenario under which this drug price plan turns out to work well, the credit would not go to Democrats—it would go to the current president, who is very loud and would obviously immediately say, “I got the Democrats to lower drug prices, they didn’t want to, but I made the deal. Crazy Nancy didn’t want it!”

Contrast this with a different bipartisan healthcare bill that was proposed this week, from Sens. Lamar Alexander and Patty Murray, that addresses surprise billing and drug patent gaming, among other things. You may think this is the Never Do Incremental Change Blog, and it is, but this is an example of a smaller-scale bill that might actually be worth passing—because unlike, say, doing a public option over single-payer, it doesn’t take the wind out of the sails for bigger change.

Surprise billing is an insane practice that needs to end tomorrow, but fixing that doesn’t preclude fixing the 6,000 other things that are insane about health insurance and networks—which will persist, as will the political pressure to fix them. Everybody involved is aware that this is a limited fix, not broad reform; it is not the culmination of both parties’ efforts to address the problems with an entire industry. The drug pricing proposal, meanwhile, would not come from two chummy senators, but from the Democratic Speaker of the House and the Republican president.

Is this your flagship proposal, Democrats? Is this what you want to show voters—that you’re going to empower HHS Secretary Alex “Eli Lilly” Azar to pretend to negotiate a small number of drug prices? In return for this policy, Democrats would give up any political leverage to paint Republicans as the party who wants you to go hungry or die because you can’t afford your medication, because they would have joined hands with them to produce this asswater. Here’s our solution: It’s Shit! Now vote for us, you idiots!

Here is an idea: Throw your weight behind one of the other, better ideas for fixing drug prices, like Ro Khanna’s or Lloyd Doggett’s, and then instead of criticizing Republicans for not compromising, criticize them for having vicious and amoral politics that exist only to protect and further rich whites. Do politics that involves defeating your opponents, not begging them to work with you.

Unless, of course, the reason you don’t want to do real drug pricing legislation is because you’re afraid of and/or indebted to the pharmaceutical industry. If that’s the case, you deserve to lose.