By Jonathan Cohn
May 6, 2021
It’s easy to assume that President Joe Biden and his Democratic Party allies are fooling themselves, fooling the rest of us or maybe both when they say they will pass legislation to reduce prescription drug prices this year.
Congress has never passed this kind of legislation before. Republicans probably won’t support it, while Democrats basically have no votes to spare. And the legislation’s top opponent, the pharmaceutical industry, is literally the most powerful lobbying group in Washington.
But the drug industry just lost a highly visible battle over protecting vaccine patent rights. That feels like a sign that the political environment for prescription drug legislation is more favorable than it has been in a long time. Success is by no means certain, but failure isn’t either.
Here are a few reasons why.
The main goal of Democratic proposals is to give the federal government new power over what pharmaceutical companies charge. The idea turns out to be quite popular.
Roughly three in four Americans support allowing the government to negotiate prices directly with manufacturers, according to a poll that West Health and Gallup released Thursday morning. And the result was no outlier. It was strikingly similar to poll findings over the past year from the Henry J. Kaiser Family Foundation as well as from Hart Research and North Star Research.
And prescription drugs aren’t just some ancillary concern for voters. Nearly half think drug legislation should be a top priority for Congress, according to a Morning Consult/Politico survey that also came out this week.
The public’s agitation for action is no great mystery. One in four Americans say they have trouble paying for their drugs, and nearly one in three say they have skipped recommended medications because of the expense, according to the Kaiser Family Foundation’s polling.
Some of this has to do with the design of health insurance and the high out-of-pocket costs many Americans face. But some has to do with the fact that prices for name-brand drugs in the U.S. are a lot higher than in any other country, where governments already have some kind of authority to negotiate or set drug prices.
Like all polling, the surveys on prescription drugs can’t tell us how people will feel once an actual legislative debate plays out. Conservative groups like Americans for Prosperity are already buying ads that warn Democratic legislation will stifle innovation and ration care.
But Democrats have answers for these charges and they appear to be effective. Recent polling from Hart Research, on behalf of the progressive group Protect Our Care, found that “every message in favor of action to lower drug prices is far more convincing than an opposing message, and support remains sky-high after voters hear from both sides.”
Congress as a whole has never approved legislation giving the federal government direct power over prescription drug prices, except in some narrowly targeted programs. But the House has. It happened two years ago, when Democrats passed H.R. 3, the Elijah E. Cummings Lower Drug Costs Now Act.
H.R. 3 has several provisions that would reduce drug prices significantly. One would introduce a form of “international reference pricing,” effectively setting prices of the most expensive drugs here based on what the governments of a half-dozen other countries have negotiated. Notably, the prices would apply to what private insurance pays, not just Medicare or Medicaid.
H.R. 3 went nowhere after House passage because Republicans in charge of the Senate refused to take it up. Now Democrats have a (bare) majority and have committed to producing legislation.
That doesn’t mean the Senate can pass something as ambitious as H.R. 3. Even the House might struggle to produce the same legislation again because the Democratic majority is smaller than it was in 2019. But the work that went into H.R. 3 will help regardless.
Legislation of any kind requires translating concepts into legislative language, building alliances with interest groups and getting official projections from the Congressional Budget Office. It also requires negotiations among legislative factions ― which, in the case of H.R. 3, led to some very public disputes between House Speaker Nancy Pelosi (D-Calif.) and members like Rep. Pramila Jayapal (D-Wash.), a leader of the party’s progressive wing.
However unpleasant those conversations may have been, they produced a rough consensus on what each wing of the party can support. That will make it easier to get legislation through the House again and it should help in the Senate as well, where the distribution of votes may be different but the position of each faction is roughly the same.
Democrats also know a lot more about legislation than they did two years ago. They have a good sense of how key stakeholder groups will react to different policy ideas, for example, and how the Congressional Budget Office will evaluate them. Most important of all, perhaps, leaders have sent a message to their members and to outside groups that they are willing to stand behind a strong bill, despite opposition from the drug industry. That will make it easier to rally support and round up votes.
“It’s got very powerful members ― the speaker, the committee chairs ― all going on the record saying we support this, we are for this,” said Frederick Isasi, who started working on healthcare in the early 2000s and is now executive director of the liberal group Families USA. “That’s a powerful signal going forward.”
Chris Jennings, president of Jennings Policy Strategies and former official in both the Clinton and Obama administrations, pointed out another reason to think reform has momentum this year: Employer groups are getting more frustrated with the way high prescription costs drive up the cost of employee benefits.
“You are now seeing the business community engage like it never has,” Jennings said.
Weird as it sounds, President Donald Trump could also turn out to be an ally ― not because of anything he’s doing now, but because of what he did while he was in office. Shortly before leaving office, his administration finalized what it called a “Most Favored Nation” program that tied the price of some Medicare drugs to prices overseas. In other words, it put in place a form of international reference pricing that is also a key provision of H.R. 3.
The Most Favored Nation initiative may never take effect because of lawsuits challenging the federal government’s ability to launch such a program exclusively through executive power. (Federal courts have already issued orders blocking it temporarily.) But Democrats can use Trump’s endorsement of the idea to argue that their approach to drug pricing isn’t some crazy left-wing scheme.
Democrats can also point out, truthfully, that the official in charge of developing the Most Favored Nation model was Trump Health and Human Services Secretary Alex Azar, a former executive with the drug manufacturer Eli Lilly. At the time, Azar promoted international reference pricing because, he said, it “will put American patients first” while the status quo “puts American patients last.”
That’s not just a defense of what Democrats want to do. It’s a distinctly Trumpy defense ― and that could come in handy.
Trump’s legacy might help in another, more fundamental way. As disengaged as he was from policy, he talked constantly about prescription drugs ― partly because he seemed genuinely irked that other nations were getting a better deal on prices, but partly because he sensed it was good politics.
“There is a reason that Donald Trump kept highlighting outrageous drug costs and the need for Americans to pay far less,” Jennings said. “One would think that the Republicans who worship at the altar of Trump would get that they do not wish to be on the wrong side of this issue.”
Nobody thinks such arguments will prod large numbers of Republicans into supporting the kind of legislation Democrats want to pass. But Trump’s record on these issues could reassure more Democrats from more conservative districts and states who feel like they need the political cover to vote yes.
And that’s not the only motivation they’ll have.
Democrats want to take other popular and much-needed actions on healthcare ― like adding vision, hearing and dental benefits to Medicare, as well as covering uninsured Americans in states where GOP officials have blocked expansion of Medicaid.
All of these would cost money. Prescription drug legislation, on the other hand, would save money, because Medicare and Medicaid wouldn’t have to spend so much on prescription drugs for their beneficiaries. A Congressional Budget Office estimate of H.R. 3 suggested it would free up $456 billion over 10 years. Even if Democrats had to settle on a less ambitious bill that produced less in savings, it’d be enough to pay for one of those other initiatives ― and maybe more.
Of course, the most direct and immediate benefit would be the one consumers would see at the pharmacy because their drugs would get cheaper. It’s something Democrats have been promising for decades. If they fail to deliver, voters might notice.