Democrats’ Stumble on Drug Prices Shows Power of Industry

In drafting their massive social spending bill, House Democrats focused on three key areas: expanding coverage for low-income Americans without insurance, increasing subsidies for those who choose to purchase their own insurance, and expanding Medicare coverage for dental, hearing, and vision care for the elderly.

They also aimed high when it came to lowering drug prices in order to pay for those. As a way to save the government money, a plan was devised to link the prices of certain prescription drugs to those paid in other countries. Over the course of a decade, the pharmaceutical industry stands to gain $500 billion in savings as a result of the House approach.

Even so, taking on the pharmaceutical industry can be dangerous.

On Wednesday, three Democrats on a key House committee voted against the bill. Congressional leaders can still include the provision in their final bill, but with a slender Democratic majority, it’s possible that these three legislators will act as a significant roadblock in the way of passing the broader package.

Legislators who have worked on health issues are familiar with this dynamic: Health industries have powerful lobbies, and they don’t like having their revenue reduced. A backlash has been generated by the House’s attempt to reduce payments to hospitals, doctors, and insurance companies, just like with measures that might reduce payments to drug companies.

He told Emily Cochrane on Tuesday that “I just don’t think paying for a lot of things by crippling investments in life sciences is really the way to go,” Democrat Scott Peters of California told my colleague. It’s “too high a price to pay” to lose the pharmaceutical investment. Other House Democrats who voted against the measure included Oregon’s Kurt Schrader and New York’s Kathleen Rice.

Large price cuts are unwelcome news for the pharmaceutical industry, as one might expect. Steve Ubl, PhRMA’s CEO, said last week that the measure was “existential” to his organisation. Drug companies alone should not bear the burden of such a large expansion in health care, he said. His response was to say, “We’re being asked to pay an excessively large portion of the bill.”

Throughout the years, the pharmaceutical industry has donated to political campaigns, lobbied members of Congress, and built relationships with other businesses. They’re taking advantage of those connections at a moment’s notice. An open letter from PhRMA was published Wednesday in several Washington publications, in addition to television commercials that aired on national news programmes and football broadcasts.

Health lobbies around the country have followed a similar strategy. An enormous campaign to defeat bipartisan legislation banning surprise medical billing began in 2019. Despite their efforts, Congress eventually passed a more business-friendly version of the ban a year later.

Senate leaders have made it clear that they intend to pursue a different strategy for regulating drug prices. Their policy fine print and the magnitude of their cut to pharmaceutical profits are still up in the air. The House, on the other hand, has been seen as more aggressive in its approach to the issue. This week’s setbacks could signal a more moderate approach and a smaller budget for Congress and the White House’s other lofty goals.