September 19, 2019 / 1:08 PM / a month ago

U.S. Speaker Pelosi unveils drug price plan, Trump welcomes it

WASHINGTON (Reuters) - U.S. House Speaker Nancy Pelosi, a Democrat, proposed legislation on Thursday to let the federal government negotiate lower prices for costly prescription drugs, drawing praise from Republican President Donald Trump, who urged a bipartisan solution.

Initial reaction to Pelosi’s plan was negative from House and Senate Republicans, many of whom are not keen on letting the government negotiate prices, viewing it as price fixing.

After Pelosi unveiled her proposal, Trump said on Twitter he liked an alternative authored by Republican Senator Chuck Grassley “very much.” But Trump also said it was “great to see” Pelosi’s bill and he urged a bipartisan approach.

It was unclear how much support Pelosi’s proposal will receive ahead of the November 2020 presidential and congressional election. Healthcare costs are a top issue for Democrats campaigning for their party’s nomination.

“We hope to have White House buy-in, because that seems to be the root to getting any votes in the United States Senate, and we want as strong a bipartisan vote as we can in the House and the Senate,” Pelosi told a news conference.

Americans pay the highest prices for prescription drugs in the world. Most other developed nations have single-payer systems with their governments negotiating prices. Trump has slammed lower drug prices abroad as “global freeloading.”

Pelosi’s proposal would allow the U.S. government every year to negotiate prices on at least 25 of the 250 most costly drugs that lack competition, a summary of the bill said. The lower prices would be available to all U.S. consumers, not just the government’s Medicare program for the elderly. Companies that refuse to negotiate would face monetary penalties.

Democrats promised to curb prescription drug prices during last year’s congressional election campaign, when they captured the majority in the House of Representatives.

Trump has also promised to lower prices but has been struggling to deliver on that before the 2020 election.

Senate Majority Leader Mitch McConnell, in an interview with Politico, ruled out any Senate action on Pelosi’s bill but the Republican said the chamber is still “looking at doing something on drug pricing.”

In the House, Republican Leader Kevin McCarthy labeled Pelosi’s plan “more socialism.” A drug industry trade group called it “radical” while some liberal House Democrats said it did not go far enough to bring down prices.

Pelosi, who consulted with the White House while developing the bill, said she hoped for a bipartisan effort - a rarity in Trump’s highly polarized Washington.

“My conversations with the president have been about making this a priority,” she said. “I believe that he considers it so and we can work together.”

The U.S. government in 2016 spent around $29 billion on prescription drugs in Medicare’s Part B, which includes most injectable drugs, and nearly $100 billion in Part D, which covers pills and other drugs usually dispensed in pharmacies.

FILE PHOTO: U.S. House Speaker Nancy Pelosi (D-CA) looks down from a balcony during an interview with CNBC at the New York Stock Exchange (NYSE) in New York, U.S., September 17, 2019. REUTERS/Brendan McDermid

‘PAINFUL’ PENALTIES

Drug companies that refuse to negotiate would have to pay a “non-compliance fee starting at 65 percent of the gross sales of the drug in question,” the bill summary said. This would increase by 10% every quarter up to a maximum of 95%. Pelosi said penalties had to be “painful” in order to work.

The plan set an upper limit for negotiated prices as no more than 120% of the volume-weighted average of the prices paid in six other countries: Australia, Canada, France, Germany, Japan and Britain.

The price index provision could be aimed at getting White House support, since the Trump administration has said it is working on a similar rule on some Medicare drug prices.

Grassley urged senators to back the drug pricing bill he authored together with Democrat Ron Wyden as the “moderate” alternative to Pelosi’s approach.

The drug industry lobbying group PhRMA said Pelosi’s plan “would end the current market based system that has made the United States the global leader in developing innovative, lifesaving treatments and cures.”

The Pelosi proposal threads the needle between moderate and more left-leaning Democrats in the House, but is too liberal for the Republican-led Senate, said Dan Mendelson, founder of healthcare consultancy Avalere Health.

Some progressive Democrats want changes in the bill.

FILE PHOTO: U.S. House Speaker Nancy Pelosi (D-CA) arrives for a House Democratic caucus meeting at the U.S. Capitol in Washington, U.S. September 18, 2019. REUTERS/Jonathan Ernst/File Photo

Representative Lloyd Doggett, a Democrat, dislikes letting drug companies set a “launch” price for new drugs a year before price talks begin, and said negotiating over a minimum of 25 drugs a year is too few.

The New Democrats, a group of House moderates, voiced optimism after meeting Health and Human Services Secretary Alex Azar that the two parties could forge a bipartisan deal that Trump would sign into law.

Reporting by Susan Cornwell, additional reporting by Michael Erman and Caroline Humer in New York and Richard Cowan; Editing by David Gregorio and Howard Goller

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