Democrats revive calls for Medicare to negotiate drug prices

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Congressional Democrats want to appoint a “price gouging” enforcer to head a new agency charged with taking pharmaceutical companies to task.

As part of their newly unveiled “Better Deal” agenda, congressional Democrats are pledging to tackle one of healthcare’s thorniest issues—the high cost of prescription drugs.

“Right now, there’s nothing to stop vulture capitalists from egregiously raising the price of life-saving drugs without any justification,” Senate Minority Leader Chuck Schumer, D-N.Y., said during a press conference Monday.

To solve this problem, Democrats would turn to a proposal that both President Donald Trump and President Barack Obama have championed—allowing Medicare to negotiate drug prices. The idea, according to Democrats (PDF), envisions the government leveraging “the bargaining power of the 41 million Americans enrolled in Medicare Part D and fight for the best possible deal on drug prices.”

Yet policy experts have long said that even if Medicare gets the ability to negotiate directly with drug companies, it may not make that much of a difference. In fact, the Congressional Budget Office itself has estimated that doing so would have a “negligible effect,” and noted that the government would likely need to establish a formulary that excluded certain drugs to make such a policy work—a politically risky move.

In addition to allowing Medicare to negotiate drug prices, Democrats offered up two other additional ideas to combat skyrocketing prescription costs.

They said they would appoint a “price gouging” enforcer to head a new agency tasked with identifying drugs that have “unconscionable” price increases, enforcing fines on the manufacturer and reinvesting the money from those fines into research at the National Institutes of Health. 

They also want to require manufacturers to submit justification to the Department of Health and Human Services at least 30 days before a significant price increase takes effect for any given drug. That justification would include information such as the total cost of marketing and advertising for that specific drug; individual factors that contributed to the price increase; and/or the percent of total expenditures on research and development derived from federal funds.

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With such broad and bipartisan support, why do the odds look grim for Congress to pass significant drug pricing legislation this year?