Advertisement

Drug executives come to Washington as Republicans grapple with how to stop runaway prices

Drug executives come to Washington as Republicans grapple with how to stop runaway prices
Senate Finance Committee Chairman Charles E. Grassley (R-Iowa) presided over Tuesday’s hearing. (Carolyn Kaster / Associated Press)

In a much-anticipated piece of political theater, seven leading pharmaceutical executives appeared before a powerful Senate committee Tuesday for a grilling from lawmakers who pledged a historic bipartisan effort to rein in skyrocketing prescription drug prices.

But even as drug prices have emerged as one of the few areas of common concern for President Trump and congressional Democrats, the drugmakers made no firm commitments to lower prices, and lawmakers — particularly Republicans — are far from settling on a strategy to force or even encourage companies to lower their prices.

Advertisement

And although the Trump administration has taken a number of modest administrative steps to change the way that prescription drugs are purchased through Medicare, prospects are dimmer for a compromise with Democrats, who are seeking much more aggressive government intervention to rein in prices.

At the same time, any compromise presents a double-edged sword politically, offering lawmakers something to campaign on in 2020, but also potentially handing the opposing party a victory as well.

Republicans, who have historically resisted government restrictions on drug companies, should have a lot of incentive to prove that they can reduce healthcare costs, said Senate Finance Committee Chairman Charles E. Grassley (R-Iowa), who presided over Tuesday’s hearing.

“Republicans have to start looking at it this way: We’re on a slippery slope to single [payer] unless we start recognizing the fact that one of the reasons we lost the midterm elections was because … 41% of the people in the elections thought healthcare was most important and 75% of them voted Democrat,” he said, referring to exit polls from the 2018 midterm elections.

Voters in 2018 punished the GOP for the party’s efforts to repeal the Affordable Care Act, often called Obamacare, and some Republicans hope that a successful effort to tackle prescription drug prices would win some of them back.

Grassley, who for years was a lonely GOP voice calling for aggressive steps to take on drugmakers, now has allies on his side of the aisle as well as the gavel of the Senate Finance Committee, which in recent years was headed by Sen. Orrin Hatch (R-Utah), a closer ally of the pharmaceutical industry.

Democrats, for their part, feel like they need to deliver on their own midterm election pledge to reduce drug costs.

“There is no question that Democrats in the Senate and the House have made an enormous investment in getting this issue to where it is — on the radar, and pounding at home day in and day out, in community meetings,” said Sen. Ron Wyden of Oregon, the top Democrat on the Finance Committee.

The convergence between the parties has given hope to consumer advocates and those in the healthcare industry that a legislative breakthrough is within reach, despite the poisonous political environment in Washington. An increasing number of states, including California, are also stepping up efforts.

One proposal to make it more difficult for pharmaceutical companies to prevent the development of generic alternatives to their drugs has attracted bipartisan support from senators, including some liberal Democrats such as Vermont’s Patrick J. Leahy and conservative Republicans such as Ted Cruz of Texas.

“I think there is enough of a recognition about the problem … that something has to be done,” said Matt Eyles, president of America’s Health Insurance Plans, the insurance industry’s Washington-based lobbying arm. “It is clear that members of Congress on both sides are increasingly alarmed.”

Tuesday’s hearing gave senators, particularly Democrats, plenty of opportunity to vent frustration with price hikes.

And as expected, drug executives largely dodged responsibility for high prices, blaming insurers while emphasizing their commitment to developing life-saving therapies.

But the drugmakers also signaled support for several initiatives being discussed in Washington, including proposals to target pharmacy benefit managers, or PBMs, the historically opaque companies that have negotiated drug prices on behalf of insurance companies. The executives also praised efforts to promote development of generics.

Advertisement

Some Democrats have been buoyed by the fact that Trump has gone further than other Republicans on drug policy, even suggesting vaguely that the federal government should be able to negotiate drug prices in Medicare (though the administration has not formally proposed this).

“He’s broken some new ground that no Republicans have been willing to break,” said Sen. Christopher S. Murphy (D-Conn.). “I don’t know that we’d be well-served by being against it simply because most of the rest of his healthcare policy is mean-spirited.”

However, there is still considerable skepticism in Washington that congressional Republicans will back legislation that challenges the drug industry’s pricing practices.

“Senate Republicans are now saying the right things, voicing outrage over drug pricing,” said John Rother, a former longtime executive with the AARP who now heads the reform advocacy group National Coalition on Health Care. “The real test will be whether they will support legislation that will actually lower prices and protect patients from price gouging.”

Several GOP lawmakers are already attacking Democrats’ calls for more aggressive action.

“The other side wants [direct drug] negotiations for [the Department of Health and Human Services]. They want price controls,” said Rep. Michael C. Burgess (R-Texas). “Those are things that are nonstarters. And they’re not going to happen. To the extent that they’re willing to move off their ideological high ground, and we’ve moved off some of our ideological high ground, I think there is perhaps some room.”

So far, lawmakers who would write the legislation are tight-lipped on what a plan would look like. Grassley framed Tuesday’s hearing as one of several he expects to hold before a bill is released. In a recent meeting with reporters, he said he doesn’t know what exactly his legislation would say, but outlined the goal as “taking secrecy out of the whole process.”

Advertisement

Both Grassley and Wyden suggested they want to know more about whether PBMs are keeping rebates offered by drugmakers from consumers, a concern that has also been highlighted by the Trump administration.

“When you have difficulty having people explain it to you or they don’t want to explain it to you, … there’s something wrong and we’re trying to right that wrong,” Grassley said of drugmakers and others in the prescription drug distribution process.

Advertisement
Advertisement