Efforts to Limit Drug Prices Are Stalled — and Pharma Is Seizing an Opening

Dozens of vulnerable House Democrats are worried that the party’s stalled spending negotiations with Joe Manchin will cost them seats in the midterms — and hand Congress to the Republicans

Democrats planned to include legislation allowing Medicare to negotiate drug prices, fulfilling a campaign promise that helped them win control of the House in the “blue wave” of 2018, as part of President Joe Biden’s Build Back Better legislation. The plan ran into an expensive lobbying blitz from the pharmaceutical industry, prompting Democrats to significantly water down the bill to limit the number of drugs Medicare could negotiate amid pushback from Sen. Kyrsten Sinema, D-Ariz., and other industry-aligned Democrats –– and that was before Manchin blew up the Build Back Better package entirely.

“We cannot overstate the paramount urgency of fulfilling the promise of lowering drug prices now for the American people,” a group of 40 House Democrats, led by Rep. Susan Wild, D-Pa., said in a letter to party leaders on Monday.

The letter came after pharmaceutical companies hiked prices on hundreds of medications to start the year. A recent report from the patient advocacy group Patients for Affordable Drugs found that drug companies have increased prices on more than 550 drugs, including 183 drugs whose prices were raised by $100 or more, and 118 drugs that now cost more than $5,000. Pfizer alone raised prices on 125 drugs, more than any company, even as it shattered profit records thanks to $36 billion in sales from its widely-used COVID vaccine.

“Even as we enter the third year of a pandemic, Big Pharma continues its practice of targeting American patients and consumers with price increases, completely undeterred by the financial and health challenges facing American families,” David Mitchell, the founder of Patients for Affordable Drugs, said in a statement.

“Drug corporations can do this because we let them — unlike other nations that use their purchasing power to get a better deal,” said Mitchell, who suffers from an incurable blood cancer that is treated with a cocktail of drugs carrying a list price of more than $900,000 per year. The original drug-pricing agreement in the Build Back Better Act, he said, “would curb rising drug prices for millions of patients and halt abusive annual price hikes by limiting increases to the rate of inflation, which is projected to return to 2.3 percent in 2023.”

Election forecasts generally suggest that Democrats will lose control of the House in the midterms, making the popular drug legislation a key priority, especially after Manchin and Sinema effectively killed off several other popular Democratic proposals, including la rollback of the Trump-era tax cuts, an extension of the expanded Child Tax Credit, and paid family leave.

A Data for Progress poll last fall found that likely voters support the Medicare legislation by a 55-point margin, including 83% of Democrats, 71% of independents, and 65% of Republicans.

“Taking action on prescription drugs is one of the most popular political issues Democrats can pursue — it’s overwhelmingly supported by a bipartisan majority of voters,” Sean McElwee, the founder and executive director of Data for Progress, said in an email. “Democrats need to take every opportunity to lower costs for voters and deliver popular legislation that visibly improves their lives this November.”

Manchin, who walked away from Build Back Better negotiations in December after the White House called him out by name in a statement over the bill’s delay, said on Tuesday that the Build Back Better bill is “dead” and any negotiations on potential spending programs would have to start from scratch. Biden has said that he hopes to include “chunks” of the original bill in a potential compromise package with Manchin.

Last year, Manchin said he supported the drug-price legislation, calling it the “one thing that should be done for sure.” But the West Virginia senator appears to be prioritizing bipartisan negotiations to reform the Electoral Count Act over any would-be spending bill, leaving a key Democratic campaign promise in limbo.

“President Biden supports this plan. We support this plan,” the House Democratic group said in their letter. “Every Democratic member of the U.S. Senate supports this plan. And most importantly, the American people support this plan. It is time to enact it into law. Already this year, drug corporations have raised prices on more than 400 drugs. Action can’t happen soon enough to make medicines more affordable for the millions who need them.”

The price increases came after the pharmaceutical lobby shattered its own record for lobbying spending as it rallied around the cause of defeating Biden’s legislation. Democrats like Sinema and Rep. Scott Peters, D-Calif., two of the biggest recipients of Big Pharma donations, led an effort to cut the number of drugs that could be negotiated by Medicare. Even so, the compromise legislation would save taxpayers an estimated $80 billion while capping price increases on certain medications, capping out-of-pocket costs for seniors, and capping the cost of insulin at $35 for people on Medicare and on private plans.

Medicare is the only government agency that is barred from negotiating bulk pricing discounts — the result of an infamous scheme hatched by Big Pharma lobbyists and a Republican leader who rammed the provision into a bill that required Medicare to cover the cost of prescription drugs, shortly before he left Congress and became the top lobbyist for the industry. A three-year investigation by the House Oversight and Reform Committee last month found that pharmaceutical companies exploit the Medicare program to boost revenues, noting that taxpayers could have saved more than $25 billion over five years if Medicare was allowed to negotiate the cost of just seven popular drugs such as Humira and Lyrica.

The investigation also found that drug companies “aggressively raise prices” to hit revenue targets and incentives for executives and have targeted the U.S. market for higher prices while keeping costs lower overseas. The report also concluded that drug companies “abuse the patent system” to suppress competition and maintain monopoly pricing. Drug companies contend that their huge profits are necessary to fund research and development, but the investigation found that the 14 leading drug companies spent $577 billion on stock buybacks and dividends over just five years, $56 billion more than they spent on research and development over that same period.

The limited Medicare negotiation bill approved by the House last year would allow Medicare to negotiate the cost of 20 popular drugs and dozens of insulin products used by 8.5 million Medicare beneficiaries, according to a recent analysis by the Kaiser Family Foundation, although many of the drugs with the highest Medicare spending would be exempt.

The Congressional Progressive Caucus, which pushed for a more expansive bill that would have saved taxpayers an estimated $450 billion over 10 years but ultimately agreed to back the scaled-down version, set a target date of March 1 to pass the revised spending plan ahead of Biden’s State of the Union address.

“This is both achievable and necessary,” CPC Chairwoman Pramila Jayapal, D-Wash., said in a statement, noting that in the weeks since negotiations had stalled out, “the case for this legislation has only become more urgent.”