- The pharmaceutical industry is playing defense with lawmakers and the American public over rising drug prices, evidenced by record lobbying spending by the pharmaceutical industry.
- With President Trump opening criticizing the industry, many analysts believe Democrats and Republicans could find common ground on drug prices.
- The key player to watch is GOP Sen. Chuck Grassley, who hopes to work with Democrats this year to move three bills addressing the issue.
The pharmaceutical industry had a banner year in 2018, at least in terms of trying to influencing Congress. Lobbying disclosure reports released this week revealed that Pharmaceutical Research and Manufacturers of America, the nation’s pharmaceutical trade group, spent $27.5 million on lobbying in 2018. That’s the most it’s ever spent in a single year.
This record spending, however, doesn’t mean the drug industry has Congress in its pocket. On the contrary, as the Washington Examiner reported Tuesday, it is evidence of the growing pressure drug companies face to lower list prices — both from the Trump administration and from Congressional Democrats.
This pressure has been building for several years. Shortly after winning the 2016 presidential election, President-elect Trump went so far as to say that pharmaceutical companies were “getting away with murder,” and while he hasn’t given drug pricing as much attention as issues like border security, the now-president Trump has continued to take the occasional jab at the industry.
This criticism, combined with yet another round of price increases at the beginning of this year, has put Big Pharma on its heels. The industry will likely be playing defense for the rest of Trump’s time in office, raising the possibility for legislative action addressing drug prices.
An opening for drug pricing legislation
“If there’s any area where the Trump administration and a Democratic House majority could find common ground, drug pricing may be it,” Mike Allen wrote in an Axios newsletter earlier this month. This is because Trump, Allen explained, “has scrambled all the usual alliances” and basically aligned with Democrats on drug pricing policy.
Despite Trump’s polarizing presence in the White House, both parties in Congress have an incentive to act on the issue. Having won the House majority, Democrats are chomping at the bit to notch concrete legislative accomplishments, while across the aisle, Republicans in Congress may be looking to 2020 and asking themselves how they can stay in power.
“Both sides are going to try to become the party that says ‘Let’s make some progress on drug prices.’ You have these two forces that are really going to heat up,” Wells Fargo Senior Analyst David Maris told “Power Lunch” on CNBC in December. “Almost every drug company has beaten earnings the last two quarters by a lot — record earnings. So it’s tough for them to say ‘Look we need this money to fund innovation.'”
Americans don’t seem to be buying this innovation argument. Earlier this month, a POLITICO-Harvard poll gauging the public’s priorities for 2019 found that 80 percent of respondents said taking action to lower prescription medicine prices was “extremely important,” making it the top issue for respondents of both parties.
In an effort designed to perhaps boost his populist credentials, last May the president and U.S. Department of Health and Human Services Secretary Alex Azar released the “American Patients First” strategy, a blueprint aimed at curbing prescription drug prices. While this made noise on the issue, it did not result in any immediate policy changes. Since then the administration has taken few concrete steps that appear likely to significantly impact drug prices, according to a recent analysis by the law firm Ropes & Gray LLP.
In the House, the newly-empowered Democrats are making noise of their own. House Oversight and Reform Committee Chairman Elijah Cummings (D-Md.) has launched a broad investigation into the prescription drug industry’s pricing practices, sending letters to a dozen companies in search of detailed information and documents about how they price their medications. Cummings’ committee has scheduled a panel hearing on drug prices for Jan 29.
That said, any potential legislative effort to bring down drug prices will have political challenges. With both sides digging in against each other during the longest partial government shutdown in US history, congressional Democrats don’t appear inclined to help Trump score a victory on an important issue. Congressional Republicans, on the other hand, are contending with the opposing pressures of their donors and their party’s standard-bearer.
This complex dynamic has led some experts, like Chris Sloan, a director at the healthcare consulting firm Avalere, to predict movement on the issue, but not necessarily new laws.
“I’m not expecting a major piece of legislation around drug pricing coming out, but it’s a huge issue with a lot of traction on the right and the left… so I’d expect in the House and the Senate (to see) hearings on drug pricing,” he told MedPage Today in December. “There’s always a chance that the Democratic House and the Republican president will come together on some piece of drug pricing — like transparency reporting — but I think it’s unlikely. So the next two years won’t be stagnant for healthcare; there will be a lot of policy development but no major bills.”
To underscore Avalere’s muted prediction, not all Democrats are as galvanized as Cummings about taking on Big Pharma. Rep. Anna Eshoo (D-Calif.), the new chairwoman of the Energy and Commerce health subcommittee, has struck a softer tone on the issue than many of her party’s colleagues, saying recently that she intended to be “fair” to drug companies rather than seeking to “punish” them. When asked if she hoped to move legislation addressing drug prices, Eshoo told The Hill she would “need to examine it first.”
Proposals on the table
Democratic lawmakers, many of whom now hold leadership positions in the 116th Congress, have introduced a slew of proposals to rein in drug prices in recent years. Sen. Elizabeth Warren (Mass.) and Rep. Jan Schakowsky (Il.), Rep. Lloyd Doggett (Texas), Sen. Bernie Sanders (I-Vt.) and Rep. Ro Khanna (Calif.), for instance, all have advanced ambitious plans on the issue. These plans all go above and beyond the Improving Access to Affordable Prescription Drugs Act, a comprehensive bill Democrats introduced in both houses in 2017.
With the GOP still in control of the Senate, however, these partisan plans realistically amount to little more than political posturing. Legislation that may actually have a chance of gaining traction is likely to make much less drastic changes to the current system while targeting the crux of Americans’ ire: prices.
On this front, the key player to watch is GOP Senator Chuck Grassley (Iowa), a seasoned lawmaker long considered a congressional watchdog of the pharmaceutical industry. As the new Chair of the Senate Finance Committee, Grassley has said he hopes to work with Democrats in 2019 to revive three bills addressing drug prices.
The first is the CREATES Act, introduced by Sen. Patrick Leahy (D-Vt.) to stop brand drugmakers from blocking competition from generic manufacturers. This would help bring less expensive generic drugs to market more quickly by allowing generic companies to have early access to samples for comparison tests. In an recent op-ed for USA Today, Ted Slafsky, founder and principal of Wexford Solutions, gave the bill a 95 percent chance of passage. It has been introduced in Congress before and appears to be gaining momentum.
Second, Grassley has partnered with Democratic Sen. Amy Klobuchar to introduce “pay-for-delay” legislation targeting legal arrangements that prevent or delay the introduction of affordable versions of branded pharmaceuticals. These settlements happen when companies pay generic manufacturers to delay producing off-patent drugs, allowing them to keep competitors out of the market and their prices higher.
Finally, Grassley again joined with Klobuchar earlier this month to introduce the Safe and Affordable Drugs from Canada Act of 2019, which would allow less-expensive branded prescription drugs from approved pharmacies to be imported from Canada. Trump backed this idea while running for president, creating a potential opening for bipartisan action.
With bipartisan sponsorship, perhaps Grassley’s biggest hurdle to passing these bills will be bringing enough of his GOP colleagues in line, some of whom have voiced concerns in recent weeks that his proposed reforms may in fact be counterproductive.
“All of us are concerned about the latest increases in prescription drugs,” Sen. Pat Roberts (R-Kan.) told The Hill on Monday. “The problem with that is if we do something, it could be very counterproductive as well.”
Image Credit: “Prescription Prices Ver1” by Chris Potter of ccPixs.com is licensed under CC BY 2.0
Andrew Collins cut his teeth in politics as a congressional campaign staffer during the 2012 election. Since then he has worked in Washington, D.C. as the digital media manager and as a staff writer at the Franklin Center for Government & Public Integrity, and is a recent graduate of the Trinity Fellows Academy (class of ’17). His work has appeared in Politico, US News & World Report, The Chicago Tribune, The Daily Caller, and The Hill. He lives in Seattle, WA.