Political drama sidelines bipartisian effort to bring down drug prices
Tens of billions could be saved on drug prices under ERP, but the threat of impeachment has pushed legislating to the side.
Progress on reducing high prescription drug prices looks to be one of many victims of the impeachment firestorm now gripping Washington, D.C. The irony is that a new report from the Democratic-controlled House of Representatives highlighted a rare area of agreement between Republicans and Democrats—a possible path to setting lower prices for prescription drugs.
High drug prices are widely considered to be one of the biggest burdens on both consumers and employer-based health plans when it comes to health care costs, and the new report suggests that adopting a system to link drug prices in the U.S. to average prices in other countries would have a huge impact on the problem.
Related: An international index would upend drugmakers’ pricing strategy
“U.S. drug prices were nearly four times higher than average prices compared to similar countries,” the report said. “U.S. consumers pay significantly more for drugs than other countries, even when accounting for rebates.” The report added that the Medicare alone could save $49 billion annually if it linked drug prices to selected comparator countries.
Democrats and Trump agree
The House report, “A Painful Pill to Swallow U.S. vs. International Drug Prices” is built around an idea that Republicans have said they could support: external reference pricing (ERP).
“An ERP system refers to the practice of using the price of a pharmaceutical product (generally an ex-factory price, also referred to as a ‘list price’) in one or several countries to create a benchmark or reference price for the purposes of setting or negotiating drug prices in a given country. With the exceptions of Denmark, Sweden, and the U.K., almost every Europe country – and most other developed nations – has established some form of an ERP,” the report said.
The idea has been championed before—by President Donald Trump. Nearly one year ago, in Oct. 2018, the Trump administration proposed a similar plan to link what Medicare drug prices to that of other industrialized countries. Avik Roy, writing for Forbes, called the development “A stunning move that could entirely reshape the way the pharmaceutical and biotechnology industries think about their business model.”
House proposal is likely to languish
The report was released in support of the House bill, “Lower Drug Costs Now Act” (H.R. 3). The authors of the study noted that while Danish patients spent on average $318 annually on drugs—the lowest amount in the study, U.S. patients paid $1,220 each year per capita, the highest. “A Center for Economic and Policy Research study suggested Medicare could save $541 billion over 10 years – approximately $54 billion annually – if Medicare’s system looked more like Denmark’s,” the report said.
Still, even before this week’s impeachment talk, there were significant differences between the House bill and legislation introduced by Senate Finance Chairman Charles E. Grassley, R-Iowa, and ranking Democrat Ron Wyden of Oregon.
Trump has already accused Democrats of scuttling any bipartisan progress on legislation with their talk of impeachment. Democratic House Speak Nancy Pelosi said she was still willing to negotiate, but until the heat in the kitchen comes down, it’s unlikely the two parties will be able to cook up a compromise.
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