Another Dumb Idea from Democrats on Drug Costs | Citizens Against Government Waste

Another Dumb Idea from Democrats on Drug Costs

The WasteWatcher

Today, House Oversight and Government Reform Committee Ranking Member Elijah Cummings (D-Md.), Sen. Patrick Leahy (D-Vt.), Sen. Bernie Sanders (I-Vt.), Rep. Lloyd Doggett (D-Texas) and Rep. Peter Welch (D-Vt.), held a press conference to engage in their usual screed  against pharmaceutical companies and provide a “solution” to lower drug costs in Medicare Part D.  Rep. Cummings’ bill, “The Medicare Drug Pricing Negotiation Act,” would strike the “non-interference” provision in the 2003 Medicare Modernization Act that created the Medicare Part D program and allow the secretary of Health and Human Services to “negotiate” prescription drug prices.  Sen. Sanders has introduced similar legislation in the Senate.

But here’s the rub.  Price negotiations already occur in Medicare Part D among pharmaceutical companies, pharmacy benefit manufacturers, and pharmacies, and they have been successful at keeping prices low.  In 2005, the Congressional Budget Office estimated that Part D would cost taxpayers $172 billion in 2015; it’s actual cost was $75 billion.  These members of Congress are ignoring this achievement and are instead calling for price controls within Medicare Part D.

The Cummings bill would allow a national formulary, which would mean no competition among Part D drug plans, and leading to less choice and rationing.  Sen. Sanders is very fond of the VA health system, which came under intense criticism starting in 2014 for its outrageous wait times and subpar care, and has its own national drug formulary.  An October 2013 Lewin Group study compared the VA formulary with the two most popular Medicare Part D plans and found the part D plans provided a “greater breadth of drug coverage than the VA formulary.”   

Ranking Member Cummings, Sen. Sanders, and the rest of this merry band continue to ignore the fact that price controls always disrupt the market and cause shortages.  If this bill was adopted, price shifting would occur into the commercial market, driving up costs, harming pharmaceutical innovation in the process.  The U.S. leads the world in pharmaceutical research at 56 percent.  Our closest competitors are Germany at 16 percent and the U.K at 7 percent, according to the Winter R&D Magazine’s 2016 Global Funding Forecast.  U.S. research and development is so much higher than the rest of the world because other countries use price controls, and frankly, ride off U.S.-funded research.

More competition is the best way to lower drug costs.  That is why it is important for Congress to make sure the Food and Drug Administration utilizes the tools provided in the 21st Century Cures Act to speed up the drug approval process and for the agency to wisely use the user fee funding provided as a result of the reauthorization of the Generic Drug User Fee Amendments to reduce the backlog of more than 4,100 pending generic drug applications.

Here’s an idea.  These members of Congress should advocate that other countries pay their fair share for U.S. pharmaceutical research, rather than advocating for America to adopt their innovation-killing price controls.