The head of Big Pharma on Tuesday blasted House Democrats’ plan to lower drug costs by allowing Medicare to negotiate down drug prices as a “hyperpartisan and draconian” scheme.
Stephen J. Ubl, president and CEO of Pharmaceutical Research and Manufacturers of America (PhRMA), the industry group representing drug companies, also said the Democrats’ “price-setting” bill would also cost 1 million jobs in the U.S.
Under the proposal, Medicare would negotiate with drug companies to lower the prices that the government and the beneficiaries of the healthcare program pay. Such a move would save the government $456 billion, according to the Congressional Budget Office.
House Democrats planning to add the measure to President Biden’s $2.25 trillion infrastructure package.
Lori Reilly, PhRMA’s chief operating officer, said the process Democrats want to set up is more like “extortion” than negotiation.
If the drug companies do not agree to a price, the government would tax the revenue for the drug in question, beginning at 65% and rising each quarter until it hits 95%.
“It doesn’t feel like a negotiation when the government has a hammer of a 95% tax,” Ms. Reilly said in a conference call with reporters.
The billions of dollars Medicare would save come from the pharmaceutical industry, which the drug companies say would force layoffs and sap funds for developing new cures.
A spokesman for House Speaker Nancy Pelosi fired back that drug companies have been ripping off Americans.
“For far too long, Big Pharma has been getting away with charging Americans five times or even more than what they charge for the same exact medicines overseas,” said Pelosi spokesman Henry Connelly. “Americans are dying because they can’t afford the astronomical prices that Pharma keeps jacking up for medicines invented decades ago, and they don’t get to have much of a negotiation at the pharmacy counter when it’s either pay up or don’t get the prescription they need to stay alive.”
Under the Democrats’ plan, Drug companies could charge Medicare the same as the lowest price for the drugs in Australia, Britain, Canada, France, Germany and Japan. Otherwise, the companies would negotiate with Medicare. The average price of the drugs in those six countries would be the most the government would be allowed to agree to.
The government could insist on paying even less.
Republicans oppose the plan because they view it as a government intrusion into the marketplace.
“It’s a job killer. It’s an innovation killer. It’s a hope killer” for those awaiting a cure for their disease, Ms. Reilly said.
As an alternative, Big PhRMA proposed Medicare lower drug costs by lowering the copays for seniors.
They suggest Congress instead go after another powerful Washington lobby, the insurance industry. Insurers in areas where they offer health care plans should be required to give customers at least one option, in which they do not have to pay a deductible, according to the pharmaceutical industry.
The government should look at ideas like those, Mr. Ubl said, “and avoid policies that are hyperpartisan and draconian.”
• Kery Murakami can be reached at kmurakami@washingtontimes.com.
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