Progressive Democrats scramble to secure curbs on drug prices

Progressive Democrats are increasingly optimistic that they will be able to clinch a last-minute agreement that would reinsert curbs on US drug prices into the text of Joe Biden’s signature $1.75tn spending bill.

Leftwing party members were disappointed last week when the White House released a draft of the bill which entirely omitted many of the US president’s campaign pledges to reduce the cost of medicines.

The removal of the curbs appeared to be a victory for the US pharmaceutical industry’s powerful lobby, but several people close to the talks told the Financial Times that members of Congress are on the verge of writing a version of the reforms back into the bill.

The measures under consideration would give the US government bargaining power over the price of a range of drugs for the first time, a move that would bring costs in line with other developed countries and hit profitability at pharma companies worldwide.

Peter Welch, a Democratic member of the House of Representatives who has pushed heavily for the measures, told the Financial Times: “Reports last week of the demise of drug price reforms were premature. We have made great progress over the last few days and we are pretty close to an agreement.”

On Tuesday Chuck Schumer, the Senate majority leader, released a statement saying he was “very hopeful” there would be an agreement on the measures as early as that day.

“The deal will finally lower the costs of prescription drugs for seniors and working families,” he said. “It doesn’t do everything I would want or many of us would want, but it takes a big step forward.”

Passage of the legislation in Congress is far from certain, with Joe Manchin, a holdout Democratic senator, again expressing reservations about the package on Monday. But reintroducing the drug pricing measures, which Manchin supports, would represent a victory for Democratic lawmakers that have long pushed for the US government to have a stronger hand in bringing down the cost of medicines.

Several Democratic Congressional aides told the FT the package was close to an agreement in the House, but that the final hurdle would be persuading Kyrsten Sinema, a centrist senator from Arizona. She and Manchin have been the most high-profile holdouts against the bill as a whole, although Democrats say she has resisted the idea of government drug price negotiation while Manchin has not.

Sinema is among the top five recipients of money from the pharmaceutical industry, having taken over $100,000 in donations during this electoral cycle, according to public figures. Her office did not respond to a request to comment.

Patients in the US pay around three times as much for drugs as those in Europe, according to research by the Brookings Institution, helping the US to account for around three-quarters of global pharmaceutical company profits.

Part of the reason for higher prices in the US, say campaigners, is that unlike in much of Europe, the government cannot negotiate what it pays for drugs funded by publicly-administered insurance plans.

Americans overwhelmingly support the policy, with a poll by the Kaiser Family Foundation think-tank last month finding that 83 per cent of Americans are in favour of it, including 71 per cent of Republicans.

Biden put the proposal at the heart of his plans to bring down drug prices in the US and hoped to pass such a measure as part of the “Build Back Better” bill that is the subject of frantic negotiations on Capitol Hill.

The pharmaceutical industry has pushed back heavily against the proposal, arguing the most radical version of the idea would cut industry revenues by 40 per cent and have a chilling effect on the research and development of new drugs.

Progressives now believe they have secured enough support for a version of the measure to pass both Houses.

Party officials told the FT that a compromise has been agreed in the House of Representatives which would see the government negotiate prices for some drugs paid for by Medicare plans for retired Americans.

However, the government will only be able to negotiate the price of the top 30 most expensive drugs that are no longer protected by the FDA’s exclusivity period, which shields drugmakers from competition from cheaper generic rivals for around five years.

The agreement would also include a version of the inflation-linked price cap, which would force drug companies to repay the government if the price of a drug rises above inflation. But the impact of this measure would be limited by calculating the cap based on 2020 or 2021 prices, rather than the price in 2016, as proposed by some Democrats in Congress.

Campaigners say they think they are close to a historic breakthrough, though many worry that Sinema will still insist that the measures are removed as a price for her support for the overall bill.

David Certner, legislative policy director at AARP, the non-profit organisation that advocates for older people, said: “We have been working on drug price reform for decades and this bill really is the best opportunity we have had to make some meaningful reforms.

He added: “We just want to make sure they are not taken out of the bill, or limited to such an extent to make this government negotiation in name only.”