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This Democratic Senator Believes That America Can Finally Do Something About Drug Prices.
Ron Wyden

This Democratic Senator Believes That America Can Finally Do Something About Drug Prices.


The push to reduce prescription drug prices through government action will take another step forward on Tuesday, when Senate Finance Committee Chair Ron Wyden (D-Ore.) issues a loose framework for legislation he hopes the chamber will pass this year.

The “principles of reform,” which Wyden’s office shared with Stardia prior to publication, include several ideas that progressives have long championed, including giving the federal government the authority to negotiate prices directly with drug manufacturers; governments in other developed countries have this kind of authority, and it is the primary reason that the price of name-brand drugs overseas is soaring.

Other critical principles include creating an incentive for drug manufacturers to negotiate, rebates to mitigate year-to-year price increases, and, most importantly, extending the negotiated prices beyond Medicare recipients to private insurers and their beneficiaries.

Even Americans who do not have Medicare would benefit from lower out-of-pocket pharmacy costs, lower insurance premiums, or both.

Wyden's intentions are important because the Finance Committee is the most likely venue for crafting Senate legislation due to its jurisdiction over Medicare.

And, while Wyden has expressed support for the majority of these ideas in a number of interviews and public appearances over the last few months, this new document formalizes his commitment to enacting them.

It also reflects Wyden's belief that a bill with these features is feasible, after what he described as "a lot of sweat equity... into finding a majority on drug pricing in the Senate" on Monday.

“I’ve had a lot of conversations with senators from both political parties,” Wyden told Stardia, “and I’m putting down on paper where I believe we need to go to get a consensus to pass a bill in both chambers.”

Intentions are clear, but details are not.

That consensus does not yet exist, and a quick glance at Wyden's document reveals the document's lack of specifics.

The principles do not specify how Wyden believes the federal government should negotiate drug prices, for example; there are several approaches, each with its own set of advantages and disadvantages, as well as its own set of supporters and detractors.

One example is “international reference pricing,” a model that would use the prices paid for drugs by foreign governments as one guideline for setting US prices.

Many progressives support the idea, and it is likely to be included in any prescription legislation that emerges from the House, given that international reference pricing was included in a prescription drug bill that passed that chamber in 2019.

That proposal died when the Senate, which was then controlled by Republicans, refused to consider it; the hope is that a new version of the House bill will pass the Senate this time, now that Democrats are in the majority.

However, as Wyden confirmed in his interview, international reference pricing has some staunch opponents among Senate Democrats.

“I’ve heard from some of my colleagues that using international prices as a basis for negotiation is not their preferred approach,” Wyden explained, “because they see it as passing the buck. They want an American system for America.”

However, Wyden added, "I want it to be clear: I'm not ruling out any policy options."

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And, while the Wyden document leaves many policy details unanswered, it does confirm Wyden's desire for legislation that goes far beyond the bipartisan bill he previously negotiated with Sen. Charles Grassley (R-Iowa), the Finance Committee's ranking Republican.

That bill included a provision to limit year-to-year drug price inflation, but it stopped short of more aggressive measures, such as government price negotiations, because Republicans would not support them.

Even that scaled-back compromise bill proved too much for Republican leaders, who refused to consider the Grassley-Wyden bill, just as they had refused to consider the one they received from House Democrats.

Now that Democrats have control of the Senate, Wyden is hopeful that the more ambitious legislation he has advocated for all along will be enacted.

One progressive activist who saw an early draft of Wyden's framework told Stardia he was pleased with both the substance and the signal it sends.

“The policy buckets are fantastic,” said Alex Lawson, the executive director of Social Security Works.

Lawson emphasized the commitment to both negotiated prices and extending them beyond Medicare, as well as ensuring that all Americans save money at the pharmacy. “We have some details that we're going to have to worry about,” Lawson said, “but this is as good a starting point as we could ask for in the Senate.”

The Difficulties In Building A Majority

Given the slim chances of obtaining significant Republican support for the type of legislation Wyden envisions, its most likely path to passage would be through the “budget reconciliation” process, in which a simple majority can approve legislation affecting the federal budget without the threat of a filibuster.

But, because Democrats hold exactly 50 Senate seats, a single defection could derail ambitious prescription drug reforms, and it's easy to see that happening.

In addition to conservative senators who have traditionally been more skeptical of government intervention in the economy, there are Democratic senators from states with large pharmaceutical manufacturers, such as Delaware's Tom Carper and New Jersey's Robert Menendez, who have close ties to the industry.

More progressive lawmakers, such as Sen. Bernie Sanders (I-VT), who have long advocated for greater government control over drug prices, are pushing in the opposite direction.

Getting these factions to agree would almost certainly require a strong push from the White House, and President Joe Biden did not include specific figures for prescription drug legislation in his budget proposal, casting doubt on his commitment to the project.

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However, in his joint address to Congress in April, Biden endorsed ambitious reforms, specifically mentioning that he wants to give the federal government the power to negotiate prices and that the private sector, not just Medicare, should be able to obtain those prices. Wyden said on Monday that statement was consistent with what he'd heard directly from Biden.

“He was signaling, and he’s told me he’s going all in on this fight,” Wyden explained.

Democrats' Possibility

One reason legislation has a chance of passing, despite all of the obstacles and a long history of failure, is that Democrats are more motivated than usual this time around.

A successful bill would result in significant budget savings, in the hundreds of billions of dollars over ten years, which Democrats can and desperately need to fund other health-care programs, such as adding a dental benefit to Medicare or insuring low-income residents in states where Republicans have blocked Medicaid expansions.

Another reason Democrats may succeed is that ideas like government-managed drug prices have consistently polled well, even among Republican voters.

Critics of Wyden's proposed legislation have long argued that government price controls on drugs would reduce innovation by providing drug companies with less incentive to invest in the development of new drugs.

Wyden discussed the importance of innovation in both his document and in his interview on Monday, as well as the need to carefully craft price negotiation policy in order to take into account the actual value drugs provide. The document also mentions increasing government funding for research, with a special focus on small biotech firms that do much of the most important drug development nowadays.

But, on Monday, Wyden slammed claims that negotiations would inevitably result in fewer breakthroughs, claiming that “industry overstates how innovative it is; it always equates innovation with the number of new treatments, whether they are me-too drugs or truly novel.”

A new Alzheimer's treatment that received federal approval last week and will sell for $56,000 per patient per year, despite scant evidence of slowing disease progression, is an example of a drug with dubious value.

Wyden was among the first to call the price outrageous after Biogen announced it, and he explained to Stardia why he was so upset: his mother, a librarian, died of Alzheimer's disease-related dementia.

“I saw how much of a toll it was taking on her and others; this is very personal to me. I heard about this drug, I saw how flimsy the evidence was... the price to me is unconscionable for what was on offer.”

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