WASHINGTON—Senate Finance Committee Chairman Chuck Grassley (R-Iowa) believes the revised proposal he and co-sponsor Sen. Ron Wyden (D-Ore.) hope to reintroduce later this week is the best bet in 2020 for Congress to act against spiraling prescription drug costs.
“The thing to remember about this bill is when you’ve got [Speaker of the House Nancy] Pelosi passing her bill, she has a different body of people she has to deal with,” Grassley told The Epoch Times on March 10.
“They passed a bill that has a lot of good parts in it, but it can’t get 60 votes in the United States Senate, so the Grassley–Wyden bill is what we’re going to have for anybody who wants to do anything about prescription drugs,” he said.
Getting a handle on prescription drug prices is one of the few issues on which Republicans and Democrats in Congress appear able to work together in a bipartisan fashion. Grassley said he expects the tweaked version of the proposal will be available later this week.
“List prices on 602 medicines rose by 159 percent, or 9 percent annually. After discounts and rebates, net prices increased by 60 percent, or 4.5 percent annually,” Grassley told the Senate.
“That’s 3.5 times the rate of inflation. These are drugs for multiple sclerosis, cholesterol, rheumatoid arthritis, chemotherapy, diabetes, and many more debilitating and life-threatening conditions,” he said.
The figures Grassley cited accounted for discounts and rebates offered by drug manufacturers.
The problem is that prescription drug price increases are far outpacing wage gains for most Americans, according to the Iowa senator.
“Meanwhile, wages for the average American over the same time period increased about 30 percent in the private sector. That means wage growth is about half the rate of growth in prescription drug prices—even after rebates and discounts,” Grassley said.
Grassley told The Epoch Times he believes that because 2020 is a campaign year, it helps his proposal “because in every Senate race, [drug pricing] comes up as one of the top three or four issues that people are interested in and demand action by Congress and demand their candidates to take a strong position on.”
The crux of the problem is what Grassley calls “a perverse incentive for companies to increase the price of drugs year-over-year,” thanks to current Medicare regulations on how much the federal government pays manufacturers.
“We limit it to the Consumer Price Index, which would be about 2.3 percent for last year,” Grassley said. “That’s why particularly Republicans ought to be joining on this bill because it’s very conservative to save the taxpayers money.”
Two of the most recent senators to sign on as co-sponsors—Republicans Martha McSally of Arizona and Joni Ernst of Iowa—face tough reelection fights this year.
Manufacturers should be able to recoup their initial investment and research and development costs, but “once that’s set up, they should not have a perverse incentive to increase their profits by gouging the taxpayers,” Grassley said.
“The program relies on private Pharmacy Benefit Managers (PBMs) to negotiate rebates and other price discounts from drug manufacturers, then offer drug plans to seniors, competing over premiums and formularies. Seniors choose the plan that is best for them,” Badger said.
“While Part D has cost far less than government estimators predicted, federal spending on the most expensive ‘specialty’ drugs has risen sharply in recent years. Drugmakers and PBMs have exploited a flaw in the program’s design that shifts the burden of the most costly medicines onto taxpayers,” he said.
By restructuring the program “to require manufacturers and PBMs to bear more of the cost,” taxpayer costs would be reduced by “tens of billions of dollars.” The proposal also caps a senior’s prescription spending each year.
“Both are significant improvements over current law,” Badger said.
Badger is less enthusiastic, however, about the Grassley–Wyden proposal’s requirement that drug manufacturers pay a “rebate” on cost hikes that exceed CPI.
“This provision is misguided” as a government price control, he said.
Grassley thinks the proposal currently has at least 15 Republican co-sponsors in the Senate, and he noted that “we’ve had all but one Democrat on the committee voting for it.”
The biggest obstacle facing the proposal is opposition from the Pharmaceutical Research and Manufacturers of America (PhRMA), which Grassley calls “the same folks who loved Obamacare because it mandated another revenue stream for their products.”
