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Do Democrats Actually Want to Make Drugs Cheaper?

Or are they just looking to cut a deal for the sake of cutting a deal?

Chip Somodevilla/Getty Images

A study published Friday in JAMA Network Open on the prices of brand-name drugs found those costs to be constantly rising, often with an insolent disregard for received economic wisdom. The authors, from Scripps Research, examined pharmacy claims data for 49 top-selling drugs from 2012-2017, and found that, in defiance of free-market dogma, competition was not driving prices down. Indeed, they write, “products that may be prescribed interchangeably... were highly synchronized in relative cost changes while demonstrating some of the largest cost increases in the industry over the past 6 years.”

“That was one of the more disheartening findings,” the study’s lead author told Medscape Medical News, about the “seeming coordination” of drug prices.

So what is to be done?

Like many seemingly intractable problems in American society, the problem of out-of-control drug prices is only “complex” and difficult to solve because the easy solutions are forestalled by our plutocrat-captured political system. The government could institute price controls, as basically every other country does. That’s a solution so obvious that even the Trump administration—which occasionally gestures at doing popular things for political gain before the conservative ideologues in charge of actually administrating the government step in to ensure that the looting continues—abruptly endorsed a version of that idea just before last year’s midterms. Trump health officials, acting for a brief moment in something that might be plausibly described as the actual public interest, proposed outsourcing the price-setting process (for drugs covered by Medicare Part B) to various other countries that figured out how to do this many years ago.

An even more effective remedy, considering that the government already funds billions of dollars worth of drug research that pharmaceutical companies eventually profit from, would just be to nationalize the pharmaceutical industry, or at least eliminate its patent monopoly.

Whatever we do to bring runaway drug prices back to earth, it will have to be big. As the study’s authors put it in their conclusion: “The costs of brand-name drugs have risen substantially in the past 6 years, with regular increases occurring 1 to 2 times per year. With so few exceptions to this norm, costs will likely continue to rise unless bold actions are taken.”

Luckily, bold, consumer-focused solutions to America’s kitchen table issues are exactly the sort of things the Democratic Party would like to be identified with, in the eyes of the electorate. And so, taking a break from squabbling about impeachment and oversight with members of her own caucus, House Speaker Nancy Pelosi last month pointed fractious House Democrats toward a plan—the result of “private talks with the Trump administration,” say the Huffington Post’s Zach Carter and Daniel Marans—to pass a bill about high drug prices.

Mind you, this was not a plan actually to lower the costs of drugs. No, it was a plan to pass a bill about high drug prices. Here, per Carter and Marans, is how it would work:

Capitol Hill sources tell HuffPost that the prescription drug proposal, which has not been officially released to the public, would empower the secretary of health and human services to negotiate lower prices with pharmaceutical companies for drugs sold in the U.S. If the two parties failed to reach an agreement on an individual medication, the Government Accountability Office would be permitted to set a final price close to the typical amount charged for the drug in other countries.

The Department of Health and Human Services would be required to negotiate on at least 25 drugs each year, and companies that refused to participate would be slapped with a tax equal to 50 percent of their prior year’s sales of the drug. Prices on all drugs covered under Medicare Parts B and D could not be increased going forward, and any company that still did so would have 100% of the price hike taxed away.

Politico confirmed the same broad outlines for the plan, again noting that in cases where the HHS is unable to broker an accord, it can then “use the GAO to resolve disputes and set a price if no agreement can be reached.”

As I said, making prescription drugs affordable is not a complicated problem, but I will grant that it is a challenging one, given that various large industries—like, say, enormous global drug companies—wield de facto veto power over any proposed curbs on pricing. Even within this necessarily constricted political environment, though, House Democrats could use their healthy majority to pass a more ambitious plan to actually cut drug costs.  Such a proposal could then serve as a starting point in their negotiations with a White House that wants to be seen as addressing high drug prices.

It’s all too easy, by contrast, to identify a plan that wouldn’t work—and that plan is pretty much the one that Pelosi put forward. The basic, blinding flaw in this proposal is to task Donald Trump’s health and human services secretary, a former pharmaceutical industry executive and lobbyist, with deciding, at his personal discretion, to negotiate the prices of “at least” 25 drugs. But even without that bit of biographical detail, you can already figure out the various ways that a price intervention all but designed to function as anything but a serious curb on drug pricing can’t possibly work, right?

For one thing, America’s unique dilemma in need of remedy is “drug costs,” not “25 drugs’ costs.” The JAMA Network Open study focused on 49 drugs that involved more than 100,000 pharmacy claims. The JAMA researchers found (emphasis mine):

Substantial cost increases among these drugs was near universal, with a 76% median cost increase from January 2012 through December 2017, and almost all drugs (48 [98%]) displaying regular annual or biannual price increases. Of the 36 drugs that have been available since 2012, 28 (78%) have seen an increase in insurer and out-of-pocket costs by more than 50%, and 16 (44%) have more than doubled in price.

You may have noticed that most of the numbers in the passage above are greater than 25. 

And even this study is just looking at a representative sampling, not the full scope of the problem. AARP’s Public Policy Institute last year tracked the retail prices of hundreds of brand-name drugs commonly prescribed to older Americans and found that more than 200 of them increased in price beyond the rate of inflation in 2017.

One might argue, in response, that a sensible executive branch would understand that lowering drug prices would be politically advantageous. And this insight, in turn, might lead some hypothetical Republican secretary of Health and Human Services to vigorously negotiate the prices of considerably more than the 25 drugs mandated by law. Alas, we must again remind any readers given to policy transports driven by logic and sound political calculation that the current, non-hypothetical HHS secretary is a former pharmaceutical industry executive. We must also gingerly remind said readers that all available evidence from the last 40 or so years of hard-right governance in Washington shows that Republicans will always place industry profits above their constituents’ needs. In short, the Republicans who currently have power in the White House and the U.S. Senate have not actually done any of the obvious things they could do to reduce drug prices, and can reliably be expected to stay the course, as they like to say

Yet the Democratic speaker of the House is blithely proceeding as though none of these obvious and crushing truths have any purchase in the debate over health care policy. The Pelosi proposal doesn’t even seem to have any safeguards in place to prevent HHS from “negotiating” pharma-friendly high prices (which, again, is easy to imagine any Republican administration, and especially this Republican administration, doing). And in the event of a stalemate over prices, the negotiations only get sent to GAO (which has no experience regulating markets of any kind) if the pharma company in question and government regulators can’t come to an accord over a modified price.* The government is thus free to continue doing nothing in the far more likely scenario of both parties showing that they can agree on an exorbitant one.

This is all evidence of a fundamentally broken congressional Democratic policy apparatus. If one were to try to come up with a plan that both has some real chance of getting signed into law and that would make any meaningful difference in the lives of voters, it would not look anything like this. The process broke down right after the part about it having a shot at becoming law, and even that step doesn’t seem to have been thought through. After all, Pelosi unveiled this proposal in the midst of a fight with the administration over congressional oversight—and sure enough, the president said the next day that he wouldn’t do any drug prices deal until and unless the House stops investigating him.

The recently passed “retirement bill” that doubles as a giveaway to the insurance industry is similarly unequal to the scope of the problem it supposedly addresses, though it is less baldly ridiculous. But both measures bespeak a profound lack of political imagination and foresight on the part of Congress’s Democratic leadership. Pelosi and her lieutenants seem principally focused on what they imagine would happen right after a bill is signed into law: a big spinning newspaper flying toward the camera with a headline blaring “DEMOCRATS CUT DRUG PRICES AND RETIREMENT SECURITY DEALS” and an extremely flattering accompanying photo of Nancy Pelosi and Chuck Schumer cutting the ribbon at a newly opened public/private partnership-run community center for veterans and orphans. Conspicuously missing in such a reverie is any serious reckoning with just what happens after a bill becomes a law and then doesn’t make a meaningful difference to anyone. It’s not so much a failure of political courage (though it is, of course, also that) as a failure of basic logic: Cutting deals for the sake of cutting deals.

It’s one thing, to be sure, to insist on holding off on impeachment or sustained oversight for the sake of producing real-world policy breakthroughs on bread-and-butter issues—even though such arguments rest on the same fallacious either/or approach to legislation versus oversight that launch your typical Trump outburst. But with these empty legislative gestures, Democratic Party elders have shown that their fabled adherence to realism and pragmatism is itself deeply unserious. In the name of sober adult legislative horse-trading, they’ve only managed to carry off the sober pursuit of silly non-solutions to real problems.

* A previous version of this sentence incorrectly referred to OMB instead of GAO.