Split Congress to Attack Drug Pricing

Healthcare was the deciding issue for more than 40% of voters in the mid-term elections, setting the stage for action on Capitol Hill to further challenge too-high prescription drug prices. Concerns over access to affordable care helped Democrats take control of the House. And even though Republicans increased their majority in the Senate, they acknowledge that efforts to dismantle the Affordable Care Act are over in the face of public demand for coverage of pre-existing conditions and other safety-net programs. Three states voted to expand Medicaid coverage, and new Democratic governors may push for similar changes, along with expanded support for opioid abuse programs.  

Despite disagreement on most healthcare issues, leaders of the two parties are open to challenging the status quo on drug costs and spending. While the legislators may stop short of mandating Medicare price negotiations or outright price controls, there is common interest in proposals to enhance price “transparency” in health coverage and drug advertising, to examine rebates and relationships between drug companies and pharmacy benefit managers (PBMs), to require the public release of data on pharma R&D and manufacturing costs, and to reform coverage of drugs under Medicare Part B and Part D.

Even if Democrats fall short of enacting new legislation, they now will set the agendas for key committees overseeing health policy and funding and be able to launch more investigations and hold public hearings on healthcare and pharmaceutical industry practices. Rep. Frank Pallone (D-NJ) is slated to head the House Energy & Commerce Committee, which has the lead in vetting healthcare legislation and federal health programs. Rep. Elijah Cummings (D-Md) will lead the House Oversight and Government Reform Committee, which can issue subpoenas for investigations of health-related abuse and malfeasance. Federal government appropriations, tax policy, and funding for biomedical research will reflect Democratic goals.

Even though Republicans still control the Senate, there will be notable changes in that body. Senate Finance Committee chairman Orrin Hatch (R-Utah) retired after years of promoting legislation of great importance to the pharmaceutical industry. His committee is slated to be led by Sen. Chuck Grassley (R-Iowa), who has long played a visible role in healthcare policy, and not always in support of pharma.  

Republicans will be able to block overly radical or intrusive measures, such as compulsory licensing for patent protected products with limited competition or challenges to medications accused of “price gouging.” At the same time, pharma companies are unlikely to find much support on Capitol Hill for reversing the $4-billion increase in industry’s share of drug costs for seniors in the Medicare Part D catastrophic program.

House leaders may find themselves supporting some Trump Administration initiatives to reform Medicare drug coverage through regulation and administrative pilots. While Democrats largely consider most Republican drug pricing proposals too modest and limited, there could be agreement on some proposals that target drug marketing and pricing practices.