2022: The End Of The US Price Negotiation Debate?
Executive Summary
The Democratic party has been advocating for Medicare drug price negotiation authority in the US for almost two decades. The coming year may see it finally happen – or it might mean the issue is gone for good.
Heading into December, it felt like enactment of a drug price negotiation program in the US Medicare program was all but inevitable.
As 2022 begins, however, that inevitability is very much in doubt, after Sen. Joe Manchin’s (D-W.Va.) declaration of opposition to the “Build Back Better” Act that is supposed to include price “negotiation” system focused on older, top-selling brands, along with inflation penalties and an overhaul of the Part D benefit design. (Also see "Medicare Price Negotiation, Inflation Rebate Legislation Would Generate $163Bn, CBO Says" - Pink Sheet, 18 Nov, 2021.)
But one thing seems abundantly clear: the nearly two-decade push by Democrats to enact a price negotiation program is at a crisis point as 2022 begins. One way or the other, this may be the year that the debate finally ends.
Consider what happened in 2017, when the Republican party controlled the White House, the Senate and the House of Representative. After years of promising to repeal the Affordable Care Act, the effort failed by a single vote in the Senate. Republicans certainly cannot be accused of embracing the ACA after that – but they are no longer foregrounding promises to “Repeal Obamacare” in their campaigns. (Also see "Pharma And Health Reform: Staying On The Sidelines Works Out" - Pink Sheet, 31 Jul, 2017.)
A failure to enact price negotiation could have a similar impact on Democrats. Can they really make price negotiation a central campaign theme after failing to enact it when they finally had the chance?
That is not to say that progressives (typified by Vermont’s Bernie Sanders) will drop the issue by any means. But given the fractures within the Democratic party, the next iteration of the debate is more likely to be a battle over broader health care themes (like “Medicare for All”) than it is to be an effort to push drug price negotiation on its own. (Also see "Medicare-For-Hmmm: A Year Of House Hearings Show Democratic Disunity " - Pink Sheet, 17 Feb, 2020.)
Then there is the possibility that the BBB could pass after all. Manchin’s statement shortly after the Senate adjourned for the holidays is being treated by Democrats as a betrayal, but it is perhaps better viewed as a step up in the existing pressure to scale back the bill — which for Manchin at least focuses primarily outside health care.
Democrats haven’t given up on the bill by any means, and are making the case that drug pricing is a key reason to keep pushing. In a Dec. 20 letter to his Democratic colleagues promising to keep moving on the BBB in the New Year despite Manchin’s objection, Majority Leader Chuck Schumer included drug pricing as the first bullet point in a list of items reflecting the urgency of action:
More than one-in-four American adults did not take a prescribed medication in the past year because of its cost, whether that is life-saving insulin that may cost them hundreds of dollars each month or cancer medications that can be thousands upon thousands of dollars for a course of treatment. Seniors and taxpayers lose billions of dollars per year because Medicare cannot negotiate drug prices.
President Biden similarly emphasized the drug pricing portion of BBB in less formal remarks responding to Manchin. During a briefing on the response to the Omicron variant of COVID, Biden was asked about the prospects for the BBB after Manchin’s statement. He included a discussion of the insulin $35 co-pay cap as a prominent element on the list of important programs that Manchin put in jeopardy.
So maybe a revised bill moves forward, and the negotiation program is enacted after all. That would obviously end the debate in a very different way – with price negotiation now “on the books.” But even so, the delay would have very significant implications about how the new price negotiation authority might be used. (Also see "Medicare Drug Price Negotiation Not A Major Threat To Pharma – Even If It Passes" - Pink Sheet, 3 Jan, 2022.)
As passed by the House, the new program would have called for the Department of Health & Human Services to create a list of “up to 10” initial negotiation targets in 2023, conduct the negotiations in 2024, and have the new prices imposed starting in 2025. If the BBB is resurrected in 2022, those dates will have to be pushed back – and suddenly the first round of “negotiations” won’t begin until after the next Presidential Election.
If Joe Biden (or a Democratic successor) is re-elected, then negotiation proceeds as planned.
But if a Republican is elected, all bets are off. The program could be halted before it gets off the ground. And remember, even Donald Trump—a very atypical Republican President on drug pricing issues as on so many other things—came out against Medicare price negotiation.
There is another option. Drug pricing could move as a stand-alone bill via regular order, and pass with a bipartisan (i.e., 60-vote) majority in the Senate. That would almost certainly be a best-possible outcome from industry, as price negotiation would presumably have to be jettisoned along the way.
For now, the prospect of moving drug pricing as a stand-alone bill appears likely only once any hope of a broader reconciliation package vanishes—and only if Democrats decide that they would be better served politically by doing something meaningful on drug pricing even if they cannot deliver the long-promised price negotiation plan.
While Republicans would likely remain united against anything that includes the “negotiation” policy, there would potentially be sufficient support for a bill that focused on the Part D overhaul, things like the insulin co-pay cap – and potentially even inflation penalties.
For Democrats, the case for moving such a bill would be recognizing that it may be preferable to be able to talk about some significant accomplishments like lowering out-of-pocket spending in Medicare—and moving on from the politics of price negotiation.