Pelosi Drug Plan Under Fire from Both Left and Right

Plus, $4.5 billion for the border

Pelosi Prescription Drug Plan Under Fire from Both Left and Right

House Speaker Nancy Pelosi’s burgeoning plan to reduce Medicare drug prices is drawing complaints from both progressives and conservatives, says Roll Call’s Andrew Siddons.

Pelosi and the House Democratic leaders developing the plan reportedly want to give the federal government the power to negotiate the prices of some drugs covered by Medicare. Under the plan, the Health and Human Services Secretary would enter into direct negotiations with drug manufacturers over the prices of the most expensive drugs. In the event of a disagreement between the parties, the Government Accountability Office would make the final call on pricing, and companies that refuse to accept the arbitrator’s decision would get hit with a tax penalty. But that proposal has features that are sounding alarms on both sides of the aisle.

What bothers liberal Democrats: Progressives say that the Pelosi-led plan doesn’t go far enough and risks creating a system that drugmakers can manipulate to their advantage. They want the government to negotiate the prices for all drugs, not just a subset of the most expensive ones (Pelosi expanded the list of drugs from 25 to 250 under pressure from her critics), and they want to give the government the power to strip patents from companies that refuse to negotiate in good faith.

“Arbitration is a very lengthy process,” said Rep. Pramila Jayapal (D-WA), one of the leading liberal critics. “If that’s still the main piece of how we get these drug prices down, I’m concerned that we may not have the ability to take on a lot of drugs.” The arbitration process could be gamed by the drug industry, as well, progressives say, with high-paid lawyers and lobbyists running circles around government negotiators.

What bothers Republicans and Big Pharma: Pelosi’s critics on the right are also worried about her proposal to use negotiation and arbitration, but for different reasons. Conservatives say that Pelosi’s plan would give the government the power to set prices in ways that violate the free market principles they hold dear.

“This comes down to government setting the price, just because someone is going to have to pick the arbitrator, and in doing so, you will start setting the prices by political mechanisms,” said Douglas Holtz-Eakin, a former head of the Congressional Budget Office who now serves as the president of the American Action Forum, a free-market think tank that receives funding from Pharmaceutical Research & Manufacturers of America, the trade group that represents drugmakers.

The drug industry has also spoken out directly against Pelosi’s proposal, claiming that it would give government employees too much power and delay the development of new medicines. “[U]nder government arbitration, a government employee, without necessarily any medical background, would make the decision about whether a Medicare beneficiary could access the medicines that their doctors prescribed,” Juliet Johnson of the Pharmaceutical Research & Manufacturers of America wrote earlier this month.

What comes next: Pelosi has forwarded her proposal to the Energy and Commerce and Ways and Means committees for further refinement. But the opposition from all sides suggests it has a rough road ahead of it. “It’s not a guarantee that progressive caucus members will be for any old bill,” said Rep. Mark Pocan. And even if Democrats can work out their differences on the negotiation process, there’s no sign that Republicans in the Senate have much interest in their approach.

Rep. Ro Khanna of California, a liberal Democrat who has released his own plan to lower drug prices, said he sees no reason to compromise on the bill given its bleak prospects. “I just don’t get the politics here,” he said.

House Democrats Unveil $4.5 Billion Emergency Border Funding Bill

House Democrats on Friday unveiled emergency funding legislation that would provide $4.5 billion to address the growing humanitarian crisis at the southern border.

The measure is expected to get a floor vote next week as lawmakers scramble to meet the needs of migrants seeking to enter the United States and the cash-strapped agencies responsible for their care and shelter. Lawmakers have little time left before they leave for a 10-day July Fourth recess.

“We’re going to run out of money in July because the numbers are just so high,” Health and Human Service Secretary Alex Azar said Friday, according to the Associated Press. “This is not about politics. This is not about immigration policy. This is a humanitarian relief package. And it has got to pass. It’s got to pass immediately. We are out of money and we are out of capacity.”

The 27-page House bill is similar to compromise legislation approved overwhelmingly this week in a bipartisan vote by Senate appropriators. Like the $4.6 billion Senate bill, the House version provides hundreds of millions of dollars for processing facilities, food, water and medical services. But it also contains some key differences sought by liberals, including extra oversight requirements for the administration, restrictions on how the money can and cannot be spent and significantly less funding for Immigration and Customs Enforcement.

“There are serious humanitarian needs at the border, and we all recognize the clear need to act,” said House Appropriations Committee Chairwoman Nita Lowey (D-NY). “This legislation would address the humanitarian crisis in a way that balances the needs at the border with the imperative to hold the administration accountable.”

The bottom line: “The bill sets up a clash with the Senate, which had painstakingly worked out its own bipartisan compromise bill with the expectation that it would pass quickly through both chambers,” The Hill’s Niv Ellis writes. But Andrew Taylor of the Associated Press says that many lawmakers expect the Senate’s compromise version “will generally prevail.”

Read more at the Associated Press, Politico and The Hill.

Medicaid Work Requirements Haven’t Boosted Employment: Report

With approval from the Trump administration, the state of Arkansas rolled out work requirements for Medicaid recipients in June 2018. In the following months, 18,000 adults fell off the Medicaid rolls, though it was not clear exactly why. Did some number, spurred by the work requirements, find new jobs that provided health insurance, eliminating their need for Medicaid?

A new study published in The New England Journal of Medicine answers that question, finding that the people who lost their insurance did not find new jobs. Researchers found instead that the policy reduced the insured rate among the roughly 100,000 30-to-49 year-olds targeted by the work requirements.

“The idea of work requirements is to get people into new jobs and private insurance. But in our study that didn’t happen,” said lead author Benjamin Sommers of Harvard University’s School of Public Health. “We didn’t find any employment changes and instead we see Medicaid coverage rates dropping and more people without health insurance–usually because the process itself was confusing or beneficiaries didn’t even know about the new requirements.”

The findings promoted some analysts to again question the purpose of the work requirements, which are being rolled out in numerous states. “If Medicaid work requirements don't lead to more work, what should we conclude about whether they work?” asked Larry Levitt of the Kaiser Family Foundation. Answering his own provocative question, he wrote: “Maybe they're more about differentiating between the so-called deserving and undeserving poor.”

Charts of the Week

1 million people hit Medicare's catastrophic threshold: The standard Medicare Part D drug benefit has a “catastrophic threshold” above which enrollees pay up to 5% of their prescription costs out-of-pocket. The Kaiser Family Foundation finds that, in 2017, a million Part D enrollees had out-of-pocket spending above the catastrophic threshold, with average annual out-of-pocket costs exceeding $3,200. The foundation says that, although people with out-of-pocket costs above the threshold accounted for only 2% Part D enrollees in 2017, their costs accounted for 20% of the $16 billion in total out-of-pocket spending by beneficiaries that year.

What federal research dollars buy: A new study published Thursday in the journal Science highlights the value of government spending on research. It shows that one-third of new U.S. patents rely on government-funded research. “Federal investment in scientific research fuels innovation, drives national and local economies, and secures United States’ place as a global leader,” Steve Gerencser, interim president of The Science Coalition and associate director of government relations at Brown University, tells STAT’s Brittany Flaherty.

But Flaherty notes that federal science funding as a percentage of GDP has steadily decreased since the 1970s. “This trend raises questions about the nation’s ability to sustain its research leadership in areas like biomedicine and technology, particularly since federal funds play a crucial role in fueling basic science breakthroughs,” she writes.

Your Prize for Making It through the Week

A guitar owned by Pink Floyd’s David Gilmour set a record at auction this week, selling for an eye-popping $3,975,000. The musician sold his entire collection of 127 instruments, including the legendary “Black Strat” — a highly modified 1969 Fender Stratocaster — with the proceeds of more than $21 million being given to organizations that fight climate change.

Listen to Gilmour talk about his former axe here, and sample its sound on some of the many songs on which it appears, including “Money,” “Shine on You Crazy Diamond” and “Comfortably Numb.” (If the Floyd isn’t your groove, this video on how soap bubbles freeze is pretty cool, too.)

Have a great weekend — and please urge your friends to sign up here for their own copy of this newsletter.

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