Moderate Democrats Reject Pelosi’s Plan to Fix Drug Prices
House Speaker Nancy Pelosi’s (D-CA) proposal to lower the cost of prescription drugs is unlikely to move forward given the opposition from within her own party.
“[The bill] would not be negotiation but price fixing,” warns Rep. Scott Peters (D-CA). “It will result in the defunding of science.”
Price fixing is when the major players in an industry agree to a fixed price rather than competing. It is illegal. And with good reason – price fixing stifles competition and makes prices higher, not lower.
This week, Rep. Peters joined 9 other Democrats in a letter to Pelosi calling for a less extreme drug pricing overhaul that does not threaten innovation.
“As we have just seen with the lifesaving, record-breaking development of COVID-19 vaccines and therapies, America benefits from the most innovative and capable researchers in the world, and from public-private partnership that encourages world-leading biomedical research and development,” they wrote.
Pelosi’s proposal, HR3, aims to lower drug prices by forcing negotiations between Medicare and pharmaceutical companies.
Drugmakers would also have the option to match the lowest price paid for a given drug in Australia, Britain, Canada, France, Germany, and Japan. Whatever agreement they reach would hold when dealing with private insurance companies.
If no agreement is reached, drugmakers would be hit with intense taxes on the drug’s revenue. Taxes would begin at 65% and increase periodically until they reach 95%. Drugmakers would also be forced to pay rebates to the government if they are found to have raised prices faster than inflation.
As opponents have warned, HR3 could result in less innovation by drugmakers. According to a report from the Congressional Budget Office, HR3 would reduce the number of new drugs introduced in the United States by roughly 3% over the next 10 years.
“Under Pelosi’s socialist drug takeover plan, Washington controls the prescription drug market. That means fewer breakthrough cures and less innovation, like the COVID vaccines,” warns an ad launched by the American Action Network. “With Washington in charge, maybe the lifesaving medication you need still gets made. Or maybe it doesn’t.”
HR3 passed the House in 2019 with just 2 Republican votes.
It was unable to move forward in the GOP-controlled Senate. Now, Pelosi is hoping to incorporate the bill into Biden’s infrastructure plan.
At least 8 of the Democrats now voicing concerns about the proposal voted for it in 2019. Peters said he voted for the bill to “start a conversation about lowering the cost of prescription drugs” and knew the bill had no chance of becoming law. “It’s a better problem to have a cure or therapy that’s expensive and have to figure out how to get it to people than it is to not have the cure at all, and I’m afraid that’s what this version of HR3 would leave us with,” he said.