Leaked Pelosi plan uses international reference index to set U.S. drug prices

A leaked draft of a drug pricing plan under development by House Speaker Nancy Pelosi seeks to give the HHS secretary the ability to negotiate U.S. drug prices based on an international price index.

Pelosi’s office said the draft was “out of date.”

It was clearly written with an eye to the 2020 elections rather than finding common ground with Senate Republicans who are proposing far more modest drug pricing legislation (see “BIO Expects Year-end Drug Pricing Legislation”).

Under the plan, prices would be set for the most expensive 250 drugs every year. Drugs would be subject to negotiation if they do not face competition from at least two generic, biosimilar or interchangeable products.

The maximum price would be 120% of the average price of a drug in six countries: Australia, Canada, France, Germany, Japan and the U.K.

Prices would be available for Medicare Parts B and D and to private payers.

Companies that refuse to engage in negotiations would be assessed a "non-compliance fee" of 75% of the gross sales of the for the previous year.

The plan asserts that it would not inhibit innovation, arguing that “much of research and development driving the search for new breakthroughs isn’t paid for by drug companies, it’s paid for by American taxpayers through federal funding of the NIH and other grants.”

It contends that drug companies spent much of the “windfalls from the giveaways in the GOP tax scam” on stock buybacks, and cited this as “evidence that out-of-control drug prices are padding corporate profits instead of fueling the search for new cures.”

The draft also states that the plan would restructure Medicare Part D by eliminating the coverage gap or donut hole and establishing a 25% cost-sharing between a beneficiary’s annual deductible and a catastrophic threshold. It does not specify the amount of the annual deductible or the catastrophic threshold, and values for liabilities of drug manufacturers and insurance companies are left unstated.

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