GOP May Outflank Bernie on Drug Price Controls

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It wasn’t so long ago that Bernie Sanders (I-VT) comfortably occupied the left flank of health care policy. His Medicare For All bill was sufficiently costly, coercive and utopian to set him apart from the pack.

Times have changed. When it comes to drug pricing, Bernie faces unexpected intruders on his left:  Republicans.

In recent months, Bernie has yielded socialist turf to two Republicans of impeccable capitalist pedigree. First, it was President Trump, who last fall announced a plan to incorporate drug prices set by foreign governments into Medicare. Then Sen. Rick Scott (R-FL) last week introduced a bill pegging U.S. retail prices for prescription drugs to those set by five foreign governments.

You have to feel for Bernie. Drug pricing was almost an afterthought in his Medicare For All magnum opus. Sure, it included stock verbiage directing the Secretary of Health and Human Services to “negotiate” drug prices and promote generic drug usage “to the greatest extent possible,” but it lacked imagination and force. Drug price negotiation is a staple Democratic talking point and generic substitution is hardly cutting edge, with generics accounting for 90 percent of prescriptions.

Then came Donald Trump. Convinced that foreign governments were “freeloading” on the United States by fixing lower prices for medicines, his administration announced plans for a demonstration project that would base Medicare reimbursement for physician-administered drugs in part on prices set by foreign governments.

In fixing drug prices, governments in developed countries commonly rely on prices set by other governments. The Trump administration has proposed to entangle Medicare reimbursement for certain drugs in this mutually reinforcing web of centralized price setting.

Bernie was ambushed. How could Donald Trump, of all people, beat him to the punch on importing foreign drug prices? Within weeks of the administration’s announcement, Sanders said that he too backed international reference pricing.

Sanders’ bill would declare the price of any drug whose average manufacturer price exceeded the median price in five countries (Canada, United Kingdom, Germany, France and Japan) to be “excessive.” A manufacturer guilty of charging an “excessive” price for a drug would forfeit market exclusivity on that product. The government would license rivals to manufacture and sell it.

Bernie at last had gone where no Republican could follow. Or so he thought.  

He couldn’t have imagined that Rick Scott, an entrepreneur who founded a profitable hospital chain before launching his political career, would introduce a bill to excite the imagination of even the most fevered socialist.

His measure declares that the retail list price for any drug may not exceed the lowest retail price in any of the five countries Sanders identified.

The Sanders bill is timid by comparison. While it references the median manufacturer price in all five countries, Scott chooses the lowest retail price in any of those countries. And while Sanders at least nods in the direction of competition (the government enforces price controls by licensing a rival to manufacture and sell a product you invented), Scott would have the government dispense with such niceties and simply issue price edicts.

And here’s the kicker: Under Scott’s bill, it wouldn’t be the U.S. government that determined a drug’s price, but one of five foreign governments. HHS would comparison shop among those five and impose the lowest as the U.S. retail price -- the price set by the French government for Product A, the Japanese government for Product B, and so on.

Before dismissing the proposal as something Republicans would never seriously consider, bear in mind that Scott isn’t operating on his party’s fringe. Axios notes that Senate Republican leaders haven’t faulted the bill. Indeed, Scott is one of a small group of Senators tasked with developing targeted health care proposals for his GOP colleagues. Bill Cassidy (R-LA) is taking aim at “surprise” medical bills and has drafted a measure that imposes mandates on insurers and price controls on providers for certain emergency services. Senate HELP Committee Chairman Lamar Alexander (R-TN) is reviewing proposals to address health care costs. Scott has set his sights on drug pricing.

That his bill resorts to government price controls is perhaps not all that surprising. Having long defined themselves as the anti-Obamacare party, Republicans lost their health policy lodestar when their repeal efforts cratered. They have grown so fearful of proposing any meaningful alternative to the Democratic party’s leftward drift that they sometimes find themselves drifting to the Democrats’ left.

Bernie Sanders once was a solitary figure in his call for government health care price-setting. He now finds himself in some very unlikely company.

Doug Badger is a senior fellow at the Galen Institute and a visiting fellow at the Heritage Foundation

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