Kamala Harris Plans To Force Drugmakers To Lower Prices

Updated July 16, 2019 at 6:00 AM

Democratic presidential candidate and California Sen. Kamala Harris released a plan to lower prescription drug prices that threatens Big Pharma’s profits if the industry does not bring U.S. prices into line with those in other developed nations.

The proposal’s most ambitious feature empowers the Department of Health and Human Services to set a price for prescription drugs whose prices grow faster than inflation or that are sold for less in another country that belongs to the wealthy Organization for Economic Cooperation and Development. (The average American spends hundreds of dollars more per year on prescription drugs than her counterpart in the costliest European nation.)

The price would be no higher than the average price of the drug in other OECD countries. If a pharmaceutical company chooses to nonetheless set the price at a higher rate, the federal government would tax 100% of every dollar made above the government-authorized rate and return the money to consumers.

“We’re really happy to see Sen. Harris put in place a system that would ensure we are not paying more than comparable countries,” said Steve Knievel, an advocate in the Access to Medicines program at the liberal consumer advocacy group Public Citizen. “It really does have the contours of what a serious reform plan looks like.”

Sen. Kamala Harris (D-Calif.) rolled out a plan that would threaten drug company profits. (Photo: ASSOCIATED PRESS/Cheryl Senter)

Alex Lawson, executive director of the nonprofit Social Security Works, echoed the sentiment, calling Harris’ proposal “a common sense plan to take on pharmaceutical monopoly power and make pharma pay if they keep ripping people off.”

Harris’ plan would also prohibit pharmaceutical companies from deducting the cost of their direct-to-consumer advertising from their federal taxes. Public health advocates believe that the advertisements encourage over-prescription of drugs while obscuring the costs for consumers.

Should Congress fail to enact those two changes through legislation, the California senator and former prosecutor promises that as president, she could take a host of unilateral actions though the executive branch, including by starting investigations of companies involved in price gouging that could lead to the importation of cheaper foreign drugs and criminal charges against offending companies.

The most radical of potential tools Harris outlines invokes “march-in” rights, in which the government compels a company to “license” its drug patent, thereby forfeiting its exclusive hold on a drug. By mandating competition in drug sales, the change would allow rival companies to produce cheaper alternatives.

Still, Harris’ policies could have granted the government even broader authority to lower drug prices, according to Knievel.

“We’re happy to see ‘march-in rights’ in there at all, but it should not just be in outlier cases for the most egregious offenders,” he said.

Harris’ plan reflects a growing Democratic consensus on the need for big ideas to bring down prescription drug prices. Legislation introduced by one of Harris’ presidential primary competitors, Sen. Bernie Sanders (I-Vt.) ― and co-sponsored by Reps. Ro Khanna (D-Calif.) and Elijah Cummings (D-Md.) ― would cap drug prices at the median rate offered in five wealthy nations.

But rather than first force compliance by threatening to tax excess profits as Harris does, Sanders would immediately threaten to open up noncompliant companies’ patented drugs to generic competition. Sen. Elizabeth Warren (D-Mass.), another Democratic presidential hopeful, has proposed empowering the federal government to begin producing generic drugs on its own when prices of key drugs remain stubbornly high.

Former Vice President Joe Biden, who leads virtually every Democratic primary poll, introduced his prescription drug plan on Monday. Biden provided fewer specifics as to how he would lower drug prices. For example, he proposed to end the policy prohibiting Medicare from negotiating bulk rates on prescription drugs but does not describe what tools he would equip Medicare with to get a good deal.

Discussions of prescription drug policy in the Democratic-controlled House have illustrated the pitfalls of vague plans. Democrats took control of the House in the 2018 election on the promise of empowering Medicare to negotiate lower prices, but a proposal to achieve that goal floated by House Speaker Nancy Pelosi (D-Calif.) in May uses the prospect of government arbitration as leverage in those negotiations. Affordable medicine advocates contend that this grants the government far less power than threatening to license patents or confiscate profits.

“Vice President Biden’s plan is a bit ambiguous about how it would achieve the policy aims it lays out,” Knievel said. “A lot would depend on those details.”

Regardless of who wins the Democratic presidential nomination, prescription drug prices are likely to be a major theme in the general-election effort to unseat President Donald Trump.

As a candidate, Trump promised to lower prescription drug prices ― posturing he has periodically reiterated while in office but failed to act on in a significant way. Last Wednesday, he withdrew a plan to ban the discounts drugmakers grant to pharmacy benefit managers ― middle-men between pharmaceutical companies and pharmacies ― which was supposed to have enabled drugmakers to offer lower prices to consumers. Two days before that, a federal judge blocked a Trump administration rule that would have required the disclosure of the prices of all but the cheapest drugs in television ads marketing them directly to consumers.

“Donald Trump talks a good game about taking on high drug prices, but his administration is literally made up of pharma bros like [Health and Human Services Secretary] Alex Azar whose only job is to keep prices high,” Lawson said.

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