This post is third in a series aimed at identifying and exploring some of the public health issues and policies under consideration by candidates in the 2020 Presidential Election.
The goal of this series is to provide a deeper look at the ways in which candidates may or may not be including a public health framework in their healthcare reform policies, and encourage candidates to thoughtfully and purposefully develop nuanced, evidence-based, impactful policies. We also hope to inform the public as they continue to evaluate each candidate’s efforts to articulate plans that address healthcare and public health challenges in the U.S. Our goal is not endorse a particular candidate or political party; rather, our goal, as always, is to research, analyze, inform, and equip people with the knowledge they need to be engaged and thoughtful members of their communities and this nation.
Many of the policies championed by the candidates vying for the 2020 Democratic nomination have centered on healthcare reform. Particular emphasis has been placed on the need to address the immense financial burden faced by Americans as they try to meet their more basic medical needs. One need look no further than bankruptcy courts to understand the impact medical costs, and resulting debt, has on Americans. Medical debt is the greatest cause of bankruptcy in the United States, and some choose to forego necessary medical care. One in four Americans struggle to afford their medications, and three in ten skip doses or forgo refills due to costs. Many diabetics are forced to ration their insulin and elders are reducing their dosage to stretch a prescription. The pharmaceutical industry is one particularly problematic element of the American healthcare system that contributes greatly to the expenses levied on patients, as the industry itself comprises the most profitable companies in the entire healthcare system. This wealth is widely seen as having accrued at the expense of the American citizen.
In 2017 the United States spent $1,220 per person on pharmaceuticals. Americans paid, on average, $600 more each year for prescription drugs than residents of comparable high-income nations. Pharmaceutical companies are continuously able to arbitrarily hike prices, such as when Turing Pharmaceuticals raised the HIV medication Daraprim from $13.50 to $750 per tablet.
We reviewed the various prescription drug pricing policies of each candidates, all of which fall into one of the following categories:
Increase regulation of the pharmaceutical industry
Grant the Department of Health and Human Services (HHS) more power to engage with the pharmaceutical industry
Cap out-of-pocket drug costs
Expand engagement with international markets
INCREASE REGULATION OF THE PHARMACEUTICAL INDUSTRY
Revoke Patents from “Worst Offenders”:
Buttigieg and Warren have proposed using provisions from the Bayh-Dole Act of 1980 to revoke patents from companies that price their drugs unaffordably, thus harming patients. Under the Bayh-Dole Act, federal agencies have “march-in rights” that enable them to require patent holders who have received federal funds to grant licenses to third parties. There have been five march-in petitions since 1997 (all denied by NIH), including one signed by 51 Congressional Democrats in 2017.
Increase Annual Branded Prescription Drug Fee:
Buttigieg has proposed increasing the Branded Prescription Drug Fee. The Branded Prescription Drug Fee Program (BPD) was enacted under the Affordable Care Act. Under the program, drug manufacturers and importers must pay a fee based on their share of branded prescription drug sales to government programs, including Medicare, Medicaid, and the VA.
Charge Rebate for Prices Increasing Faster than Inflation:
Buttigieg and Biden have suggested that pharmaceutical companies pay a rebate for drugs with prices increasing faster than inflation. Buttigieg proposes withholding government payment until companies comply with the rebate. Biden proposes prohibiting companies from participating in Medicare and public option until companies comply with the rebate.
Combat Anti-Competitive Practices:
Buttigieg, Warren, and Klobuchar have proposed measures to combat anti-competitive practices within the pharmaceutical industry, such as “pay-for-delay” deals, which occur when pharmaceutical companies compensate competitors to delay marketing their generic drugs. When generic manufacturers challenge brand-name manufacturers’ patents, the brand-name company will sue the generic company for patent infringement. The two companies will settle with a “reverse payment agreement,” where the suing brand-name company actually pays the generic company, and the generic company agrees to delay marketing their product until a specified date. According to the Federal Trade Commission, these deals result in consumers and taxpayers paying an additional $3.5 billion per year through higher drug costs.
Warren says her administration will pursue antitrust action against companies such as AbbVie, who entered into a pay-for-delay settlement in 2019 to prevent generic competition for its drug Humira. Klobuchar sponsors the Preserve Access to Affordable Generics and Biosimilars Act, which prohibits pay-for-delay deals. Buttigieg says he supports the Protecting Consumer Access to Generic Drugs Act, which would make pay-for-delay deals illegal.
End Tax Deductions for Prescription Drug Adverts:
Sanders, Warren, Biden, Klobuchar, and Steyer propose ending tax deductions for prescription drug advertisements. Under current law, pharmaceutical companies can deduct their advertisement costs from federal taxes. In 2016, these expenses reached $6 billion. Sanders, Warren, and Klobuchar cosponsor the End Taxpayer Subsidies for Drug Ads Act.
Improve Transparency in Drug Pricing:
Buttigieg has proposed several measures to increase drug price transparency. This includes requiring pharmaceutical companies that sell prescription drugs to Medicaid, Medicare, and the public option to report information on sales volume, price, discounts, rebates, promotion, manufacturing costs, and R&D spending to the federal government. Additionally, companies would be required to report drug ingredient sources and manufacturing location on the drug label. Finally, pharmacy benefit managers (PBMs) that work with Medicaid, Medicare, and the public option would be required to report sales information, pricing, and rebates received to the federal government.
Limit Brand-Name Patents
Bloomberg has proposed limiting brand-name drug companies to one 20 year patent. He would also require drug companies that use National Institutes of Health (NIH) IP to make a commercial drug product to pay royalties to NIH, with revenue going to fund additional research and lower Medicare drug costs.
Eliminate Drug Manufacturer Payments to Pharmacy Benefit Managers
Bloomberg has proposed eliminating drug company rebates to PBMs, companies that administer prescription drug benefits on behalf of health insurers. PBM rebates were singled out by President Trump as a cause of high prescription costs; however, he withdrew a proposal to eliminate such rebates for Medicaid and Medicare in July 2019. PBMs receive larger rebates for more expensive drugs, giving them an incentive to favor high-priced drugs. However, a 2019 GAO report found that “virtually all (99.6%) prescription drug rebates negotiated by PBMs with drug manufacturers in Medicare Part D are passed through to drug plan sponsors and used to lower costs for Medicare beneficiaries.”
CAP OUT-OF-POCKET DRUG COSTS
Cap Out-of-Pocket Drug Costs
Sanders, Buttigieg, Warren, and Bloomberg have proposed capping out-of-pocket drug costs. Sanders and Warren propose a cap for everyone, while Buttigieg proposes a cap for public option, Medicaid, and Medicare Part D recipients. Bloomberg also proposes a cap for Medicare Part D recipients
Under Sanders’ Medicare for All plan, everyone’s out-of-pocket drug costs would be capped at $200 per year. Individuals or families with an income under 200% of the federal poverty level would not pay anything. Warren’s Medicare for All plan says there would be no cost sharing at all.
Buttigieg would cap out-of-pocket drug costs at $200 per month and $2400 per year for seniors on Medicare, with lower caps for seniors with lower incomes. Those on public option would be capped at $250 per month. Co-payments for generic drugs would be $0 for those on Medicaid, and for low-income individuals on public option. Bloomberg would cap out-of-pocket drug spending for Medicare beneficiaries at $2000 per year.
GRANT HHS MORE AUTHORITY TO ENGAGE WITH THE PHARMACEUTICAL MARKET
Empower the Federal Government to Negotiate Drug Prices:
Under the Medicare Modernization Act of 2003 (MMA), which established the Medicare Part D benefit, the HHS Secretary “1) may not interfere with the negotiations between drug manufacturers and pharmacies and PDP sponsors; and 2) may not require a particular formulary or institute a price structure for the reimbursement of covered part D drugs.” This section of the bill, known as the “noninterference clause,” prohibits the government from negotiating Medicare drug prices. Among voters, empowering this negotiation is a fairly uncontroversial measure; overall, 88% of Americans, including 92% of Democrats and 85% of Republicans, favor allowing the federal government to negotiate with drug companies for Medicare beneficiaries. Even Donald Trump campaigned on allowing Medicare to negotiate prices, later breaking from that strategy in 2018.
Currently, Medicaid and the Veterans Benefits Administration (VBA) are allowed to negotiate; Medicare pays 73% more than Medicaid and 80% more than the VBA on brand name drugs. In December, the House passed a bill allowing the government to negotiate on Medicare prices.
All of the candidates have expressed support for allowing the federal government to negotiate on behalf of Medicare for lower drug prices.
Empower the Federal Government to Manufacture Generic Drugs:
Under Warren’s Affordable Drug Manufacturing Act, HHS would be allowed to manufacture generic drugs when no company is manufacturing a drug, when only one or two companies manufacture it and the price has spiked, when the drug is in shortage, or when a medicine listed as “essential” by the WHO faces limited competition and high prices.
EXPAND ENGAGEMENT WITH INTERNATIONAL MARKETS
Permit Purchase of Low-Cost Prescription Drugs from Other Countries:
All of the candidates, except for Buttigieg, have expressed support for allowing the purchase of prescription drugs from other countries.
Use International Prices to Benchmark Prices in the US
Sanders, Biden, and Steyer have suggested benchmarking prescription drug prices in the US against international prices in order to control costs. Sanders has suggested pegging US drug prices to the median drug prices in Canada, the UK, France, Germany and Japan. Biden has suggested using this method only in the case of new specialty drugs introduced without competition; an independent review board established by HHS would determine a reasonable price based on the average price in other countries. Medicare and the public option would pay this rate, and private plans in the individual marketplace would be able to access a similar rate. Steyer has not released any further details beyond stating that prescription drug prices will be benchmarked against international standards and price-capped.
All candidate stances were sourced from their official campaign websites, accessible below: