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Should the federal government be able to negotiate the prices of prescription drugs?

Americans spend more on prescription drugs than any other country in the world: about $1,200 per person every year. One in four say the cost is problematic, and some say they haven’t taken their medicine as directed as a result. In Congress, both parties are looking to address the problem -- but with different approaches. William Brangham talks to Emmarie Huetteman of Kaiser Health News.

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  • Judy Woodruff:

    Americans spend approximately $1,200 a year per person on prescription drugs. That's more than anywhere else in the world. One in four say it's difficult to afford those costs.

    Both political parties are now looking to tackle that problem, but with some different approaches.

    As William Brangham reports, the Democrats in the House went first today by passing their own bill.

  • Woman:

    The bill is passed.

  • William Brangham:

    It's an ambitious plan to change the government's role in the cost of prescription drugs, costs that are becoming prohibitively expensive for many Americans.

    The bill aims to lower the price tag for prescription drugs, partly by overturning a 2003 rule that blocked the federal government from negotiating most Medicare drug prices.

  • House Speaker Nancy Pelosi:

  • Rep. Nancy Pelosi, D-Calif.:

    This will make all the difference in the world, and central to it is the power to negotiate.

  • William Brangham:

    The 450-page bill proposes three major changes.

    It lets the government negotiate Medicare prices for dozens of drugs each year, including insulin. It caps out-of-pocket costs for Medicare patients at $2,000 per year. And it forces drugmakers to give rebates to the government if their Medicare drug prices rise faster than inflation.

    Democrats, like Representative Debbie Dingell of Michigan, say it's critical that the government gets the power to negotiate these prices.

  • Rep. Debbie Dingell, D-Mich.:

    There is a reason that we pay nearly four times more for prescription drugs than other industrialized nations. They use negotiation to lower drug prices. We don't.

  • William Brangham:

    Republicans say it will hurt competition and shrink the number of new drugs entering the market.

    Congressman Kevin Brady of Texas:

  • Rep. Kevin Brady, R-Texas:

    People want more cures and lower drug costs. They don't want more cheap political shots. We do, as Republicans, oppose HR-3's government price-setting regime because it will kill lifesaving cures for Americans.

  • William Brangham:

    The House bill is not expected to pass the Senate. But there is a bipartisan bill in that chamber that has some support in both parties. It, too, caps drug costs for seniors and penalizes drugmakers for price increases, but it doesn't allow the government to negotiate drug prices for Medicare.

    The Congressional Budget Office analyzed the Pelosi bill and found it would lead to about eight fewer new drugs coming to market over the next decade, and then 30 fewer over the subsequent decade. It also would lower Medicare drug spending by $450 billion over the next decade, but a little less than that would be spent on new vision, dental and hearing benefits.

    But Mitch McConnell said he won't even bring Pelosi's bill up for a vote.

    For more on all of this, I'm joined by Emmarie Huetteman of Kaiser Health News.

    Welcome to the "NewsHour."

  • Emmarie Huetteman:

    Thanks so much for having me.

  • William Brangham:

    So, before we get to the specifics of the legislation, can you just — again, I touched on this again in the introduction, but remind of us what the problem is.

    I just worry that people who don't have these big drug costs in their life don't appreciate what's going on here.

  • Emmarie Huetteman:

    Absolutely.

    And the fact is, if you have good insurance, in many cases, you don't run up against this problem. But many people do. And it's the kind of problem where it's affecting people in particular who have life-threatening illnesses.

    Diabetes, for example, has been one of the issues that has really drawn attention to this, because a lot of people have had trouble affording insulin, of all drugs. And insulin has been around for a long time and really hasn't improved that much. So people ask, why are the costs going up so much?

    The fact is that drug prices are one of the biggest issues with many Americans, and especially coming into an election year. A lot of Americans in polls say that this is their biggest issue in health care that they want legislators to deal with. And legislators want to make sure that they're showing that they're listening.

  • William Brangham:

    One of those legislators being Nancy Pelosi. We saw a little bit of the detail of her bill.

    How does that bill try to target this problem?

  • Emmarie Huetteman:

    It goes out in kind of a direct way and says, we're going to empower the government to negotiate when it comes to the costliest drugs. We're going to empower the government to negotiate the prices of these drugs directly.

    And the Pelosi bill is actually interesting, because, in addition to negotiating those prices on behalf of Medicare beneficiaries, those prices would then be available to all payers, which means that even if you have…

  • William Brangham:

    Not just Medicare people?

  • Emmarie Huetteman:

    Correct.

    Even if you have employer-based insurance, you would have the ability to then access these prices, because the law says that insurers would have — or drugmakers would have to offer you those prices.

  • William Brangham:

    And then there's also it sets a cap on how much you can pay, also?

  • Emmarie Huetteman:

    It sets a cap for Medicare beneficiaries on how much you pay out of pocket for your — for your drugs every year.

    And that's the first time ever that this is being proposed. So this is going to be probably pretty popular with a lot of Medicare beneficiaries.

  • William Brangham:

    So, right now, what is the difference between the Senate bill and the House bill?

  • Emmarie Huetteman:

    Sure. Absolutely.

    The Senate bill and the House bill have a big difference. The Senate bill doesn't include negotiations. It does have the ability to cap drugs at — they call it an inflationary cap. The idea is that you don't want drug prices to rise faster than the pace of inflation.

    And both the Pelosi bill and the Senate bill include that cap and say, we're going to use this to try and keep prices down more. But, otherwise, the negotiations are really the centerpiece of the Pelosi bill. And the Senate has said, no, that's a no-go for us. Republicans say they don't want the government involved directly in setting drug prices.

  • William Brangham:

    So the idea, if I understand it correctly, is — in the Pelosi bill and this larger argument over, is that the federal government buys so many drugs through the Medicare program. We should have the right to say, hey, drug companies, look, we're buying so much from you. Let's talk about the price.

  • Emmarie Huetteman:

    Right.

  • William Brangham:

    Why is that such a problem for Republicans? That seems like a very natural capitalistic tendency.

  • Emmarie Huetteman:

    Yes. And, also, Republicans will make the argument that, in a capitalist society, you want to have very little government interference in the free market. That's the hallmark of a Republican and conservative perspective.

    And when they look at drug pricing in particular, they say you don't want to restrict drugmakers by setting prices. Among other things, their argument is, if you restrict the amount that drugmakers can charge for their drugs, you interfere in the process through which new drugs are brought to market.

    And their big argument is, if you do this, it's less money for innovation.

    And there are some big weaknesses, actually, in that argument, it must be mentioned. Among other things, as you mentioned, the CBO report said that this Pelosi plan would result in about eight fewer drugs over 10 years.

    To put that in perspective, the FDA approves about 30 drugs a year.

  • William Brangham:

    So it's not back huge of a dent in the flow of new drugs to market?

  • Emmarie Huetteman:

    Theoretically. It's at least hard to make the direct connection.

    And I should also mention that a lot of experts will tell you that most drug development doesn't happen at drugmakers — in drugmakers' labs these days. It's happening at academic institutions. And the drugmakers then purchase the drugs.

  • William Brangham:

    We could sit here and debate the House version vs. the Senate version, but, of course, there's a third party involved. It's President Trump.

    What do we know about what's a red line for the president, what he will accept, what he won't accept?

  • Emmarie Huetteman:

    I'd say the big thing we know is that Donald Trump is wanting to bring drug prices down in any way he can.

    This is one of his big priorities, especially heading into the election next year. He wants to look like he's very strong on health care and listening to people. And this is one of those issues that really drives him crazy.

    As far as red lines, he's actually expressed support for this negotiations idea before. Of course, he was a candidate at the time. But when Pelosi introduced her deal in the — or her bill in the first place, Trump actually tweeted out his support, saying, nice to see your — nice to see your plan.

    Of course, when the Grassley-Wyden bill, the Senate bill, came out later, Trump then said, nice to see your plan too.

    And now the White House says that actually Trump supports the Grassley way of doing this.

  • William Brangham:

    So, if you were a betting person, that's where you think this is going to end up being, that it's going to be some version of that, which does not allow the federal government to negotiate?

  • Emmarie Huetteman:

    Unfortunately, there's one big hiccup here, which is that Senate Republicans actually don't like the Grassley-Wyden bill.

    Their big issue is that that inflationary cap that I referenced, they see that as government price-setting. And they think that that's as bad as negotiations when it comes to interfering in the free market. So there are some big problems there for them.

  • William Brangham:

    So is it possible that nothing gets signed, nothing gets done this year?

  • Emmarie Huetteman:

    I mean, that's always possible in this Congress.

    I would say that, at this point, there are some bipartisan pieces to this. The cap on out-of-pocket costs, that's got a lot of bipartisan support right now. That's both in Grassley's bill and also in the Pelosi bill.

    There's also a lot of consensus on actually different small pieces of legislation that would address blocking generics from coming to market. And a lot of members of Congress point out that, if you ease the path for generics to come to market, you increase competition, and you lower drug prices that way.

    So, we could see some movement on that as well.

  • William Brangham:

    Emmarie Huetteman of Kaiser Health News, thank you very much.

  • Emmarie Huetteman:

    My pleasure.

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