- Democratic presidential candidate Pete Buttigieg on Monday unveiled an aggressive and wide-ranging plan to reduce prescription drug costs, proposing stiff penalties on pharmaceutical companies that don't agree to negotiate with the government on prices.
- For drugmakers deemed "worst offenders," Buttigieg also signaled he would consider asserting the government's so-called march-in rights on drugs associated with patents held by the National Institutes of Health as well as powers to take possession of other patents.
- While other Democratic presidential hopefuls, including Sen. Kamala Harris, D-Calif., have raised that option, Buttigieg's plan goes further in stating the South Bend, Ind. mayor would appoint an attorney general "willing and able to defend these rights" and a Health and Human Services Secretary "prepared to use them."
Buttigieg's plan shares elements and objectives contained in policies advanced by other Democratic candidates, as well legislation proposed in the House of Representatives and advancing through the Senate Finance Committee.
While the political futures of each remain uncertain and nothing has yet changed for an industry used to winning in Washington, taken together the plans signal growing interest in options that would dramatically change how drugs are paid for in the U.S.
Notably, Buttigieg supports direct drug price negotiation by the government, a policy also included in the bill spearheaded by the office of Speaker Nancy Pelosi, D-Calif.
"We are the largest purchaser of drugs in the world," states an outline of Buttigieg's plan. "Applying Walmart logic to the pharmaceuticals industry, we should be paying the lowest prices, not the highest, for prescription drugs."
Unlike the 25 to 250 drugs targeted under Pelosi's plan, Buttigieg proposes the government negotiate on "as many drugs as needed," starting first with treatments for diabetes, asthma, HIV and cancer.
In deciding which drugs to negotiate on, HHS would consider the benefit offered by treatment, the cost of brining a therapeutic class of drugs to market, current treatment costs and the prices charged abroad.
As with the legislation produced by Pelosi's office, Buttigieg aims to bring drugmakers to negotiations via a heavy penalty on the gross sales of companies which refuse to cooperate, beginning at 65% and ratcheting up as high as 95%. Such a stiff tax would essentially threaten to seize company revenues in the event of non-compliance.
Buttigieg's plan also proposes drugmakers pay a mandatory rebate back into Medicare should prices on their products rise faster than inflation, akin to the principal proposal of legislation from Sens. Chuck Grassley, R-Iowa, and Ron Wyden, D-Ore.
For consumers, Buttigieg focuses on both lowering out-of-pocket costs for people insured through Medicare and Medicaid, as well as eliminating copays for generic or biosimilar drugs.
Monthly out-of-pocket expenditures would be limited to $200 for beneficiaries covered via Part D under Buttigieg's plan, and pharma companies would pay a greater share of catastrophic phase of coverage.
Drugmakers oppose most of what is contemplated in Buttigieg's and Pelosi's plans, potentially making the legislation advanced by Grassley and Wyden a more palatable option for the industry.
A Democratic win in 2020, however, could mean policies long considered a nightmare scenario for pharma become a much more real possibility.