HR Policy Association

Senator Wyden Includes Employer Plans in Drug Pricing Proposal

Published on: June 25, 2021

Authors: Margaret Faso

Topics: Federal Health Care Reform, Transparency, Quality and Cost Containment

Senate Finance Committee Chair Ron Wyden's (D-OR) proposal to reduce prescription drug prices includes enabling Medicare negotiation with pharmaceutical companies and applying those prices to employer health plans.

The proposal is a starting point to reignite negotiations on drug pricing.  Previous efforts to address rising drug costs in the U.S. through legislation like Speaker Pelosi’s drug pricing bill, H.R 3, have stalled as Republicans and separately, a group of moderate Democrats, raised concerns over the impact of government negotiations on innovation. 

The principles include:

  • The authority for Medicare to negotiate with pharmaceutical companies, especially in cases where competition and market practices are not keeping prices in check.

  • Extending Medicare-negotiated prices to all Americans, including those covered by employers and commercial health plans.  This is consistent with the Association’s advocacy principles on drug pricing reform, which supports such an approach if Medicare-negotiated prices are part of a reform effort.

  • Capping out-of-pocket costs for Medicare beneficiaries and discontinuing certain rebate practices that limit competition.

  • Limiting Medicare drug price increases to the rate of inflation.

  • Reforming the patent system so that drug pricing reflects and rewards scientific innovation.

Outlook:  The proposal offers few specifics on how these principles will be implemented.  Specifically, it provides no direction on how Medicare will negotiate prices, highlighting the minimal agreement in Washington, even between Democratic lawmakers, on how to implement drug pricing negotiations.  Separately, Senator Bernie Sanders has stated he will be drafting a budget resolution which includes direct government price negotiations and an expansion of Medicare to cover dental, hearing and vision benefits.

Margaret Faso

Director of Health Care Research and Policy, American Health Policy Institute and HR Policy Association

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