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U.S. House Speaker Pelosi unveils proposal to lower drug prices

WASHINGTON (Reuters) – U.S. House Speaker Nancy Pelosi, a Democrat, proposed legislation on Thursday to allow the federal government to negotiate the prices of hundreds of prescription drugs, and said she hoped for support from Republican President Donald Trump.

But many of Trump’s fellow Republicans, who run the Senate, are not keen on letting the government negotiate over prices, saying it amounts to price fixing. Initial reaction to Pelosi’s plan was negative from both House and Senate Republicans.

“We hope to have White House buy-in, because that seems to be the root to getting any votes in the United States Senate, and we want as strong a bipartisan vote as we can in the House and the Senate. We would hope that they would support this,” Pelosi told a news conference.

Americans pay the highest prices for prescription drugs in the world, as most other developed nations have single-payer systems with their governments negotiating prices.

Democrats promised to curb prescription drug prices during last year’s congressional election campaign, when they captured the majority in the House of Representatives.

Trump has also promised to lower prices but has been struggling to deliver on that before the November 2020 presidential election.

Senator John Thune, the number two Senate Republican, said Pelosi’s plan was “heavy-handed” and would be “dead on arrival” in the Senate. The plan was “essentially kind of killing the free market for drugs,” he told reporters.

In the House, Republican Leader Kevin McCarthy labeled Pelosi’s plan “more socialism.” Elements of Pelosi’s plan are also opposed by the pharmaceutical industry. Still, she appeared undeterred.

“My conversations with the president have been about making this a priority,” said Pelosi, who consulted with the White House while developing her bill. “I believe that he considers it so and we can work together.”

Such cooperation would be a rare example of bipartisanship in Trump’s Washington, highly polarized along partisan lines.

Pelosi’s proposal would allow the U.S. government every year to negotiate prices on at least 25 of the 250 most costly drugs that lack price competition, a summary of the bill said.

The lowered prices would be available to all U.S. consumers, not just Medicare, the government healthcare program for the elderly.

The U.S. government in 2016 spent around $29 billion on prescription drugs in Medicare’s Part B, which includes most injectable drugs, and nearly $100 billion in Part D, which covers pills and other drugs usually dispensed in pharmacies.

The Speaker’s bill would also impose penalties on pharmaceutical companies that refuse to negotiate or do not reach agreement. They would have to pay a “non-compliance fee starting at 65 percent of the gross sales of the drug in question,” the summary said. This would increase by 10% every quarter up to a maximum of 95%.

Pelosi told reporters these penalties had to be “painful” in order to work.

“We cannot have the noncompliance fee be a cost of doing business,” she said.

The plan also calls for the government to use a global pricing index, that would set an upper limit for prices reached in negotiations as no more than 120% of the volume-weighted average of the prices paid in six other countries.

Those countries are Australia, Canada, France, Germany, Japan and Britain.

The price index provision could be aimed at soliciting White House support, since the Trump administration has said it is working on a similar rule on some Medicare drug prices.

Other developed nations typically pay far less for drugs, which Trump has called “global freeloading.”

The proposal caps annual out-of-pocket spending on prescription drugs at $2,000 for Medicare Part D beneficiaries, the summary said.

It is not clear how much support Pelosi’s proposal, or any other drug pricing measure proposed in Congress, will receive ahead of next year’s election. But the cost of U.S. healthcare is sure to be a top campaign issue.

FILE PHOTO: U.S. House Speaker Nancy Pelosi (D-CA) looks down from a balcony during an interview with CNBC at the New York Stock Exchange (NYSE) in New York, U.S., September 17, 2019. REUTERS/Brendan McDermid

A less aggressive, bipartisan drug pricing bill by Republican Charles Grassley and Democrat Ron Wyden has passed the Senate Finance Committee, but has not come to the Senate floor. Grassley urged Republicans to get behind his version as the “moderate” alternative to Pelosi’s approach.

International price referencing is likely to face legal challenges from pharmaceutical companies, drug executives say.

Stephen J. Ubl, president of the drug industry lobbying group PhRMA, called Pelosi’s plan “radical,” saying it “would end the current market based system that has made the United States the global leader in developing innovative, lifesaving treatments and cures.”

Reporting by Susan Cornwell, additional reporting by Michael Erman and Richard Cowan; Editing by Himani Sarkar and Bernadette Baum

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