Capitol Perspectives

Controversies over COBRA and abortion coupled with a decline in elective medical procedures plague the healthcare system during this COVID-19 crisis. 

Just weeks ago, America had the lowest unemployment rate in history, the stock market was setting record highs, and the political system had become so poisoned that the speaker of the House and the president, fresh off the Senate acquittal of impeachment articles, were not speaking to each other. That seems like a  dream that was eons ago.

The same politics that fuel patient ire at the drug industry for rising out-of-pocket costs manifest in the other major focus of health legislation this year: “surprise medical bills,” which occur when a patient receives care from an out-of-network healthcare provider.

As the impeachment trial of President Donald Trump dragged into the latter half of the second week, the wheels of healthcare policy development have ground to a halt.

Hours after the House of Representatives impeached President Donald J. Trump, it passed a gargantuan omnibus appropriation package costing $1.4 trillion in 2020 that continues the bipartisan unravelling of the Affordable Care Act (i.e., Obamacare) by repealing three taxes critical to its financing: the “Cadillac tax” on high-cost insurance plans, the medical device excise tax, and the health insurance tax. Together, their repeal costs the federal government $373.3 billion in lost revenue over the next 10 years according to the Joint Committee on Taxation.

Despite Speaker Pelosi’s partisan approach to prescription drug pricing legislation, the building blocks for bipartisan consensus on a redesign of Medicare Part D’s outpatient drug benefit are being laid for a possible deal in Q1 of 2020.

Red flags have gone up regarding the vast overreach of Speaker Pelosi’s sweeping bill (H.R. 3), raising concerns that its key provisions that would enable the government to dictate prescription drug prices may be deemed unconstitutional.

Speaker Nancy Pelosi (D-CA) unveiled her long-awaited, sweeping “Lower Drug Costs Now Act of 2019” (HR 3) that would establish price controls for up to 250 branded drugs, not just for government programs, but for all commercial contracts as well!

Stepping back from the political hyperbole driving the prescription-drug debate is that American taxpayers, patients, and employers spend far more on hospitals than pharmaceuticals. Yet hospitals receive very little scrutiny of their escalating costs.

No one is arguing that enacting price controls in Medicare Part D means they would be applicable in nongovernment commercial contracts. But requiring rebates for price increases that exceed an arbitrary index obviously is a price control in Medicare.

The concept known as “arbitration” to resolve billing disputes between out-of-network providers and insurers on surprise medical bills could spell doom for the pharmaceutical industry if it is cross-walked into the prescription-drug debate.

New challenges have emerged regarding Medicare Part D which require a fundamental re-examination and modernization of the program.

A plethora of proposals are currently under consideration to wring resources out of the pharmaceutical industry, but no amount of money extracted from the life sciences sector can right-size the fundamental imbalance between the federal government’s financial obligations and taxpayers resources to finance those promises.

What is the policy problem driving the populist agenda to slash pharmaceutical spending? Answer: Rising list prices and patient out-of-pocket spending.