Grogan and Philipson: We can lower drug prices and spur medical innovation. Pelosi's H.R. 3 is not the answer

The Senate has a bipartisan compromise that could deliver lower drug prices for Americans. The president is ready to sign it into law. So, why is Speaker Pelosi pushing a partisan plan with fatal flaws that has no chance of passage?

It is within our grasp to provide a real win for Americans worried about the high price of prescription drugs—if Congress can get it across the finish line before the end of the year.

Democrats and Republicans in the Senate have been able to work together on an issue that matters to Americans families: lowering what seniors pay for prescription drugs. Republican Chairman of the Finance Committee Chuck Grassley has worked with Democratic Ranking Member Ron Wyden to craft a transformative bill that would improve the Medicare Part D program, hold drug companies more accountable and save federal taxpayers billions of dollars.


Under the proposal, Medicare Part D beneficiaries would also have a $3,100 annual cap on their total drug costs for the first time. This substantial financial protection would result in savings for over one million beneficiaries with high drug costs.

The bill also would stop arbitrary spikes in drug prices by putting in place an inflation penalty on drug manufacturers who increase their prices faster than the rate of inflation for certain Medicare drugs.

Finally, the bill would require true transparency from pharmacy benefit managers—the hidden middlemen of drug pricing.

Importantly, this transformative bipartisan proposal could be passed by Congress and signed by President Trump. There’s only one hold up: while House Republicans are prepared to enact bipartisan solutions, Speaker Pelosi is pushing a separate bill that is entirely partisan, unworkable, and harmful to Americans’ health.

Why is the Pelosi bill unworkable? A central feature of H.R. 3 that has been widely mislabeled as “negotiation” would instead rely on a bureaucrat to dictate prices for the most innovative medicines.


This “negotiation” would be enforced by a massive tax that would put companies out of business. Even the bill’s supporters admit that under H.R. 3, Americans would need to “accept a trade-off” —less access to potential life-saving medicines— that other, more socialist governments have forced their citizens to live with for years.

The Pelosi bill would kill the innovation and access that have benefited patients worldwide and made the American life sciences the envy of the world.

The Congressional Budget Office suggests that as many as 8-15 new drugs might not be developed in the first ten years under H.R. 3, but standard estimates from economics literature suggest the bill could cut the number of new drugs developed by as many as one third in the long term.  That would mean out of 300 new drugs expected to be approved over a decade by the Food and Drug Administration, 100 new drugs could be severely delayed or never developed.


Even that shocking number fails to reflect the additional costs that would burden families and the federal government due to new lifesaving pharmaceuticals not coming to market.

This reduction in new drugs and the associated premature mortality will cost all of us enormously and could erase nearly one-quarter of the expected gains in life expectancy over the next decade, according to the Council of Economic Advisers.

This number reflects the impact of a cure for Alzheimer’s or cancer that may never be developed or may be launched decades later, too late for thousands of Americans who could have benefited.

So, when the Senate has a bipartisan compromise that could deliver the lower drug prices Americans are rightly demanding and a president is ready to sign it into law, why is Speaker Pelosi pushing a partisan plan with fatal flaws that has no chance of becoming law? Patients waiting for life-saving cures and affordable drugs deserve an answer.

The Grassley-Wyden bill offers Congress an opportunity to enact commonsense solutions that would lower drug prices and preserve medical innovation. If Speaker Pelosi can focus on American patients, a lasting achievement is close at hand.

Joe Grogan is Director of the White House Domestic Policy Council. Tom Philipson is Director of the White House Council of Economic Advisors.