On March 21, House Speaker Nancy Pelosi came to Dallas, Texas to meet with Dallas Representative Colin Allred, beginning a discussion about how to lower drug prescription costs and how to expand Medicare.
Pelosi and Allred hosted a roundtable with Dallas District Judge Clay Jenkins and County Health and Human Services Director Phil Huang to brainstorm ideas on negotiating lower drug costs. The roundtable participants debated on how to expand Medicare and Medicaid.
“The taxpayer should not have to be paying so much more money for prescription drugs than consumers overseas — three, four, or five times more than a consumer overseas,” said Pelosi.
Texas is among the twelve states that have not expanded Medicaid coverage. Many Northern Texans shared their stories with the panel of medical professionals, Allred, and Pelosi.
Pelosi and Allred want to pass legislation that will allow Medicare to negotiate on drug prices, making them more affordable.
Allred claimed if a business does not have a competitor, it will feel free to raise rates, asserting the drug industry prices need to be kept in line.
“We see in some certain areas in the prescription drug arena, that when you don’t have a competitor, and you have the ability to raise costs, or whatever level you want, that you will, and so that’s what we’re trying to combat,” said Allred.
This is commonly true of goods and services. However, medical professionals and economists have observed that increasing competition in pharmaceuticals may have the opposite effect.
Economists refer to the phenomenon as “sticky pricing,” where, instead of competitors being forced to lower prices to compete for business, they raise their prices to match another company’s higher price.
Dr. Elisabeth Rosenthal, a medical journalist and former physician, explains, “It basically means [that] once one drugmaker, one hospital, one doctor says ‘Hey we could charge $10,000 for that procedure or that medicine,’ maybe it was $5,000 two months ago, but once everyone sees that someone’s getting away with charging $10,000, the prices all go up to that sticky ceiling.”
Texas is quickly approaching a deadline to make medicines more affordable, as the American Rescue Plan expires in September. During the height of the COVID-19 pandemic, medical clinics used funds from the American Rescue Plan Act to expand health coverage, but the extra funds are going away now that it is winding down.
Dr. Phil Haung, the Dallas County Health Director, expressed concerns about how the County intends to continue paying for COVID vaccines, which cost the Parkland hospital system $1.8 million per month to administer to uninsured patients, when the funds are gone.
“This is a mission because this is right on the kitchen table of every table in America,” Pelosi said. She called the issue a priority for U.S. families, noting that many had shared with her their struggle to afford medicines.
Democrats in the House of Representatives, Pelosi among them, proposed legislation aimed at lowering drug prices, but the majority voted against it.
Congresswoman Beth Van Duyne (R-Texas 24th District) said she worried that if the pharmaceutical companies had to negotiate with the government, it would hinder their research.
“I would hate to lose that incentive where they are looking at new cures for things like cancer, heart disease, and breast cancer specifically because they don’t feel like they’re able to put those dollar investments into research and development,” said U.S. Rep. Van Duyne.
Representatives Kurt Schrader (D-Oregon), Scott Peters (D-California), and Kathleen Rice (D-New York) voted against their own party in the decision, echoing Van Duyne’s concern that the measure would stifle innovation from drug companies.
Since then, the Democrats in the Senate have been working on their own bill, which has currently seen no progression.
Though Pelosi commented that she thinks Republicans, namely in Congress, are to partly blame for drugs’ high cost, many Republican officials have also worked to lower the prices of medicine for Americans.
Texas Attorney General Ken Paxton, Texas Governor Greg Abbott, and former President Donald Trump have each campaigned on ideas for lowering drug costs.
Paxton has settled multiple lawsuits with pharmaceutical companies over price gouging.
In 2019, Abbott signed a bill to force transparency in drug prices that requires drug companies to provide certain information any time the price of a drug rises by more than 15% in a year.
The Trump administration passed a rule called the “most favored nation” clause in December 2020. It required Medicare’s reimbursements for fifty prescriptions in the U.S. to match the drugs’ lowest price in other developed countries. However, the rule was immediately blocked by a U.S. district judge in Maryland.
Pelosi said that she has hopes of legislation passing on the issue before funding from the American Rescue Plan runs out in September.