Pharma's worst nightmare? Leaked Democrat pricing plan calls for negotiations, price index, fines and more

An image of Nancy Pelosi standing at a podium wearing a red blazer.
A version of House Speaker Nancy Pelosi's drug pricing bill was leaked, but aides said it's outdated. (Getty images/Tom Williams/CQ Roll Call)

Pharma watchers have been awaiting House Speaker Nancy Pelosi’s drug pricing plan, and on Monday the industry got a peek at what Democrats are discussing to lower drug prices.

The upshot? If the House leadership gets its way, it would devastate pharma's pricing power.

The leaked document is outdated and the proposals could change, a senior aide told The Hill. The industry would put up fierce opposition, and Republicans could well balk, too. But the bullet points offer a glimpse into the talks behind closed doors that could end up out in the open—and on the House floor.

In the draft drug pricing plan, published by Bloomberg Business, Democrats suggest authorizing the HHS secretary to negotiate prices for the top 250 drugs that don’t have at least two generic or biosimilar rivals. That would include the industry's biggest sellers, such as AbbVie's behemoth Humira and Merck & Co.'s powerhouse Keytruda.

The plan also calls for an international price index to peg pharma’s U.S. prices to the much lower stickers overseas. It would also levy steep fines to keep drugmakers in line and place limits on price hikes, among other things.

If the proposals ever come up for Congressional action, they'll face serious opposition from the industry and possibly Republicans. 

Veda Partners analyst Spencer Perlman wrote that the plan is “scary, but unpassable,” as quoted by Bloomberg.

In a note to clients, Evercore ISI analyst Umer Raffat wrote that the plan is “very ambitious.” In fact, it’s so aggressive he wondered whether it’s intended to “get something done” or to “provide armor in an election year.” Importantly, analysts will be watching to see whether President Donald Trump provides any support for the plan, Raffat wrote.  

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While the leaked document isn’t an official proposal or in its final form, it does highlight the aggressive stance Democrats intend to take on drug prices. It remains to be seen whether they'll attract any cooperation from Republicans in control of the Senate.

Pelosi's plan is only the latest after several years of drug pricing debate in Washington, D.C. The Trump administration has made some moves and faced setbacks on the issue, but officials are still forging ahead with efforts to lower prices. Meanwhile, as Congress and the federal government haven't reached a consensus on drug prices, many states have also taken measures into their own hands.