The pharmaceutical industry is set to be a particular target of the new Democrat-led US House of Representatives, whose members have pledged to act speedily to fulfil their promise to voters to reduce prescription drug prices and increase oversight of the industry, following the party’s landslide election victories on November 8.
House Democratic Leader Nancy Pelosi has said that, within the first 100 hours of a Democratic majority, she would pass legislation to enable Medicare to negotiate lower prices for prescription drugs. The Medicare Modernisation Act of 2003, which established the Medicare prescription drug benefit, expressly prohibits the federal government from engaging in price negotiations with drug manufacturers, and the Democrats are expected begin work immediately to get this prohibition removed.
However, President George W Bush has the power to veto any such move, and the Democrats’ two-seat majority in the Senate, could prevent any serious legislative upsets for the foreseeable future.
Nevertheless, the Democrats have powerful allies among Republican Senators who support moves to curb drug prices – they include John McCain of Arizona, who has expressed interest in seeking the Republican presidential nomination in 2008. Even if such legislation is frustrated by Presidential veto or stalemate in the Senate, Congressional hearings are likely to be forthcoming, in order to probe the profits made by manufacturers and providers since the drug benefit’s enactment.
Shares of leading drugmakers and health insurers fell immediately on news of the Democrat victories, and the Pharmaceutical Research and Manufacturers of America warned Congress and the Administration to “carefully consider” the impact that any legislation or regulation might have on pharmaceutical innovation.
“America’s pharmaceutical research companies lead the world in discovering new cures and treatments for patients,” said PhRMA president and CEO Billy Tauzin. “The new drugs that save patient lives today are a result of the billions of dollars and years of research and development that pharmaceutical companies invest. So we support public policies that help promote an environment in which the innovation of new, cutting-edge treatments are valued and encouraged,” he added.
Nevertheless, some analysts expect biotechnology companies to draw some benefits from the new political landscape, not least because of the Democrats’ support for stem-cell research.
PhRMA has also pledged to continue backing the Medicare drug program. “Today, 90% of the Medicare population has comprehensive drug coverage, and they are saving on average $1,200 a year. Clearly, the new program is working very well and exceeding expectations,” said Mr Tauzin.