CQ Roll Call: House Democrats Question Drug Industry Innovation

House Democrats on Thursday took aim at one of the pharmaceutical industry's key arguments as Congress considers how to address drug prices, questioning whether drugmakers are actually innovating in exchange for the high prices Americans pay.

"Despite the immense lobbying power, despite the government-funded research, despite the monopoly profits, big pharma, I believe, has actually not done a very good job on innovating," said Ways and Means Health Subcommittee Chairman Lloyd Doggett, D-Texas, at a panel hearing.

Professors and advocates who testified offered suggestions on how Congress could both lower drug prices and promote innovation, such as limiting the number of patents one product could receive.

Robin Feldman, director of the Institute for Innovation Law at the University of California's Hastings School of Law, told the panel that around three-quarters of new patents for drugs weren't for new molecules but for new uses of existing ones. The monopoly extensions granted for those new patents are likely rewarding the drug company with a greater incentive than is needed to reward the incremental research.

"We may be lavishing rewards without getting the innovation that we desperately need," she said. Feldman suggested that all drugs should be granted just one period of exclusivity, which could encourage drugmakers to pursue new, groundbreaking products rather than "recycling and repurposing."

Democrats are not yet rushing to put any drug pricing bills on the House floor, and Doggett said more hearings are likely before any bills were marked up. The broader Ways and Means Committee's next target might be various tax exemptions that pharmaceutical companies enjoy, such as breaks for advertising or the drugs they donate to charity, Doggett told reporters.

Debate Over Direct Negotiation

A key Democratic proposal — allowing direct government negotiation in Medicare's prescription drug benefit, Part D, that would replace the current negotiations by private insurers administering the program — faced harsh criticism by Republicans. One of the witnesses also raised questions about how such a plan would be implemented.

Doggett is the primary sponsor of a Part D negotiation bill (HR 1046) with 118 co-sponsors, all Democrats. The idea could be a major part of a drug price package that the House is expected to pass at some point this session, but it would struggle to advance in a Republican-led Senate.

Under the Doggett bill, if the government and drugmakers fail to agree on a price, then the government would award the license to manufacture a product to a company that was willing to sell it at the government's price.

Republicans characterized that approach as theft of property and raised questions about how the government would approach price-setting.

California's Devin Nunes, the subcommittee's ranking Republican, described the plan as "confiscation of intellectual property when the manufacturer rejects the best offer of a Washington, D.C., bureaucrat."

Douglas Holtz-Eakin, a former Congressional Budget Office director and current head of the American Action Forum, a right-leaning free-market advocacy group, warned that the system for negotiation would be very complicated and "probably would involve years of negotiation or litigation to come up with" a price.

But Amy Kapczynski, co-director of the Yale Law School Global Health Justice Partnership, told the panel it would be an effective tool if the government agreed to pay a fair price.

"What is a fair price? It needs to reflect what we want, so we should pay well for what we value," she said. "We should pay more for more effective drugs and we should take into account the costs and the risks associated with drug development."