White House, Pelosi in talks on drug pricing legislation

The Trump administration has held early-stage conversations with Speaker Nancy Pelosi's staff about drug-pricing legislation that could provide each side with a domestic policy victory, according to White House and congressional sources.

Democrats and the Trump administration have made reducing drug costs a priority, but accomplishing anything could be difficult, especially since the administration has taken an aggressive stance to overturn Obamacare in federal court.

Democrats have been reluctant to work with the president or give Republicans the opportunity to claim credit on an issue that ranks high with likely voters.

Rep. Peter Welch (D-Vt.) participated in a mid-February meeting where White House participants included Domestic Policy Council Director Joe Gogan, HHS Secretary Alex Azar, acting chief of staff Mick Mulvaney and Chris Liddell, his deputy for policy coordination. Welch told POLITICO the only shared principle was to lower drug prices.

Wendell Primus, Pelosi's longtime health policy aide, is handling talks on the speaker's end, sources told POLITICO Playbook. Primus has also been engaged in bipartisan conversations with aides to Senate Finance Chairman Chuck Grassley (R-Iowa), the senator's staff told POLITICO. While all of the participants have not yet met in one place, Republicans in the House and Senate are also having separate conversations with the White House and HHS on how to address pharmaceutical costs, according to Grassley aides.

The White House reached out to Democratic-leaning health groups earlier this year to gauge how receptive Democrats would be to working with the Trump administration on drug pricing, sources said.

Primus has been trying to get White House buy-in for a drug price negotiation idea known as arbitration, where a third party would help decide the price of a select group of high-cost drugs, POLITICO reported in February. Republicans might support that idea more than widespread negotiation of all drugs in Medicare Part D. But the proposal irks progressives who think Democrats should stick with their 2018 campaign platform pledge of all-in Medicare price negotiations.

Rep. Lloyd Doggett (D-Texas) said Tuesday that while he wouldn't rule out arbitration, it was "an extremely narrow approach that would not provide an immediate answer to the concerns I hear from so many people about prescription drugs." Doggett chairs the Ways and Means Health Subcommittee and sponsored a Medicare price negotiation bill with more than 110 co-sponsors.

If Democrats are going to reach an agreement, "it needs to be on something that really makes a difference in the lives of people on health care and not agreement for agreement's sake, so a meaningful step forward I'm for and I hope that we can get there," Doggett said.

Congressional Republicans may also be a barrier to an agreement on arbitration. Grassley has concerns about the plan, his aides said.

The White House-Pelosi talks so far consist of staff-level discussions and aren't negotiations, according to Henry Connelly, Pelosi's deputy communications director. "House Democrats promised the American people we'd take bold action to lower prescription drug prices, and that's what we're going to do," he told POLITICO Playbook.

The White House may be trying to use its conversations with Pelosi's office to send a signal to Republican lawmakers that they need to be willing to push further on drug pricing. Many of the White House ideas on drug pricing — like tying the costs of physician-administered drugs to the lower prices paid overseas — fall outside the market-based approaches favored by Republican lawmakers on Capitol Hill.

Primus wants the White House to agree to a delay in implementation of a sweeping rule to overhaul the drug rebate system, lobbyists and health policy groups said. The proposed rule would prohibit drug manufacturer rebates in Medicare and Medicaid unless they are passed on directly to consumers at the point of purchase. Democrats have been critical of the rule because it is expected to raise seniors' Medicare premiums and cost the government billions of dollars.

Azar and his team have been adamant the rebate rule — aimed at eliminating "back-door rebates" to middlemen — will be finalized shortly so it can take effect in 2020. But health plans and the drug industry see that timeline as unrealistic. Savings generated from delaying the rebate rule could help the White House pay for other drug-price priorities, including a budget proposal to establish an out-of-pocket spending cap for Medicare Part D beneficiaries that is estimated to cost the government $14 billion over 10 years.

However, this is another idea that faces an uphill battle with Republican lawmakers. Grassley has said delaying the rule would simply be a budget gimmick he does not support.

House Democrats this week intend to start moving a package of narrow bills that address drug prices by creating more robust generic drug competition. Several of the measures have bipartisan backing.

One area of possible compromise could be on legislation to make it harder for brand-name drug companies to deny samples of their products in order to block generic drug competition. CEOs from seven major drug companies recently told the Senate Finance Committee they could support some version of the plan, known as the CREATES Act.

However, work in the House on even these more incremental drug pricing bills have stirred tension between the Democrats and Republicans.