Fact Checker: Ad takes on 'Republican' plan to lower drug prices

A health care advocacy organization launched a new ad in Iowa earlier this month, making the case that allowing federal officials to negotiate prescription prices directly with drug companies would reduce cost for Americans on Medicare.

The ad states 'the current Republican-sponsored health care proposal does not allow Medicare to negotiate.'

Analysis

The 'Afford' TV ad was launched in Cedar Rapids and Des Moines by Health Care Voter, a left-leaning health care advocacy organization created in 2017 to block the repeal of the Affordable Care Act, according to Influence Watch.

The ad makes the case that drug companies are making 'astronomical profits' and that allowing Medicare to negotiate those prices would help reduce costs for Americans across the board.

For the sake of this check, we will focus on the measurable statement: 'the current Republican-sponsored health care proposal does not allow Medicare to negotiate.'

In 2019, there were 64 million Americans on Medicare, including Medicare Advantage enrollees, accounting for one of the largest purchasers of prescription drugs in the world.

According to the federal Centers for Medicare and Medicaid Services, Medicare spending on prescription drugs increased $76 billion in five years, growing from $109 billion in 2012 to $185 billion in 2017.

Currently, the U.S. government has no direct role in negotiating or setting drug prices for Medicare beneficiaries, according to the Kaiser Family Foundation, a nonprofit health care research foundation.

The Medicare Modernization Act, which was passed by Congress in 2003, includes a 'non-interference clause' that stipulates the Secretary of the U.S. Department of Health and Human Services 'may not interfere with the negotiations between drug manufacturers and pharmacies and Medicare Prescription Drug Plan sponsors.'

Fact Checker gave former Democratic presidential hopeful Amy Klobuchar an A in December for her claim that it was against the law for Medicare to negotiate lower drug costs.

The ad is not overtly clear what the 'current Republican-sponsored health care proposal' is referring to. Following an inquiry from Fact Checker, Health Care Voter said it is referring to the Prescription Drug Pricing Reduction Act of 2019.

The Prescription Drug Pricing Reduction Act does not include a proposal to reverse the non-interference clause to allow Medicare to negotiate with drug companies, according to the Kaiser Family Foundation.

However, it is a bipartisan proposal, and not solely Republican-backed. The legislation was first put forth by Sen. Chuck Grassley, R-Iowa, but a Democrat from Oregon, Sen. Ron Wyden, soon jumped on as a co-sponsor.

The two senators released a second iteration of the bill this past December with revisions that could win more support from GOP lawmakers, the Washington Post reported. According to the report, while the White House has backed the proposal, nine out of 15 Republicans were against it when the bill was up for vote in the Senate Finance Committee in July 2019.

The Hill reported Republicans up for reelection this year are hesitant to support this bill since some conservatives view provisions within the proposal as too close to a price control.

In an email to Fact Checker, a Health Care Voter spokeswoman said the organization believes one of the best ways to lower drug prices is to give Medicare power to negotiate with drug companies, similar to what the Department of Veterans Affairs does today.

She pointed to the Elijah E. Cummings Lower Drug Costs Now Act of 2019, a proposal passed by the Democratic-controlled House in mid-December. According to a Kaiser analysis from December 2019, the legislation includes a provision to allow the Health and Human Services secretary to negotiate with drug companies to reduce spending for high-priced drugs for Medicare and private insurers.

Health Care Voter also pointed to Grassley's track record as chairman of the Senate Finance Committee. According to an article published by The Hill in January 2019, Grassley said he would not pursue the House-approved legislation, meaning the proposal would not make its way to the GOP-controlled Senate.

'I don't want to mess with the government negotiating prices with the private sector,' he said, according to The Hill.

The Prescription Drug Pricing Reduction Act of 2019 does have proposals that theoretically would impact overall drug costs for those on Medicare, if passed into law.

The bill redesigns Medicare's Part D benefit to include more consumer protections by establishing a $3,100 cap on out-of-pocket spending as well as provisions to address certain factors that lead to inflated drug costs, according to the public policy think tank Brookings Institution.

One such provision — which would generate millions in savings, according to the Congressional Budget Office — requires manufacturers to pay rebates to the government if drug prices grow faster than inflation.

The House's Lower Drug Costs Now Act of 2019 would cap out-of-pocket costs at $2,000 and would also include an inflation-based limit on Part B and Part D drug pricing, according to Kaiser. Under this legislation, unlike the Prescription Drug Pricing Act, the dollars saved from these provisions would be reinvested into Medicare to expand benefits to more Americans, according to Kaiser.

Conclusion

When simply looking at the statement of how the 'proposal does not allow Medicare to negotiate,' the claim is accurate.

The Prescription Drug Pricing Reduction Act of 2019 does not include a provision that would allow the Health and Human Services secretary to negotiate directly with drug companies to reduce costs for Medicare and private insurers.

However, the claim does not specify this legislation is a bipartisan proposal — and has even struggled to gain support from other Republicans.

Therefore, the ad leaves out important context on the support behind this bill. While the ad's claim on a provision within the proposed plan is accurate, we've docked the grade because of this. We give the ad a B.

Criteria

The Fact Checker team checks statements made by an Iowa political candidate/officeholder or a national candidate/officeholder about Iowa, or in ads that appear in our market. Claims must be independently verifiable.

We give statements grades from A to F based on accuracy and context.

If you spot a claim you think needs checking, email us at factchecker@thegazette.com.

This Fact Checker was researched and written by Michaela Ramm.