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Pete Buttigieg Unveils Plan to Lower Prescription Drug Prices

Yuval Rosenberg

Democratic presidential candidate Pete Buttigieg on Monday rolled out a sweeping plan intended to lower prescription drug prices.

Here are some key elements of the plan:

Negotiating drug prices: Like other Democratic proposals, the Buttigieg “Affordable Medicine for All” plan calls for the federal government to negotiate Medicare drug prices with pharmaceutical companies, with those prices also applying to private insurance plans and Medicaid.

“The first drugs for negotiation will be those with very high price tags and large price differences between what we pay and what other industrialized countries pay, including those to treat diabetes, asthma, arthritis, HIV, and cancer,” the Buttigieg plan says.

As under the plan released recently by House Speaker Nancy Pelosi, drugmakers who refuse to negotiate will be required to pay a tax starting at 65% of a drug’s gross sales. The tax would rise by 10 percentage points, up to a maximum of 95%, each quarter that the company doesn’t comply.

Buttigieg would also allow the federal government to revoke a company’s patent rights if the manufacturer refuses to lower its price. “For ‘worst offender’ pharmaceutical companies that continue to price in a way that harms patients due to unaffordability, when attempts at direct negotiation are rebuffed, and in cases of national emergency related to either a natural disaster or a public health emergency, Pete will judiciously exercise these rights to take away patents,” the plan says.

Cap of out-of-pocket costs: His plan also would cap out-of-pocket spending on prescription drugs at $200 a month for seniors on Medicare and $250 a month for people choosing to enroll in a plan under his proposed public option.

Expand government investment in drug development and manufacturing: A primary focus here would be on antibiotics and medicines to protect against pandemics. Buttigieg also calls for increased U.S. manufacturing of essential drugs. “Currently, global medicine production is largely dependent on China,” the plan says. “This is a serious national security vulnerability that could be weaponized. If China were to ‘shut the door’ on medicine exports and drug ingredients, drug costs could skyrocket, and hospitals and clinics could stop functioning within months, if not days.”

Making drugmakers pay more: “The plan would be funded by significantly increasing an Obamacare-mandated fee on branded prescription drug companies to at least $8 billion per year, indexed to inflation. That’s about $5 billion more annually than drugmakers pay now,” Politico reports. “The pharmaceutical industry would also be on the hook for more of the costs of drugs when seniors with large out-of-pocket spending enter the ‘catastrophic’ phase of the Medicare prescription drug benefit. Drugmakers would also be penalized if the cost of their branded medicines increased faster than inflation.”

Why it matters: “Buttigieg’s drug pricing plan is the latest sign that while Democrats differ dramatically in their vision for the American health insurance landscape, they are far closer together in their willingness to take on the pharmaceutical industry,” STAT’s Nicholas Florko and Lev Facher write. “While Buttigieg has sought a middle ground on health coverage via his ‘Medicare for all who want it’ proposal, his drug pricing plan displays an appetite for aggressive drug industry reforms on par with that of candidates like Sens. Bernie Sanders (Vt.) and Elizabeth Warren (Mass.).”

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