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Thursday, 01/21/2016 4:04:32 PM

Thursday, January 21, 2016 4:04:32 PM

Post# of 425628
Drug Pricing:



FLASH NOTE - DRUG PRICING REGULATION: HOUSE HEARING BUT NO ACTION IN 2016 OR BEYOND

Next Tuesday, January 26, at 2pm US eastern time, the US House Oversight Committee will hold a hearing on drug pricing entitled "Developments in the Prescription Drug Market." This hearing will not lead to any legislative action on drug pricing regulation. We stick with our call that no action on drug pricing regulation will happen in 2016, and almost certainly not in 2017. Nothing happens on drug pricing in 2016 except political posturing in an election year designed to make drug pricing regulation a political wedge issue.

No congressional action on drug pricing regulation in 2016. This hearing creates minor headline risk because pharmaceutical sector investors are concerned about any interest in drug pricing regulation from Washington, even if it is a hearing in a House committee that cannot legislate on the issue. This is not the first hearing on drug pricing in this Congress: the US Senate Select Committee on Aging - another committee without the ability to legislate - held a hearing December 9, 2015, that heard testimony from several drug manufacturers.

Congressional Republicans, the majority in both houses of Congress, oppose regulating drug pricing and will stop all attempts by congressional Democrats to do so. Republicans have consistently opposed price regulation in health care since the Affordable Care Act became law in 2010 without a single Republican vote in either house. Republicans want ACA reforms that remove government intervention in health care markets and cite price regulation as a major reason for ACA's failures. The general Republican anti-ACA policy position has been popular with voters, who seem in polls to consistently oppose ACA and to desire its repeal or change. ACA opposition was instrumental in creating the current Republican congressional majorities, which are committed to "repealing and replacing" ACA with something else.

Congressional Democrats understand their inability to effect drug pricing regulation since they are in the minority but are using public dismay about rising drug prices to call for regulation. House Democrats last fall created a "task force" as one means of calling attention to drug pricing issues. Congressional Democrats have not always been so interested in drug pricing regulation: when congressional Democrats held the huge majorities that created ACA in 2010 they acceded to Obama Administration deals with the industry that kept ACA from including drug pricing regulation in exchange for industry ACA support. Members and Senators in both parties understand that voters are concerned about rising drug prices and that many polls suggest the public is interested in government action. We think Members and Senators are open to discussing and considering potential solutions to rising drug prices, including ways that the government could negotiate more effectively with drug companies. But regulators are not yet ready to suggest effective solutions (see our discussion below), and Congress will not step in during an election year when bipartisanship on the issue is unlikely
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