Last week, the Energy and Commerce Committee considered pieces of President Biden’s $3.5 trillion reconciliation bill, also known as the Build Back Better Act. From Monday through Wednesday, we debated on subtitles related to air pollution, energy, public health, wireless connectivity, and drug pricing among many others.
By passing the president’s Build Back Better agenda, Congress will make bold and generational investments for our communities. However, lawmakers are in the midst of finalizing the elements in this bill. There is yet to be an agreement between the House and the Senate about either the size or scope of those investments.
As we work to build this bill, I opposed the drug pricing proposal, H.R. 3, and offered my own alternative. I am confident that we will come together at the end of this to make a historic investment in our future.
Some reporting has implied I do not support lowering drug prices for seniors, but that is false. I want you to hear my position on lowering out-of-pocket costs directly from me.
Earlier this month, some of my colleagues and I introduced the Reduced Costs and Continued Cures Act. Our proposal would, for the first time, limit the out-of-pocket drug expenses of any senior to a maximum of $3,100 per year, and for lower-income seniors, $1,200. It would cap insulin expenses at $50 per month.
It would allow Medicare to negotiate for better prices. It would also close patent loopholes abused by drug manufacturers that make it harder for patients to access less expensive generic drugs. And it pays for this by imposing a cap on the price increases drug manufacturers can impose that extends retroactively to 2016, clawing back from pharma companies’ excess profits gained since then.
From the perspective of seniors and patients, the relief we give seniors is extremely similar to the proposal we voted on last week, and in fact, our proposal lowers costs for the neediest seniors by even more than the other proposal, H.R. 3. That is why I object strenuously to the ridiculous and deceptive assertion that the reason I opposed the bill was because I want drug prices to stay high. My proposal would achieve exactly the opposite.
The reason I could not support that bill is because it puts our ability to find new cures in the future at risk. It proposes to have the government set a price, then charge a 95% excise tax against companies who refuse to accept that price. There is very little incentive for an investor to put money into drug development if there is no ability to achieve a return on that investment.
Why is That Important?
Drug development is a partnership of the public sector and the private sector. Taxpayers invest about $40 billion in the National Institutes of Health each year to do basic research, but we rely on the private sector to invent medicines using that research.
It is expensive — each drug that comes to market costs an average of about $1 billion. It is risky — 95% of drug ideas do not reach the market. In 2018, the private sector invested more than $100 billion in drug development, at no risk to taxpayers. But that investment would not be made if there was no ability to earn a return at the other side.
Who Cares about This?
The investors who put up the money for drug development have explained how H.R. 3 would dry up investment and cost jobs. In San Diego, this would be devastating. We are the third largest biotechnology cluster in America, where 68,000 are employed in life sciences, mostly doing research. It is my job to protect this pillar of our local economy.
But it is not just about jobs and money. Over 50 rare disease patient advocacy groups — which fight for cures for cancer, ALS, multiple sclerosis, lupus and other autoimmune diseases — have publicly expressed concerns with H.R. 3. They worry the cures we could lose might be the ones that save the lives of the sick people they fight for.
The independent, nonpartisan Congressional Budget Office has projected that we will lose cures over time if we enact H.R. 3; independent analysts have suggested the number of cures lost would be far worse than CBO predicts. Those potential cures could be for a rare autoimmune disease that affects only a few, or for a widespread disease like Alzheimer’s.
Worse, the foreign governments we would be basing our prices off of, should H.R.3 become law, restrict access to drugs as a way to save money. That is why the National Council on Disabilities has made clear that it does not support the funding mechanism in H.R. 3 because it is inherently discriminatory against the disabled.
My proposal is to lower drug prices today — just like Democrats have long proposed — while we preserve the ability of American scientists to invent the cures for tomorrow. We have to do both.
Our bill would pay for itself and, we estimate, generate another $200 billion to support additional health care coverage. If my bill passes, we would finally provide out-of-pocket relief to seniors for the first time. Please take the time to review my full proposal here.
We agree that we must lower the costs of prescription drugs. I am committed to doing the hard work to create a plan to actually get it done.
Rep. Scott Peters represents the 52nd District, which covers much of central San Diego County including Poway, Coronado, and large portions of the City of San Diego.