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Republican and Democratic lawmakers grappled with the issue of high drug costs at a subcommittee hearing of the House Committee on Education and Labor on Wednesday.

President Biden gave a boost to Democrats by broadcasting his support for price negotiation in his first address to a joint session of congress in late April. "We all know how outrageously expensive drugs are in America," he said. "Let's give Medicare the power to save hundreds of billions of dollars."

Everyone at the hearing agreed that lowering costs of prescription drugs is important -- what they couldn't agree on is how to do it.

"Americans routinely pay three to four times -- sometimes a dozen times -- more than what patients in other countries pay for the exact same drugs," said Rep. Mark DeSaulnier (D-Calif.), chair of the subcommittee on Health, Employment, Labor, and Pensions.

For DeSaulnier, who has chronic lymphocytic leukemia, the issue is personal: "My drug costs $500 per day -- ibrutinib [Imbruvica]. I'm grateful, obviously for this drug," he said, but he questioned why "the exact same prescription drug" was available in Australia for less than $30 a month.

High Prices 'Unconscionable'

One consequence of these high costs is that Americans unable to afford the drugs may ration them or skimp on other necessities.

Frederick Isasi, JD, MPH, executive director of Families USA, a national, nonpartisan advocacy group for healthcare consumers, said roughly a third of Americans are not taking their medications because they're too expensive. Some patients resort to skipping doses or cutting pills in half, he said.

Isasi referred to an elderly woman living in Georgia on a fixed income, "Maureen," who pays $400 every 3 months for an anti-blood clot medication. He said she gave up driving because she couldn't afford both the gas and the medication and limits herself to just one meal a day.

"An 80-year-old woman has made the decision to give up food to pay for prescriptions. It's unconscionable," Isasi said.

DeSaulnier in broad strokes outlined the provisions of the bill he says can help address the problem: the (H.R. 3), which passed in the House in December 2019.

DeSaulnier said the legislation would allow the HHS Secretary to negotiate with drug companies for "fair prices" in the Medicare program, and then make that lower price available to Americans in private health plans, including those with employer-sponsored insurance. The bill would also cap the negotiated price to align with prices in similar developed nations and limit out-of-pocket costs for Medicare beneficiaries -- ending price hikes on nearly 8,000 drugs.

In addition, he said, the bill would reinvest the savings from these negotiations into research that aims to find new medical breakthroughs.

A 'Government Takeover'

Ranking Member Rick Allen (R-Ga.), however, called the bill a "big government power grab" that would drastically reduce drug development and innovation.

"What we're talking about here is a government takeover of the pharmaceutical industry," he said.

The Council of Economic Advisers Forum found that the bill would lead to 100 fewer drugs entering the market over a decade. What's more, Allen argued, if the bill had been in place during the pandemic, the swift development of the COVID-19 vaccines through Operation Warp Speed would not have been possible.

But Isasi argued the opposite was true: "The entire regime around the development of these vaccines is what H.R. 3 would put in place," he said.

"The government helped to fund the vaccine development. The government negotiated the price," Isasi said. "We paid for 100% of the Moderna development and we paid for almost half of all the other [vaccines], and yet we still have record profits occurring in the pharmaceutical industry."

'Different Type of Negotiation'

Mariana Socal, MD, PhD, MPP, of Johns Hopkins Bloomberg School of Public Health in Baltimore, noted that what happened with remdesivir (Veklury), an antiviral therapy used against COVID-19, was also a "very useful model."

Because the pandemic presented an "extreme situation" where a drug with no competition was urgently needed, the HHS Secretary was able to negotiate the price of a certain amount of remdesivir and then make that price available to private hospitals who purchased the drug, Socal said.

As she explained in her opening statement, the drugs that lack any competition are the same ones that Americans pay three to four times more than other countries do, and they are the reason "a different type of negotiation" is needed.

As Socal and David Mitchell, founder of the Washington-based Patients for Affordable Drugs Now, a national bipartisan patient organization focused on lower drug prices, said transparency is also critical.

Mitchell, who has multiple myeloma and who noted that he spent more than $18,000 out-of-pocket for pomalidomide (Pomalyst) last year, said that under the current system, it's impossible for him to know whether the "preferred drug" on a formulary is "the best drug" or the least costly, or whether it's simply "preferred" because the pharmacy benefit manager (PBM) got a kickback from the drug company.

But under H.R. 3, Socal explained, employers would have access to a federally mandated "transparent maximum price," and PBMs would still have the option to negotiate prices further.

And unlike the current systems, patients would directly benefit from the transparent and lower drug price produced by negotiations, Socal said.

The 'Wrong Direction'

But others disagreed that the bill would solve the problem of high drug prices.

"I think this goes way too far in the wrong direction," said Doug Holtz-Eakin, president of the American Action Forum, a conservative think tank.

He said that while he was sympathetic to the notion that specialty drugs, particularly oncology drugs, are very expensive, there isn't evidence of a "sharp uptick in prices" that would merit the kind of "sweeping" legislation being proposed. The bill would impact every third-party payer in the country, he said.

Plus, it would do nothing to improve the situation for the chairman and his fellow witness David Mitchell.

"It would only make it worse," Holtz-Eakin said. "There would be no innovation to replace [their drugs] with anything that is a cure." Nor would there by any competition to help lower the price of their drugs, he added.

And while Democrats and patient advocates painted an image of an industry swimming in profits, Holtz-Eakin characterized drug development as "risky" business. One in 1,000 pharmaceutical agents makes it into a clinical trial and only 8% are approved by the FDA, he said, adding that it takes an average of $2.9 billion and about 15 years to bring a successful drug to market.

Also, he argued, H.R. 3 would threaten innovation in the U.S. pharmaceutical industry. In other countries, where similar policies have been adopted, citizens are denied access to the latest therapies and drugs, he said. "The United States does not do that."

Holtz-Eakin argued for a more "targeted solution," one captured by the Republican "."

He said this bill, which the ranking member also supports, would strengthen incentives for negotiations by making manufacturers and plans liable for more of the costs in the catastrophic region of the Medicare Part D benefit, which would reduce the incentive for having high-cost drugs that "push individuals into that region."

Lawmakers can also cap out-of-pocket costs to improve the benefit for beneficiaries.

And, he noted, because Part D Medicare plans account for a quarter of drug spending, they are a "very important lever" to improve private negotiations -- "that I think is a better route to go," he said.

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