Dr. Ezekiel Emanuel, one of the architects of Obamacare, has recently written in the Washington Post about prescription drug prices and the two approaches to making sense of this mess. He joined me Tuesday:
HH: Dr. Ezekiel Emanuel is the chair of the Department of Medical Ethics and Health Policy at the University of Pennsylvania. You may remember him as serving in President Barack Obama’s White House from 2009 to ’11 where he helped design Obamacare. He recently put into the Washington Post an op-ed that I read and distributed widely, because it’s actually fair. It represents accurately the two approaches to the prescription drug pricing nightmare we are caught up in, and so I asked him to come on. Dr. Emanuel, great to have you on the Hugh Hewitt Show. Thank you for joining me.
EE: Thank you for having me.
HH: All right, now I am a big fan of Secretary Azar’s mixed pricing. I’ll call it pegged pricing approach. You describe it accurately, so I gave you points for that. What’s the deal that can be done there?
EE: So Secretary Azar said look, why don’t we for a segment of Medicare drug prices, those drugs that are administered in a doctor’s office or a hospital, so cancer, chemotherapies, or drugs for rheumatoid arthritis that are injected, for them, we’re going to create this basket of, we call it reference pricing. We’re going to create, look at 16 countries, look at their prices, and we’re going to create an average. And that’s the price we’re going to pay. And we didn’t make it policy. He said we’re thinking about running this as an experiment, as a demonstration project. So that’s a pretty, I mean, as he himself said, it’s a pretty radical, it’s a pretty revolutionary approach. And first of all, it tells me that the Republicans are worried about drug prices. They realize the public is really upset about them. Second, they realize that we have to somehow cap our prices more reasonable in relationship to what the rest of the world is paying, that we’re paying exorbitant prices. And I think this is one approach. It’s price controls. Let’s be serious. It is a price control. You have Republicans putting out an idea for price controls in one part of Medicare.
HH: And reference pricing or peg pricing, as I call it, that is going to be a demo project for half the country. When I had Secretary Azar on, I said wow, the other half of the country is going to be ticked off. But let’s assume for a moment it goes through notice and comment, rulemaking, and half the country get the benefit on this select set of drugs. We have a success. What happens next with Nancy Pelosi and the Democrats in the House and the Republicans in the Senate if everybody says we like that?
EE: It’s a five year experiment. So the results would be in, in 2025, because they’re proposing to start it in 2020. I think if it’s a success, if it lowered prices, say, 20-30%, you would have, yes, this is what we should do. And by the way, we shouldn’t just do it on this restricted part of Medicare. You should do it on all drugs throughout the country. Why should it just be for Medicare? And I think that would be the pressure point. And I think everyone has to realize it.
HH: So Dr. Emanuel, do you support doing that? And at the same time, is there a companion piece that Republicans are going to have to trade for to get support from Democrats for the pegged pricing reference pricing demo project?
EE: Well, I think, look, there are several options out there. So this proposal by Secretary Azar is one of the options. Representative Lloyd Doggett has 100 co-sponsors for a bill that would negotiate Medicare prices not just in this Part B, this segment that’s, a portion, less than half of all drug pricing, but for all of Medicare drug pricing. And his bill says we’re going to negotiate. If we don’t get fair terms with the drug companies, then any company, we’re going to open up the market so there’s no exclusivity for that drug, and any generic maker can come in and produce a generic. That’s the threat to bring the companies to the negotiating table. So you have a negotiating bill on one hand. You have a price setting bill on the Republican side. I think there’s lots of room for negotiation about what to do. And I do think that when you’ve got both sides making proposals, it looks like there’s, you know, potential for legislation. There are a million ways legislation can fail. You know, personally, I think that it shouldn’t just be for Medicare drugs as I said before. I think all of us, I mean, remember, Medicare covers about 55 million Americans. There are, that means 275 million other Americans who need help, Medicaid has low drug prices, so take out another 65 million Americans for that. That still leaves over 200 million Americans that this wouldn’t apply to. And they will need relief from excessive drug prices. And I think what this bill, I think whatever bill emerges cannot just address Medicare. That is my primary point.
HH: And a quick exit question. When you take away patent protection, don’t you kill research and development? I mean, this is my first, I’m a free market guy. I’m afraid that if you take away patent protection, you’ve got one minute, Dr., I’m sorry to cut you short, that you’ll kill R&D? Go ahead.
EE: Well, you know, this is a, that’s the threat if they don’t come to negotiate and have better prices. And you know, you do need a credible threat. I think most people would say look, what we really want from the drug companies is continued research, because we still have a lot of diseases that need cures. But we don’t want exorbitant prices. That means that even if you have a cure, people can’t afford it. And that’s the tension. We know that drug companies are making huge profits. The top 10 drug companies made 25% or more profit. And so there’s plenty of money in the system. They’re really raking it in because of these high prices. We need to bring the prices down.
HH: You’re talking, you’re preaching to the choir.
EE: And they can still do research.
HH: You’re preaching to the choir. Big Pharma, not a good, not a good industry from my perspective. Ezekiel Emanuel, Dr., Happy Thanksgiving. Come back early and often as we talk about drugs throughout 2019.
End of interview.