Could Big Pharma Actually Lose This Fight Over Drug Prices? It's Biden's Call

This story is co-published with The Daily Poster

More than 20 years ago, when I was the press secretary for then-Congressman Bernie Sanders, I rode a bus with him and a group of seniors seeking lower-priced prescription drugs at Canadian pharmacies. The trips were part of our attempt to spotlight the pharmaceutical industry charging American consumers the world's highest prices for medicine—and soon after, another candidate I worked for, Brian Schweitzer, started running similar bus trips. It became a national headline-grabbing crusade.

Sanders' effort was successful—until it was short circuited by Bill Clinton. Despite well-funded opposition from the pharmaceutical lobby, the Vermont lawmaker's campaign helped pass legislation through the Republican Congress that would have allowed Americans to import lower-priced prescription drugs from other industrialized countries—just as Europe has safely done to help reduce prices there.

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On the campaign trail, Joe Biden promised to support importation. Could Big Pharma actually lose this fight over drug prices? The administration is sending mixed signals. JIM WATSON/AFP via Getty Images

However, Clinton's Health and Human Services Secretary Donna Shalala—with the support of the president—ended up doing a huge favor to drug companies by effectively vetoing the importation program, choosing not to implement it, in the final weeks of the Clinton presidency. Shalala did so by parroting drug companies' brazenly dishonest safety argument, which alleges that even as drug companies themselves regularly import medicine—and even though other countries have constructed safe parallel importation programs—importation would somehow endanger American consumers. She also claimed it wouldn't save money.

This episode has been a cautionary tale about the power of the pharmaceutical lobby and drugmakers to use massive campaign contributions and armies of lobbyists to influence legislation at a cost to consumers.

This industry—which so often touts the virtues of free trade—has used its political influence to embed a contradiction in our trade laws. Today, drug companies are permitted to manufacture drugs abroad and then import them for sale at inflated prices in the United States—all while those trade laws prohibit American consumers, wholesalers and pharmacists from engaging in the same cross-border importation that might reduce prices.

But two decades later—as wildly profitable drugmakers continue to hike medicine prices—there may finally be some good news: After Sanders reprised the bus trips during his 2020 presidential campaign, Big Pharma is once again on the precipice of losing this same battle. And now, the Biden administration is in a position to deliver a big win to begin saving consumers billions of dollars.

Here's the kicker: This particular victory would satiate President Biden's obsession with bipartisanship because a reactionary Trump-allied Republican just so happens to be leading the latest iteration of the importation crusade.

The changing politics of drug prices

That's right, Florida GOP Gov. Ron DeSantis—a prospective 2024 presidential candidate—signed a 2019 law making his state one of six moving to create a program to facilitate the importation of medicines from Canada, where prescription drugs are available on average at roughly half the American price. The legislation requires the federal government to effectively invalidate Shalala's 2001 veto and approve state importation plans—and so now DeSantis is pressuring the Biden administration "to act immediately to approve Florida's plan that will ultimately help drive down costs for taxpayers."

The move by DeSantis illustrates how the politics of prescription drugs have scrambled in recent years.

Sanders' original coalition was mostly Democrats with a handful of free-trade Republicans. Barack Obama was one of those Democratic supporters—he voted for it as a senator and promised to allow importation as president. But then his administration echoed pharmaceutical lobbyists' safety talking points to justify leaving it out of the Affordable Care Act—to the outrage of the Democrats pushing it—and the administration never approved Brian Schweitzer's request to launch an importation program in Montana when he was elected governor.

In the Trump era, a handful of Democrats started the GOP president's term by helping his party vote down a drug importation measure. Later, President Trump upended the dynamic by endorsing a proposed rule to facilitate drug imports from Canada. Conservatives who profess their fealty to free markets began making a free trade argument to demand that Americans get access to Canada's pharmaceutical price controls.

Despite the contradiction, DeSantis is now championing the initiative in the same state where Shalala recently echoed her drug industry donors' fearmongering about safety—just before Florida voters threw her out of Congress.

'Where are the dead Canadians?'

Now Biden has a chance to take at least part of the issue back for Democrats. Under existing federal rules, his administration has the authority to approve or deny state importation plans.

Biden following through on his campaign promise to support importation would be an easy way to satisfy his urge for bipartisanship—something he can do without passing new legislation. Polls have long shown that the idea of drug importation is popular among voters across the political spectrum, and it has support from both Democratic and Republican elected officials.

Then again, drugmakers have funneled more than $30 million to Democrats since 2016, and the last election cycle saw them deliver more cash to Democrats than Republicans, according to data compiled by OpenSecrets. Biden's campaign pulled in more than $13 million from donors in the pharmaceutical and health products sector—and while his HHS secretary Xavier Becerra voted for importation during his time in Congress, Biden has also stocked his administration with officials linked to the drug industry, which is frantically trying to block the administration from permitting importation.

That obstruction campaign is now in the courts, where drugmakers' top Washington lobbying group, Pharmaceutical Research and Manufacturers of America (PhRMA), has filed a lawsuit to try to preemptively block the federal government from allowing importation. Their case is predicated on the recycled assertion that letting Americans import FDA-approved medicines from places like Canada would "present significant safety risks"—an argument originally destroyed by former Republican Minnesota Gov. Tim Pawlenty, who, in response to drugmakers' safety canard, asked, "Where are the dead Canadians?"

Torn between the Democratic Party's pharmaceutical donors and a popular bipartisan importation initiative, Biden's administration has so far sent mixed signals. On the one hand, the White House took the side of patients by asking the court to dismiss the case, but Biden's HHS admitted last week that it has not even set a timetable on whether to approve state initiatives to import lower-priced medicines.

To be sure, state importation programs that are limited only to Canada are not singular game changers in the fight to lower drug prices—such limitations could allow drugmakers to ratchet down supplies in Canada, and the Canadian government could restrict exports. Similarly, a fully expanded importation program that includes all industrialized countries with FDA-inspected facilities would not alone solve the drug price problem. Achieving that requires everything from patent reform to letting Medicare marshal its bulk-purchasing power to negotiate discounts.

That said, any state importation program—even a limited pilot version—would kick the door open to a wider importation system, and that would be a significant step. The Congressional Budget Office recently reported that if implemented nationally, importation could save the federal government almost $7 billion over a decade, and that does not include how much more it might save consumers.

The pharmaceutical industry recognizes how much is at stake here, as evidenced by its ferocious opposition. Indeed, for two decades, drug companies have refused to compromise or negotiate on this issue.

Right now, they enjoy vast riches generated by one of the biggest contradictions in American public policy: They get free-trade rights to import medicines from manufacturing facilities across the world, while denying those same free-trade rights to consumers.

In other words, they get special protectionism for their own outsized profits—unless the Biden administration acts.

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Joe Biden and Barack Obama campaign in Bloomfield Hills, Michigan, a state Donald Trump won in 2016. Can President Biden succeed where President Obama failed--or will he aim for comity and compromise rather than seizing his FDR moment? Drew Angerer/Getty Images