Earlier today Senator Minority Leader Chuck Schumer (D-NY) and House Minority Leader Nancy Pelosi announced several new proposals to stop corporate consolidation and reduce prescription drug prices. These proposals go beyond what congressional leaders have endorsed in the past, and signify that they are willing to make sweeping changes to protect consumers and deal with these problems.
The first proposal focuses on rising prescription drug prices. It bluntly states that our current situation is unsustainable and that "we will re-write the rules so that the federal government is on the side of consumers and middle-class families." Schumer and Pelosi urge the establishment of a new independent "price gouging" enforcer who will be confirmed by the Senate, lead its own agency, and receive its own funding stream to preserve its independence. The agency's job will be investigating drug manufacturers and protecting people from outrageous drug price increases; it will identify those drugs and fine the companies, reinvesting the fine money into new drug research.
This white paper also calls for allowing Medicare Part D to negotiate lower drug prices. Currently Medicare is prohibited from doing so, and this would benefit over 41 million Americans enrolled in that program. We have already submitted a letter on behalf of various consumer groups urging this reform and are pleased that it is being brought forward.
Finally, drugs with a significant price increase would have to submit justifications for the price increase to the Department of Health and Human Services. A significant price increase is defined as an increase of at least 300% over five years or 100% over one year, or a drug that represents the top 50th percentile of drug spending in Medicare or Medicaid and had a price increase of 50% over five years or 15% over one year. The company's justification would include all the factors that contributed to the price increase, and all the information would be made public.
The second white paper takes a broader view, arguing the over the past thirty years growing corporate consolidation has harmed competition, reduce consumer choice, and hurt American workers. It promises to revise America's antitrust laws to promote economic freedom for ordinary folks. Schumer and Pelosi endorse establishing new mergers that focus more on the broader, long-term view and that follow strong presumptions that market concentration leads to anticompetitive conduct. The goal is to not only prevent mergers that increase prices but mergers that unfairly reduce competition. Mergers will be judged based on whether they reduce wages, cut jobs, reduce product quality or access to services, harm innovation, or hurt small business. The largest mergers would be presumed anticompetitive and would be blocked unless merging companies can establish the deal will lead to benefits.
Additionally, antitrust regulators will get new power and resources to monitor mergers after they are completed. Regulators will ensure corporations keep their commitments and they can adopt corrective measures if they find the merger has led to a monopoly or to abuses. A new competition advocate will be established; they will research market activity, hear consumer complaints, and recommend competition investigations to FTC and DOJ. The advocate will consider the full range of anticompetitive behavior, and its recommendations will be public.
We welcome these proposals and urge all members of Congress to support meaningful reforms to ensure patients have access to affordable drugs and that antitrust laws are strong enough to protect consumers and promote competition.