Pres. candidate Mayor Pete’s ‘worst offender’ healthcare plan goes after pharma

Democratic presidential candidate Pete Buttigieg, currently the mayor of South Bend, Ind., presented his plan to take on high drug prices this week, tackling one of the hottest election issues.

His plan, which comes just a week ahead of the Oct. 15 Democratic debate, focuses on cutting drug prices by taxing pharmaceutical companies and declaring eminent domain over intellectual property rights from pharma companies. While the plan isn’t likely to be a fan favorite among pharma industry insiders, it may help the mayor stand out in a crowded field of candidates focused on improving healthcare.

“While millions of Americans struggle to pay for medicine, pharmaceutical companies are enjoying record profits and remain the most profitable companies in the entire health industry,” Buttigieg wrote in a paper explaining his plan. “Time and time again, Washington has proven that it’s either uninterested or incapable of addressing this problem—with real-life consequences.”

A handful of Democratic candidates have adopted a Medicare for all healthcare plan, while others have pushed for a public option for those who want it. Buttigieg’s plan calls itself Medicare for All Who Want It, which is similar to a public option that caps monthly out-of-pocket drug spending under $250. Some of these actions, including drug spending caps for beneficiaries, require legislative action.

Buttigieg pointed out that families and individuals are struggling to pay for prescription medications, even rationing their drugs, at a time when medical innovation has led to new breakthroughs and extended life expectancy for several serious conditions. To reduce these harms, the plan includes a “worst offender” provision, which would allow Buttigieg to exercise rights to take away patents from pharma companies that gauge prices so severely it makes drugs unaffordable.

The plan also promised increased taxes on pharma companies––specifically on the annual Branded Prescription Drug Fee on manufacturers and importers––“to ensure they pay their fair share” and to lower drug prices. To reduce future drug price increases Buttigieg wants to implement pricing protections against inflation in Medicare and the public plan by requiring pharma companies to pay a rebate for drugs that rise faster in price than inflation.

The penalties in Buttigieg’s plan are fairly steep––a 65% tax on a company’s gross sales of a drug if they refuse to participate in negotiations of leave the negotiation before a fair price is agreed upon. The penalty will increase 10% every quarter until the company complies, up to 95%. The focus of the negotiations will start with diabetes medications, which have seen steep increases over the past several years.

The plan further calls for the federal government to negotiate drug prices and establish a national All-Payer Claims Database for more transparency around medication cost and quality.