The House Democrat drug pricing plan championed by House Speaker Nancy Pelosi (D-Calif.) could impose a 95 percent tax on hundreds of life-saving and life-preserving drugs including cures for cancer, hepatitis C, epilepsy, and multiple sclerosis.
The legislation (HR 3 – the Lower Drug Costs Now Act) imposes a retroactive, 95 percent excise tax on up to 250 drugs. This tax is imposed on the sales of a drug if the manufacturer does not agree to government-imposed prices. The tax starts at a 65 percent rate, increasing by 10 percent every quarter a manufacturer is out of “compliance.”
Under the Pelosi drug plan, 250 medicines including 125 of the top Medicare Part D drugs (by total spending) are eligible to be selected by the HHS Secretary, meaning they could face the 95 percent tax.
Based on research by Americans for Affordable Prescription Drugs, the 95 percent tax could hit the following Part D treatments:
- Leukemia: 5 drugs to treat leukemia (Imbruvica, Imatinib Meslyate, Gleevac, Sprycel, Tasigna)
- Cancer: 6 drugs to treat other forms of cancer including breast cancer, liver cancer, prostate cancer, and kidney cancer (Ibrance, Imbruvica, Zytiga, Xtandi, Afinitor, Tarceva)
- MS: 7 drugs to treat multiple sclerosis (Copaxone, Tecfidera, Avonex, H.P. Acthar, Ofev, Gilenya, Avonex Pen)
- Schizophrenia: 2 drugs to treat Schizophrenia (Invega Sustenna, Aripiprazole)
- Bipolar: 2 drugs to treat bipolar (Latuda, Aripiprazole)
- Epilepsy: 2 drugs to treat epilepsy (Lyrica, Vimpat)
- Lung disease: 6 drugs to treat lung disease (Advair Diskus, Spiriva, Symbicort, Spiriva Respimat, Anoro Ellipta, Incruse Ellipta)
- High Blood Pressure: 2 drugs to treat high blood pressure (Zetia, Bystolic)
- Diabetes: 19 drugs to treat diabetes (Januvia, Lantus Solostar, Lantus, Novolog Flexpen, Levemir Flextouch, Humalog Kwikpen U-100, Tradjenta, Invokana, Novolog, Trulicity, Janumet, Humalog, Toujeo Solostar, Levemir, Novolog Mix 70-30 Flexpen, Tresiba Flextouch U-200, Jardiance, Humalog Mix 75-25 Kwikpen, Welchol)
- HIV/AIDS: 7 drugs to treat HIV/AIDS (Genvoya, Triumeq, Tivicay, Truvada, Atripia, Prezista, Isentress)
- Hepatitis C: 3 drugs to treat Hepatitis C (Harvoni, Eclupsa, Zepatier)
- High cholesterol: 2 drugs to treat high cholesterol (Crestor, Welchol)
If the entire 125 top Part D drugs were selected, it would amount to a $90 billion tax increase on seniors’ medicines over ten years based on the above research.
The 95 percent Pelosi tax applies to the entire market, not just Medicare Part D, so the overall tax hike would be far greater.
Because the Pelosi drug tax would not be deductible from income taxes, the nonpartisan Congressional Budget Office estimates that it could result in a manufacturer being taxed more than their total sales:
“the combination of income taxes and excise taxes on the sales could cause the drug manufacturer to lose money if the drug was sold in the United States.”
As an alternative to paying the tax, the CBO analysis stated that manufacturers could withdraw a drug from the market resulting in no revenue from the Pelosi tax:
“CBO and JCT anticipated that manufacturers would discontinue sales in the United States if the excise tax was levied on a drug, resulting in no revenue in that case.”
The 95 percent tax led over 70 groups and activists to write in opposition to the Pelosi plan.
As they noted, if the Pelosi plan were to become law it would dramatically change the American healthcare system in a way that will harm patients, innovators and providers.