Senate Democrats recently introduced the Stop Price Gouging Act (S. 378), which seeks to place an excise tax on pharmaceutical companies in proportion to price spikes on prescription drugs.
The bill generally requires a company to justify to the Department of Health and Human Services (DHHS) any spike in prescription drug prices, but it is short on details regarding the criteria the inspector general of DHHS would have to abide by when analyzing the spike.
A bill under the same name was introduced in 2017 by Senate Democrats but failed to win widespread support. The current introduction comes on the heels of President Donald Trump’s State of the Union address, where he stated that lowering the costs of healthcare and prescription drugs would be a major priority.
The excise tax would be imposed on the greater of the annual price spike or cumulative price spike for the prescription drug if the medication has been in circulation for more than two years. Revenue from the excise tax would go toward funding research and drug development at the National Institutes of Health.
Sen. Sanders’ bill is one of many adverse to the brand-name drug industry introduced by Democrats in the House and Senate this year. Others would permit Medicare to negotiate prices directly with pharmaceutical manufacturers, allow for drugs to be imported from countries where governments set prices, permit the federal government to manufacture generic drugs and authorize the federal government to invalidate patents if brand-name companies don’t meet certain conditions.
None of those bills – with the possible exception of drug importation – is likely to win congressional approval anytime soon. But they are an indicator of the strong anti-industry sentiment among Democrats, especially those on the political left – and in particular those such as Sen. Sanders who contemplating a run for president.