Nov 3, 2021 - Health

The glaring hole in Democrats' drug pricing outline

Caitlin Owens

House Speaker Nancy Pelosi (D-Calif.) shaking Senate Majority Leader Chuck Schumer's (D-N.Y.) hand during a press conference in September 2021. Photo: Kent Nishimura/Los Angeles Times via Getty Images

One glaring hole in Democrats' drug pricing outline: It says that drug companies that refuse to negotiate with Medicare will be subject to an excise tax. But they don't say what that tax will be.

Why it matters: If the penalty for refusing to negotiate isn't large enough, drugmakers simply won't comply, undermining the entire concept.

What they're saying: "Without knowing the penalties for not complying with negotiation it is impossible to know what this means for incentives facing drug makers. And that is the tip of the iceberg. What does it even mean to not comply?" American Enterprise Institute health economist Ben Ippolito told Axios.

"So far we have a very very basic framework. What this saves taxpayers or what it means for the future of the drug market are almost entirely up in the air."

Go deeper: Democrats reach drug-pricing deal

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The glaring hole in Democrats' drug pricing outline

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