June 27, 2019
Baseball, Arbitration, and Drug Prices
With arbitration between the government and drug manufacturers gaining attention as a potential way to reduce drug prices, AAF’s Director of Health Care Policy Christopher Holt examines the mechanics and potential impact of such a policy. Government-imposed arbitration would be a marked departure from how the U.S. government has historically worked with private products and markets, Holt notes, and could have serious implications for access and future innovation.
News reports have indicated that the Part D arbitration proposal being developed by Speaker of the House Nancy Pelosi would designate the Government Accountability Office as the arbitrator, after progressive members of the House Democratic Caucus objected to a neutral third party being selected. Under such a scenario, the government and a drug manufacturer would go to arbitration after failed price negotiations—with the government also serving as arbitrator. If it is the government deciding between the government-proposed price and the industry-proposed price, that scenario begins to look like thinly-veiled government price setting.