Just the medicine: how the next president can lower drug prices with the stroke of a pen.

• Author: Mundy, Alicia

It's hard to watch television or read a newspaper these days without seeing stories about outrageous prescription drug price increases. This past summer, the company Mylan was in the spotlight for hiking the price of its EpiPen, an injector containing cheap but lifesaving allergy medicine, from $94 for a two-pack in 2007 to over $600 today. Last fall, Martin Shkreli, CEO of Turing Pharmaceuticals, became the face of greed when his company purchased the AIDS drug Daraprim and promptly raised its price from $13.50 to $750 per pill--an increase of some 5,000 percent. Prior to that, Valeant Pharmaceuticals drew widespread scorn for jacking up the prices of two heart medications, Nitropress and Isuprel, by 212 percent and 525 percent respectively. Meanwhile, Medicare, Medicaid, and private insurers were buckling under the $84,000 per-dosage-cycle price of Sovaldi, Gilead Sciences' treatment for Hepatitis C, and of Medivation's prostate cancer drug Xtandi, which costs $129,000 for an annual treatment.

These are not isolated incidents. List prices for drugs in general rose 12 percent last year, on top of similar increases over the previous five years. Drug prices are now on track to account for more than 15 percent of health care costs in America, up from less than 10 percent in 2014. That increase is helping to drive up health insurance premiums and patient deductibles. According to an August 2015 report by Kaiser Health News, 24 percent of Americans taking prescription drugs reported being unable to afford a prescription from their doctors in 2015 over the previous year.

The only thing more depressing than these out-of-control drug prices is the seeming inability of politicians to do anything about the problem. President Barack Obama has called for, among other things, faster approvals of generic copies of expensive biologic drugs and new authority to drive down prices for Medicare Part B. His proposals have gone nowhere in the GOP-controlled Congress. This summer, Hillary Clinton released a more aggressive plan for statutory changes that would make drugs cheaper and cut some advertising tax breaks for the drug industry. Even Donald Trump said he would break with his own party and support changing the law to allow Medicare to bargain with the pharmaceutical industry over drug prices.

Yet none of these proposals has even the slightest chance of being taken up by Congress during the lame-duck session, and the chances will be hardly better in the new Congress, given Big Pharma's power over lawmakers in both parties. Indeed, legislation introduced in September by a bipartisan group of lawmakers that would merely require drug companies to give warning about upcoming price increases--an effort just to give incumbents up for reelection something they could tell voters they were doing--was widely seen as DOA.

But what if the next president doesn't need Congress's approval in order to act? What if previous statutes have already given the executive branch the authority it needs to beat back extreme drug price increases? And what if the Obama administration, which otherwise has not been shy about using executive power aggressively--to battle climate change, to reform immigration, and to defend transgender rights, for example--simply hasn't used that power to curb drug prices, even though it could?

That's exactly what a group of progressive Democratic lawmakers, including Massachusetts Senator Elizabeth Warren and Vermont Senator Bernie Sanders, have been saying for months. The source of that authority, they say, comes from provisions in a thirty-six-year-old law, the Bayh-Dole Act, that empower the executive branch to get pharmaceutical companies to reduce prices on drugs invented with the help of federal research funds. "We already have leverage in the law to force down prices--why isn't President Obama using it?" asks the group's leader, Texas Representative Lloyd Doggett.

According to a months-long investigation by the Washington Monthly--including interviews with a dozen current and former Obama administration officials as well as scores of outside experts--these progressive Democrats have a case. If they're right, the next president could have leverage not only to bring down excessive drug prices, but also to reform the increasingly dysfunctional federally funded biomedical research and commercialization system that gives rise to those insane prices in the first place.

Last September, as public outrage over price hikes by Valeant and Martin Shkreli was spiking, Doggett invited a few fellow Democratic representatives, including Rosa DeLauro of Connecticut, Jan Schakowsky of Illinois, and Peter Welch of Vermont, along with staffers, for a series of meetings in his Rayburn Building office. Doggett is a former Texas state supreme court judge with a bit of a laconic western drawl who represents a safe liberal district that includes Austin. He enjoys a reputation among his colleagues as a non-flashy legislative workhorse who fights hard behind the scenes for his causes. One of those causes is lowering drug costs; he has been pushing legislation to that end since he entered Congress in 1995.

At one of these meetings in Doggett's office, researchers from the Center for American Progress (CAP), a liberal think tank, gave the group an eye-opening presentation on the extent to which federal--meaning taxpayer--dollars support critical drug research. Government funding played a role in nearly half of the 478 drugs approved by the FDA between 1998 and 2005, according to one study, and almost two-thirds of the most important and cutting-edge ones. These more innovative drugs, such as the critical oncology medication Gleevec, not only originated through federal support but continue to receive it thanks to Medicare, Medicaid, and other government programs that subsidize their purchase. Taxpayers, in other words, are paying for these drugs on both the front and back ends, even as the prices drug companies charge escalate seemingly without end. The CAP researchers also explained how the Bayh-Dole Act--officially the Patent and Trademark Law Amendments Act of 1980--could be utilized to lower those prices.

A complex piece of legislation that took four years to write and pass, Bayh-Dole was designed by its sponsors, Indiana Democratic Senator Birch Bayh and Republican Robert Dole of Kansas, to encourage the commercialization of federally sponsored research. At the time, much of that research was sitting on shelves in university and federal labs because companies could not get secure enough title to the discoveries to be willing to invest the extra dollars necessary to turn them into salable products. Bayh-Dole mandated that the labs and universities could patent their discoveries and sell the royalty rights to private-sector firms.

The law was, by most accounts, a big success. Over the next two decades, U.S. universities increased their patent output tenfold and founded more than 2,200 companies to exploit those patents, thus creating 260,00 new jobs and contributing $40 billion to the economy (though some of this increase is probably due to the biomedical revolution, which gave university researchers tools such as gene splicing to more easily...