Congress, CMS Taking Key Steps to Examine Drug Costs

Kerry Dooley Young

January 10, 2019

A senator who long has been a congressional watchdog of the pharmaceutical industry said Wednesday he will work closely with the Department of Health and Human Services (HHS) in efforts to rein in rising drug prices.

In a meeting at the Capitol with reporters, Senate Finance Chairman Charles E. Grassley (R-IA) showed strong support for HHS Secretary Alex Azar's intention to address pharmaceutical costs. Grassley, who will lead oversight of Medicare as finance chairman, spoke about the need to consider changes to how the giant federal program purchases medicines. Grassley also said he remains committed to working on legislation that he developed with Democrats to speed introductions of generic medicines.

But Grassley said he remains opposed to the effort to eliminate having insurers act as the middlemen and negotiate discounts for the Medicare Part D pharmacy plans, an idea for which there is some bipartisan support. House Republican Rep. Francis Rooney of Florida joined Rep. Peter Welch (D-VT) this week in introducing a bill that would require the federal government to directly negotiate lower drug prices for seniors enrolled in the Medicare Part D program.

"I feel very strongly that we don't mess with that provision" of Part D, said Grassley, who helped with the creation of the Medicare pharmacy program. "But there are some things we need to do to modernize it."

The 116th session of Congress (January 2019 to January 2021) has opened with bipartisan support among voters and lawmakers for the idea of reducing pharmaceutical costs, even if they disagree on specific steps for doing so.

Lowering prescription drug prices emerged as Americans' top priority for health policy in a recent survey published by Politico and the Harvard T.H. Chan School of Public Health. According to a summary of the poll results, 89% of GOP respondents and 94% of Democratic respondents sought reductions in pharmaceutical costs.

Upon retaking her position as leader of the House, Speaker Nancy Pelosi (D-CA) spoke of a "mandate" to lower healthcare costs and prescription drug prices. HHS Chief Azar this week sought to draw more attention to drug prices, including by appearing on the Fox Business Network and using his Twitter account.

"All options are on the table," Azar said in a tweet. "We will continue with more regulatory and legislative proposals, and we will work with Democrats and Republicans, until we see list prices come down."

The Medicare program represents a path for immediately addressing prices paid by senior citizens and the disabled, thus affecting groups who often take medicine for chronic and serious conditions. The clout of Medicare, though, extends beyond the 58 million people covered directly by the program. Medicare's decisions can influence the policies of other large American insurers.

Drugmakers thus routinely lobby Congress to try to thwart or soften regulatory proposals that can reduce their profit. Lawmakers can fairly easily put on hold a plan developed by a federal agency such as the Centers for Medicare and Medicaid Services (CMS), sometimes by simply showing disapproval.

Federal Oversight

With Grassley in charge of the Finance Committee, though, the pharmaceutical industry faces a savvy lawmaker who has shown a dogged interest in its business practices for many years.

In his previous stint as finance chairman, Grassley held a highly watched 2004 hearing about how Merck handled the risks of its Vioxx pain drug, which was withdrawn because of heart risk. In keeping with Grassley's interest in the work of whistleblowers, the hearing highlighted the efforts of David J. Graham, MD, MPH, a US Food and Drug Administration scientist, to draw attention to Vioxx's risk.

Grassley also has a record for building strong partnerships with Democrats on pharmaceutical issues. 

He and Sen. Amy Klobuchar (D-MN) on Wednesday announced the introduction of a bill to permit the importation of prescription drugs from approved pharmacies in Canada. He and Klobuchar, who both serve on the judiciary committee, have been partners on legislation to limit anticompetitive pay-for-delay arrangements that prevent or delay the introduction of affordable follow-on versions of branded pharmaceuticals. Grassley works with another judiciary colleague, Sen. Patrick Leahy (D-VT), on the so-called CREATES Act, which is intended to block legal mechanisms that drugmakers use to thwart generic competition.

On Wednesday, Grassley said he also intends to look at the role of consolidation in driving up health costs, including an examination of supply chain middlemen and pharmacy benefit managers. His Democratic partner in leading the finance committee is Sen. Ron Wyden (D-OR), with whom he earlier partnered on an 18-month investigation of the pricing and marketing of Gilead Science's hepatitis C drugs Sovaldi and Harvoni. In a 2015 joint press release, Grassley and Wyden said the investigation drew upon 20,000 pages of internal company documents, dozens of interviews with healthcare experts, "and a trove of data from Medicaid programs in 50 states and the District of Columbia."

"The Finance Committee has tremendous responsibility in overseeing the federal programs paying for prescription drug coverage," Sen. Grassley said in the release.  

Guarded Optimism

David Mitchell, president and founder of the nonprofit group Patients For Affordable Drugs, cited the pairing of Grassley and Wyden as a reason for guarded optimism about the chances for near-term legislation addressing drug costs.

Mitchell also noted that other Republicans, including Sen. Bill Cassidy (R-LA) and President Donald Trump, have shown an interest in the issue. Voters' demands will also keep drug costs high on the legislative agenda, Mitchell told Medscape Medical News.

"It doesn't mean that we will get something done, but there's an opening to get something done," Mitchell said

He said he doesn't expect that a single bill will make a major dent in the costs of drugs. Instead, there could be smaller successes such as the enactment of laws that ease the path for generic introductions. Still, Mitchell cautioned that pharmaceutical lobbying remains strong and active and shouldn't be underestimated in its ability to derail legislation or regulatory action.

"There's going to be a fight every step of the way," Mitchell said.

Part B Proposal

HHS, for example, has drawn criticism for a pending draft proposal for changing how Medicare pays for drugs administered in physicians' offices. In his Wednesday talk with reporters, Grassley said he will need to review the feedback from the public on this plan. But he also expressed some skepticism about its proposed international pricing index (IPI) model, which HHS has described as a path to lower costs.

"I can say initially that I don't want foreign countries setting our drug prices," Grassley said.

In October, CMS and HHS outlined ideas for major changes to Part B through what's called an advance notice of proposed rulemaking (ANPRM). This approach serves as a way to gather feedback before CMS put out a more concrete proposed rule. The Pharmaceutical Research and Manufacturers of America (PhRMA), many medical groups, and physicians submitted comments on the proposal to CMS.

In its comment, PhRMA urged CMS to drop the IPI model. Medicare's current Part B payment for drugs is based on reported average sales prices (ASP), an approach that "reflects discounts negotiated in the commercial market," PhRMA said in its comment to CMS. Medicare pays a markup of about 4.3%, accounting for a federal budget cut, to the ASP. In other nations, "government-dictated price controls" do not fully reward companies for their investment in developing new drugs, PhRMA officials said in the comment.

"HHS itself recognizes that prices in these countries are artificially suppressed by governments that run most or all of their countries' healthcare systems and rely on flawed standards that impede or delay access to treatment," PhRMA wrote. "Yet, by endorsing foreign price controls, the IPI model would also endorse policies that lead to significant barriers and delays in patient access to clinically important treatments."

Many of the comments submitted didn't have a detailed analysis of the IPI or other parts of the CMS proposal. They instead offered only a sentence or two with vague descriptions of the plan. At least 40 comments included the phrase "socialist price control" in varied forms of capitalization.

Physicians offered more detailed objections to the CMS proposal. In them, many of them objected to the notion of financial rewards influencing their choices of medications for patients.

"I am excited to see CMS attempting to address drug pricing. As a physician who buys and bills infusible Part B drugs for rheumatic diseases, I am sad to see the continual rise in drug prices," wrote Chris Phillips, MD, a rheumatologist in private practice in Kentucky. "However, I chafe at the notion as stated in the ANPRM that I would prescribe more expensive Part B drugs due to ASP +4.3% financial incentives."

In fact, the difference in price between competing branded biologic drugs is actually fairly small, Phillips told CMS.

"Right now, we have no cheaper biologic drugs, though we hope the era of biosimilars will change this. If CMS wants to impact drug costs meaningfully, accelerate the arrival of biosimilars to our market," Phillips wrote. "I have switched most of my Medicare Remicade patients to the biosimilar for cost savings to the patient and the system."

CMS did get some enthusiastic support for its plan. In a comment, Mitchell's organization asked CMS to proceed with the international reference pricing model, saying that it will lower costs.

"We strongly support direct Medicare negotiations," Patients For Affordable Drugs wrote. "But we are pleased that HHS proposes a step forward with international reference pricing because – if implemented – it will in fact lower prices on Part B drugs for patients in the US and produce measurable savings for Medicare beneficiaries."

Patients For Affordable Drugs also presented a petition that it said had more than 1480 signatures from patients urging CMS to proceed. Like Mitchell, many of the signers have serious diseases such as cancer, multiple sclerosis, and rheumatoid arthritis. 

"As patients, we find the claims that this proposal would hinder patient access to be outrageous, offensive, and wrong," wrote Mitchell and co-signers in a letter. "Under the proposal, Medicare would pay only 26% more than other wealthy countries, down from the current average of 80% more."

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