New Drug Pricing Bill Allows Negotiation
With Pharma

Kerry Dooley Young

September 20, 2019

WASHINGTON — US House Speaker Nancy Pelosi (D-CA) is championing a bill to reduce drugs prices that would let Medicare negotiate directly with drugmakers on the prices of certain costly medicines, including insulin.

Republicans long have objected to the idea of direct Medicare bargaining with drugmakers. Members of the two parties certainly will spar over this provision when a House Energy and Commerce subcommittee holds a hearing on the Democratic bill on Wednesday.

The bill, unveiled yesterday, also would create a mandatory rebate for drugs covered by Medicare's Part B and Part D program if their prices rise faster than inflation, according to a detailed summary released by House Energy and Commerce Chairman Frank Pallone Jr (D-NJ).

Furthermore, the bill calls for establishing an upper limit for price reached in negotiation of not more than 1.2 times, or 120%, of the volume-weighted average price of six countries: Australia, Canada, France, Germany, Japan, and the United Kingdom. The Trump administration also has raised the concept of an international price model, but many congressional Republicans have rebuffed the idea.

The Democratic package does contain a provision that already has bipartisan support in Congress: putting an annual limit on the out-of-pocket costs paid by people enrolled in Medicare Part D pharmacy plans.

The new bill proposes starting with a $2000 cap in 2022. Senate Finance Chairman Charles E. Grassley (R-IA) included a Part D spending cap in his committee's legislative package intended to address rising drug prices. President Trump earlier this year called for a Part D spending cap in his proposed fiscal 2020 budget.

There is a good chance that Congress creates a Part D cap later this year, perhaps moving it as an add-on provision to a larger bill not focused on healthcare, said Joel White, a former Republican staffer on the House Ways and Means Committee. In that role, White helped write the law that created the Part D benefit.

"The out-of-pocket cap is something that's time has come. You have enough Republicans and Democrats recognizing that and asking for it," said White, now the president of the Council for Affordable Health Coverage, on a call with reporters.

Trump's continued interest in drug prices likely will put pressure on Senate Majority Leader Mitch McConnell (R-KY) to take some action. Thursday evening, Trump tweeted that he likes "Sen. Grassley's drug pricing bill very much, and it's great to see Speaker Pelosi's bill today. Let's get it done in a bipartisan way!"

But the odds appear to tilt against Congress clearing a major legislative package focused on drug prices this year, according to White. McConnell might not want to open a debate on this topic ahead of the 2020 election, he said.

There is significant division among Republicans about the best ways to try to bring down drug prices, as seen in the July vote on the Senate Finance committee's drug legislation package. Six Republicans, including Grassley and Sen. Bill Cassidy, MD, of Louisiana, backed the proposal, which also had the support of all 13 of the Democrats who serve on Finance. Nine Republicans opposed it.

McConnell yesterday told Politico that the Senate's path forward on legislation regarding drug pricing is still "under discussion," but he is "looking at doing something."

In a statement, America's Health Insurance Plans (AHIP), a trade group, noted that the House Democrats' bill contains "several key proposals that have bipartisan support, such as out-of-pocket limits for seniors and ensuring manufacturers have meaningful accountability for their prices and price increases."

"We encourage legislators to advance efforts that will reduce drug prices across the entire healthcare system — not just shifting costs to consumers, employers, and taxpayers," said Matt Eyles, chief executive officer of AHIP.

Eyles also asked lawmakers to preserve "the ability of health insurance providers to use market-based tools and private-sector negotiations to reduce the net price of drugs." In this stance, AHIP concurred with Pharmaceutical Research and Manufacturers of America Chief Executive Stephen J. Ubl.

"Speaker Pelosi's radical plan would end the current market-based system that has made the United States the global leader in developing innovative, lifesaving treatments and cures," Ubl said in a statement.

In contrast, AARP, which has almost 38 million members, has pressed Congress to allow Medicare to negotiate directly with drugmakers. 

"Medicare should be able to use its bargaining power to get a better deal for the more than 55 million seniors who rely on Medicare, especially for the highest-priced drugs and those drugs with little or no market competition," Nancy LeaMond, AARP's chief advocacy and engagement officer, said in a statement, offering broad praise for the House Democratic bill.

The lobbying group for older Americans has been pushing Congress for many years to address spiraling drug costs. AARP on Thursday also released a new report that said retail prices for a combined set of 754 widely used brand name, generic, and specialty prescription drugs rose by 4.2% in 2017, outpacing a general inflation rate of 2.1% for the same period. AARP said this was the 12th consecutive substantial annual increase in drug prices.

"Prescription drugs do not work if you cannot afford them. High drug prices hit older Americans especially hard," LeaMond said. "Medicare beneficiaries live on fixed incomes averaging just over $26,000."

LeaMond also asked Congress to put a cap on the amount that senior citizens and people with disabilities enrolled in Medicare contribute to their Part D plans.

House Republicans yesterday criticized their Democratic colleagues for adding provisions to their drug bill that the GOP staunchly opposes, such as direct Medicare negotiations. Rep. Greg Walden of Oregon, the ranking Republican on the House Energy and Commerce Committee, said the Democratic leaders had shaped their bill to appease more liberal members of their party.

"They can put out their talking points and score their political points and leave the American people hanging, because this is not going to become law," Walden said.

Yet, the House Democratic bill would not deliver the sweeping change that  many advocates for an overhaul of American pharmaceutical purchasing have sought. 

"The bill would be a step in the right direction, but in my opinion, it falls short of the medicine we really need," Adam Gaffney, MD, MPH, president of Physicians for a National Health Program, told Medscape Medical News in an interview.

Citizens of nations that negotiate drug prices with manufacturers can get drugs for nominal amounts, or even without cost at times. Meeting the $2000 cap envisioned in the House Democrats' bill would still be a hardship for people on Medicare, given that they may also have copays for other medical bills, he said.

Gaffney said his patients tell him of their struggles to afford inhalers for conditions such as emphysema, noting that physicians often hear about these kinds of stories. Congress faces intense pressure to take some action on drug prices, with many Americans unable to afford their medicine, he said.

"[Patients] are making decisions between filling their prescriptions and putting food on the table," Gaffney said.

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