Addressing Drug Pricing Remains Top Priority for Administration and Congress This Fall
By Jenny Nieto and Dani Mitchell
August 27, 2019
Congress will return from its annual summer District Work period (“August Recess”) after Labor Day on Sept. 9. Looking ahead to legislative agenda for the fall, healthcare, and more specifically drug pricing, is expected to remain a critical issue for lawmakers to address. The following is a summary of the drug pricing proposals currently in play for both Congress and the Administration.
Trump Administration Actions on Drug Pricing
Last October, the Administration released an Advanced Notice of Proposed Rulemaking (ANPRM) to lower Medicare Part B costs and list prices over five years by setting certain Medicare Part B drug prices based on an International Pricing Index (IPI), against which U.S. prices will be assessed. On May 22, CMS delayed the release of the proposed rule. Later, in June, the White House’s Office of Management and Budget (OMB) formally received the President’s proposed rule to implement a new IPI and tentatively scheduled a release date for August 2019. Currently, the proposed rule has not yet been released. CMS is required to provide a 60-day public comment period for the proposed rule before it goes into effect.
President Trump is also expected to release an Executive Order mandating a “favored nations” policy, in which U.S. payments for drugs are capped at the lowest price paid by either a manufacturer or a developed country, which is intended to complement the IPI proposed rule.
While it appeared the Administration was poised to take meaningful action to reduce patients’ out-of-pocket costs through reforming Medicare’s rebate system, on July 11, the Trump Administration withdrew a proposed rule on drug rebates. The proposed rule would have banned the current rebate structure in Medicare and Medicaid and required PBMs to pass the rebates on to patients at the point of sale at the pharmacy counter. CMS had previously delayed the release of the final rule to Nov. 2019, prior to withdrawing.
On July 31, the Administration announced a plan to allow for the importation of certain drugs from foreign countries, with the intent to offer the lower-cost drugs to U.S. consumers. (See FDA notice).
The “Safe Importation Action Plan” includes two steps: 1) the U.S. Department of Health and Human Services (HHS) and U.S. Food and Drug Administration (FDA) will propose regulations allowing pilot projects run by states, wholesalers, or pharmacists to import certain FDA-approved drugs from Canada, and 2) FDA will provide guidance to drug manufacturers allowing them to import certain FDA-approved drugs (i.e. medications for diabetes, arthritis, cardiovascular diseases, and cancer). CLSA is deeply concerned about the impact that drug importation would have on U.S. patients and issued a statement of opposition. Other allied stakeholders have also panned the proposal, including the Alliance for Safe Online Pharmacies.
On May 16, the House voted 234-183 to pass H.R. 987, the Strengthening Health Care and Lowering Prescription Drug Costs Act, that included several provisions to strengthen the Affordable Care Act (ACA) as well as proposals aimed at bringing down the cost of prescription drugs by allowing easier market access for generics (including: H.R. 938, H.R. 1499 and H.R. 965).
On May 23, bipartisan leadership of the House Energy & Commerce, and Ways & Means Committees released and solicited feedback on their discussion draft to create an out-of-pocket maximum in Medicare Part D based on the current catastrophic threshold ($5,100 for 2019) and to reduce the government’s share of the catastrophic coverage from 80 percent to 20 percent over four years.
CLSA submitted detailed comments to the leadership of the House Ways & Means and House Energy & Commerce Committees with feedback on their draft bill. Comments were due on June 6, and House Committee Leadership will continue reviewing the comments that were submitted when they return from recess.
On July 17, the House Energy and Commerce Full Committee held a markup of 26 bills from all subcommittees that included bills from the Subcommittee on Health on drug pricing, surprise billing, public health, and health extenders. The legislation was unanimously approved by the full committee. Notably, E&C added a provision into its surprise billing legislation allowing for arbitration to be used as an independent dispute resolution process.
Additionally, House Speaker Nancy Pelosi (D-San Francisco) has been working on a drug pricing whitepaper intended to reflect a consensus proposal of the Democratic Caucus. While the whitepaper text is not public, it will reportedly include the concept of binding arbitration as a solution to negotiating lower drug list prices. The whitepaper’s release has been delayed multiple times, but is now anticipated to be released in September.
CLSA is deeply concerned about this binding arbitration concept, as it will reduce access to lifesaving therapies for America’s most vulnerable, threaten U.S.’s leadership in new medical innovation, increase system-wide expenditures for administrative & litigation costs, and stifle innovation. CLSA and continues to communicate our concerns about binding arbitration with Members of the California Congressional Delegation.
On June 26, the Senate H.E.L.P. Committee marked up several bills including S. 1895, the Lower Health Care Costs Act that passed by a vote of 20-3 and includes provisions related to drug pricing such as the CREATES Act and an amendment to increase transparency into prescription drug price increases (S. 1391, the FAIR Drug Pricing Act).
On July 25, the Senate Finance Committee marked up and approved its legislation to address drug pricing – The Prescription Drug Pricing Reduction Act (PDRPA). This bill includes a restructuring of the Part D benefit that includes a 20% responsibility for manufacturers in the catastrophic phase and does not smooth out the benefit for patients. It also requires mandatory rebates in Part D if manufacturers increase their list price (WAC) above inflation (CPI-U), excluding generics and biosimilars. The bill has several other concerning provisions that make dangerous changes to Medicare Part B and Medicaid as well. The Senate delayed any floor action on their drug pricing package until September.
In June, CLSA joined 103 signers on a multi-association letter to Senate Leadership and Senate Finance Committee leadership, led by the Part B Access for Seniors and Physicians Coalition, expressing concerns about PDRPA.
The House of Representatives will have 10 legislative weeks, and the Senate will have 12 weeks, remaining to take action on drug pricing in 2019. The House and Senate are both working to advance individual bills through their committees, with the ultimate goal of consolidating individual bills into bipartisan packages to move through their respective chambers in the fall.
We expect to see additional ideas coming directly from the White House in the form of proposed or final rules, as well as Executive Orders, in the coming weeks. With a Presidential Election in 2020, both parties are looking for a win to take home to constituents when they hit the campaign trails.
CLSA continues to advocate for patient-centered reforms that embrace competition, foster the provider-patient relationship and value transformation. Questions? Please contact Jenny Nieto, CLSA’s Vice President of Federal Government Relations (firstname.lastname@example.org).