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Analysis

Senate Finance Committee Passes Bipartisan Drug Pricing Bill

By Jack O'Brien  
   July 25, 2019

The bipartisan drug pricing bill passed the committee but faces industry opposition and uncertainty in the full Senate.

The Senate Finance Committee passed the Prescription Drug Pricing Reduction Act (PDPRA) Thursday afternoon, a bipartisan bill to address prescription drug pricing. 

PDPRA, crafted by Committee Chairman Sen. Chuck Grassley, R-Iowa, and Ranking Member Sen. Ron Wyden, D-Ore., passed the committee by a vote of 19 to 9.

The main components of the bill are $3,100 cap on what Medicare beneficiaries pay out-of-pocket on prescription drugs, set to take place in 2022, and a limit on prescription drug price hikes under Medicare Part D. 

On Wednesday afternoon, the Congressional Budget Office released its estimate of the financial impact of the legislation, projecting a $31 billion reduction in cost sharing and premiums by unsubsidized Part D enrollees.

Related: 4 Takeaways From Pharma Testimony at Senate Drug Pricing Hearing

Related: GOP Senators Distance Themselves From Grassley And Trump's Efforts To Cut Drug Prices

Members on both sides of the aisle expressed reservations with what they described as the bill's perceived weaknesses, in some cases voting to move the bill out of the committee while seeking to improve the bill before a full vote on the Senate floor. 

Senators on the committee filed 110 amendments, which created contentious arguments over what should or should not be included in the bill as it heads to the Senate floor. 

The committee voted to remove a penalty on drugmakers who raise prices above inflation and eliminate the ability for Medicare to directly negotiate prices with drugmakers.

Members of the committee sought to add an amendment that would remove the implementation of the international price index for prescription drugs, a policy supported by the White House, but it did not pass in a tie vote.  

Chairman Grassley also indicated that he would support adding language to the bill that would reinstate the proposed prescription drug rebate rule the administration abandoned earlier this month, but this did not receive a vote.

Related: Senate Committee Unveils Bipartisan Bill to Reduce Healthcare Costs

An article in The Hill Wednesday afternoon highlighted the growing uncertainty the bill faces in the Republican-controlled Senate, as some members have balked at limiting drug price increases under Medicare Part D. 

The Hill reported that HHS Secretary Alex Azar personally reached out to Republican senators to galvanize support for the bill, indicating the White House backed the proposal. 

Meanwhile in the House of Representatives, Wendell Primus, an aide to Speaker Nancy Pelosi, said the chamber will present its own drug pricing bill in September. 

Industry responses

The pharmaceutical industry has taken proactive steps since the bill's release to pushback on the proposed drug pricing plan.

Politico reported Thursday morning that PhRMA CEO Stephen J. Ubl, as well as representatives from drugmakers Pfizer and Amgen, met with President Trump, Secretary Azar, House Majority Leader Kevin McCarthy and other senior White House officials on Wednesday.

In a statement issued after the bill was passed Thursday afternoon, Ubl said the legislation was the "wrong approach to lowering drug prices."

"It would siphon more than $150 billion from researching and developing new medicines and give those savings to the government, insurers and PBMs, instead of using those savings to lower costs for seniors at the pharmacy counter," Ubl said. "It also fails to ensure the deep discounts negotiated in the Medicare prescription drug program are passed along to patients in the form of lower out-of-pocket costs. And it replaces the successful, market-based structure of Medicare Part D with Medicaid-style price controls that result in money going to the Federal treasury instead of seniors." 

Tom DiLenge, president of the advocacy, law and public policy division at the Biotechnology Innovation Organization, commended the committee for approaching the issue of high prescription drug costs but warned that PDPRA "punishes" drugmakers from pursuing innovative cures.  DiLenge, like Grassley, added that he also believed the bill could be improved with language reinstating the proposed drug rebate rule. 

“The proposal does almost nothing to hold insurance companies and middlemen accountable for shifting more of the cost burden onto patients," DiLenge said. "Instead of eliminating distortions within the drug pricing system, this proposal could create and exacerbate perverse incentives that disadvantage patients and taxpayers."

Related: Blame Game, Again: PBM Execs Jockey With Senators Over Price Transparency

Some industry stakeholders welcomed the committee's proposal and saw it as a building block for future bills aimed at lowering prescription drug prices.

"We applaud Chairman Grassley and Ranking Member Wyden for their dedication to lowering prescription drug prices for Americans,” Campaign for Sustainable Rx Pricing executive director Lauren Aronson said in a statement. “The committee’s bipartisan actions are a good first step. We are reviewing the details of this package and look forward to working with committee members to advance measures to hold Big Pharma accountable.”

David Henka, CEO of ActiveRADAR, a healthcare analytics company, told HealthLeaders in an emailed statement that while Congress is seeking to provide relief for Medicare beneficiaries and take on the pharmaceutical industry, he doesn't believe PDPRA has fully accounted for the potential unintended consequences on the market. 

"These types of economic environments are like a scale; any time you push the prices down on the Medicare or government side of the business, you’re going to see a corresponding, inverse change in the commercial side," Henka wrote. "The federal government may pay less for pharmaceuticals, but the commercial employers and plan sponsors will end up paying more. Pharma will continue to meet its margins one way or the other, even if they are forced to lower their prices on the government side."

Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.

Photo credit: Photo credit: WASHINGTON - JULY 18: A sign at the entrance to a Senate Finance Committee hearing room in Washington, DC on July 18, 2017. The United States Senate is the upper chamber of the United States Congress. - Image / Editorial credit: Katherine We


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