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Analysis

Industry Stakeholders React to Pelosi's Drug Pricing Plan

By Jack O'Brien  
   September 19, 2019

The Speaker's proposal generated ample discussion around its potential impact.

One week after a draft proposal leaked, House Speaker Nancy Pelosi's long-awaited prescription drug pricing plan is out now, garnering praise and sharp criticism from several prominent healthcare industry groups.

The Lower Drug Costs Now Act would allow the Department of Health and Human Services (HHS) Secretary to directly negotiate drug prices with manufacturers and establish a ceiling price of no more than 120% of the volume-weight average price of the Average International Market price.

Additionally, the plan would cap out-of-pocket costs for prescription drugs under Medicare Part D at $2,000 per year, decrease the government reinsurance for catastrophic spending down to 20%, and increase health plan responsibility to 50%.

Pelosi's drug pricing plan has been months in the making and included several changes after concerns were raised by the Congressional Progressive Caucus earlier this summer. The proposal's release generated immediate responses from industry groups and fellow lawmakers on Capitol Hill, both positive and negative.  

House Ways and Means Health subcommittee chairman Rep. Lloyd Doggett, D-Texas, said that the proposal was "stronger because of progressive involvement" and intended to "sway President Trump and a reluctant Republican Senate," but added that more was required from the bill. 

Patients for Affordable Drugs Now (PADN) issued a statement supporting the bill's "strong provisions" that promote lower prices, access, and innovation.

"Importantly, the legislation incorporates key bipartisan priorities like an International Pricing Index, caps on price increases, and an out-of-pocket limit for prescription drug spending," Ben Wakana, executive director of PADN, said in a statement. "It will lower drug prices for all Americans covered by a government plan or private insurance. HR 3 is a bold step forward."

Related: Pharma Cash Rolls Into Congress To Defend An Embattled Industry

A major player in the insurance market, America’s Health Insurance Plans (AHIP), also backed the proposal as a way to ensure that Americans don't have to choose "between paying their bills and getting their life-saving medications."

"For too long, Big Pharma has taken advantage of government-granted monopolies to set outrageous launch prices, eliminate competition and increase prices on the same products year after year," Matt Eyles, CEO of AHIP, said in a statement. "This legislation advances 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."

Pelosi's drug pricing plan debuted one week after the HHS Office of the Inspector General found that Medicare Part D drug rebates "substantially reduced" spending growth between 2011 to 2015.

Related: HHS OIG: Medicare Part D Drug Rebates 'Substantially' Reduced Spending Growth

Lauren Aronson, executive director of the Campaign for Sustainable Rx Pricing (CSRxP), issued a statement highlighting the report as further evidence that drugmakers are "the culprit for the crisis of rising prescription drug prices."

On Thursday, Aronson said Pelosi's plan is another part of the "unprecedented momentum" behind holding drug manufacturers accountable. 

"The plan unveiled by leaders in the House reflects several key reforms that have won bipartisan support, including measures to reform the Medicare Part D program by giving Big Pharma more skin in the game, capping out-of-pocket costs and keeping price hikes below the rate of inflation," Aronson said in a statement. "As the details of this plan are discussed and weighed, we encourage policymakers on both sides to maintain their commitment to bipartisan action to hold Big Pharma accountable and lower drug prices."

While Pelosi received plaudits for the direction of her legislation, she also received a sizable amount of pushback.

Republicans on the House Health, Energy, and Commerce Committee unanimously rejected the proposal, accusing Pelosi of "pushing a socialist proposal to appease her most extreme members."

Similarly, the American Action Network (AAN), a center-right advocacy group, urged legislators to reject Pelosi's "socialist takeover."

"This plan will have devastating consequences for any American who ever needs a prescription medication and lawmakers must reject it at once," Dan Conston, president of AAN, said in a statement.

Meanwhile, Ed Schoonveld, managing principal at ZS, a professional services firm, said the $2,000 out-of-pocket cap was the "only sensible part of the legislation."

One of the leading voices on the side of drug manufacturers, PhRMA, criticized Pelosi's proposal as a "radical plan" that would curtail the U.S. system developing "innovative, lifesaving treatments and cures."

"[This plan] would fundamentally restructure how patients access medicines by giving the federal government unprecedented, sweeping authority to set medicine prices in public and private markets while importing price controls from other countries that restrict access to innovative medicines," Stephen J. Ubl, CEO of PhRMA, said in a statement. "We do not need to blow up the current system to make medicines more affordable. Instead, policymakers should pursue practical policy solutions such as sharing negotiated savings with patients at the pharmacy counter, lowering coinsurance in Medicare Part D, increasing transparency on patients’ costs, promoting value-based contracts, among other improvements to the system."

Editor's note: This story has been updated to include commentary from Ed Schoonveld of ZS.

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

Photo credit: Brussels, Belgium. 18th Feb. 2019. President of the European Commission Jean-Claude Juncker meets with a Speaker of the United States House of Representatives Nancy Pelosi. - Image / Editorial credit: Alexandros Michailidis / Shutterstock.com


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