Topics
More on Policy and Legislation

Senate Finance drug pricing bill faces opposition in full Senate

Senate Finance Committee passes Prescription Drug Pricing Reduction Act in bipartisan effort but full Senate approval may mean bill modifications.

Susan Morse, Senior Editor

The Prescription Drug Pricing Reduction Act that passed in the Senate Finance Committee by a bipartisan vote of 19 to 9 is facing opposition from some Republicans in the full Senate.

The bill is scheduled to go before the Senate in the fall, but some GOP senators oppose the legislation as price control. Senate Majority Leader Mitch McConnell is unlikely to bring the bill to the full Senate without substantial changes, The Hill has reported.

America's Health Insurance Plans said it was against any modification that would require drug rebates at the point-of-sale, rather than being passed on to insurers to reduce premiums for all beneficiaries. 

The bill's main provision would limit drug price increases in Medicare Part D. Pharmaceutical prices would be capped at the rate of inflation and overages would be paid back to Medicare as an inflation rebate.

The bill would also place a $3,100 cap on what Medicare beneficiaries pay out-of-pocket, starting in 2022.

The bill is estimated to save Medicare $85 billion over the next 10 years. Medicare beneficiaries would save an estimated $27 billion in out-of-pocket costs and $5 billion in premiums, according to the Congressional Budget Office.

While the bill is also touted as saving money for commercial beneficiaries due to the inflation rebate provision, others say pharmaceutical companies would be looking to make gains through their employer-sponsored plans.

"Pharma will always find a way to hit its numbers," said David Henka, president and CEO of ActiveRADAR, a company specializing in pharmacy cost reduction programs. "Disrupting the status quo might also decrease transparency when it comes to the PBMs. Each one of them negotiates individually with the manufacturers, so the difference between the Medicare prices and what pharma is charging for the non-Medicare side will become a highly guarded secret."

WHY THIS MATTERS

Reducing the price of prescription drugs has become the issue for Congress in attempting to lower healthcare costs.

Not surprisingly, the Pharmaceutical Research and Manufacturers of America is against the bill that it says replaces the successful, market-based structure of Medicare Part D with Medicaid-style price controls.

"The Senate Finance Committee legislation is 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," PhRMA 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."

MedPAC has said that the bill establishes an out-of-pocket cap that would only benefit 2% of Medicare patients starting in 2022, PhRMA said.

PhRMA CEO Steve Ubl and other executives met with President Trump on July 24 to discuss ways to lower medicine costs for patients. No specific policy reforms were given.

TREND

In the battle over drug prices, insurers say manufacturers alone set the prices, while blame has also been placed on the pharmacy benefit managers and the insurers who get rebates from drug-makers to lower overall premium rates.

The Trump Administration recently rescinded a policy that would have ended drug rebates from being passed onto insurers and made them only available to consumers at the pharmacy counter.

Pharmaceutical companies are now required to post the list prices of their drugs in television ads.

ON THE RECORD

AHIP President and CEO Matt Eyles: "These common-sense solutions will keep billions of dollars in seniors' and taxpayers' pockets, rather than going toward Big Pharma's bottom line. We urge the Senate to support these solutions, and to reject efforts to raise premiums and costs for seniors and taxpayers – such as weakening the ability to negotiate lower prices from drug companies on behalf of patients, or reducing drug maker accountability for high prices and costs."

AARP's EVP and Chief Advocacy Officer Nancy LeaMond said, "High drug prices disproportionately hurt older Americans, particularly Medicare Part D enrollees who take an average of 4.5 prescription medications each month. Most Medicare beneficiaries live on fixed incomes, with an average annual income of just over $26,000. The average annual price for a single specialty drug used on a chronic basis is now an astounding $79,000. Medications are simply not affordable when their prices exceed a person's annual income."

The Campaign for Sustainable Rx Pricing CSRxP Executive Director Lauren Aronson said, "In particular, we applaud the committee's bipartisan work to keep the growth of prescription drug prices in line with inflation, boost list price transparency, support increased utilization of biosimilars and deliver relief for Medicare Part D beneficiaries."

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com