Pulse on Pricing
with help from co-author Michelle Leeds
Winter is coming… this spring. While we’re excited for the Game of Thrones season premiere this weekend, we’re talking about drug pricing legislation. We’ve seen many hearings on drug pricing in the past few weeks, and there’s been a few bills that have made it through committee. Now, according to the Washington Post, U.S. House of Representatives Speaker Nancy Pelosi is looking to bring a package of policies to a vote in the full House in May. There’s a strong possibility new laws to increase transparency and competition within the life sciences industry are on the horizon.
Here’s a quick rundown of some of the pricing proposals that could end up in a package:
- The STAR Act (H.R. 2113) would require manufacturers to “justify” price increases at certain thresholds (i.e. 10% increase per year or 25% over three years). PBMs would also be required to publicly disclose rebates.
- The Protecting Consumer Access to Generic Drugs Act (H.R. 1499) would ban pay-for-delay deals.
- The CREATES Act (H.R. 965) makes it easier for biosimilar manufacturers to obtain original samples.
- The Payment Commission Data Act (H.R. 1781) would make more drug pricing and rebate data available to MedPAC and MACPAC to hopefully better inform their recommendations to Congress.
- The BLOCKING Act (H.R. 938) would allow the FDA to approve a generic drugmaker's application to bring a competing drug to market if the first generic manufacturer to apply has not launched its product. The bill is intended to discourage drugmakers from taking advantage of extended exclusivity periods.
Rebates continued to be in the news this week for several reasons. They were a hot topic at the Senate Finance Committee’s hearing on drug pricing with leaders from five PBMs. Also, comments were due to the Trump Administration’s rebate rule that would remove and replace certain safe harbors for rebates. And, the Medicaid and CHIP Payment and Access Commission (MACPAC) made a recommendation to Congress on the topic.
The Senators had a less antagonistic tone with the PBMs than they did with the pharma companies in prior hearings. The conversation focused on who benefits from rebates (are they passed through to insurers, employers, patients?) and spread pricing (in which a PBM charges an insurer more for a drug than the pharmacy paid it for the same drug).
Lawmakers hinted at potential policy requiring transparency in the negotiation process. The PBMs testified that public transparency would hinder their ability to negotiate with manufacturers, but would potentially support a confidential disclosure to government entities.
The Senators also hinted at potential policy around spread pricing, which the PBMs present seemed to support. What that looks like remains to be seen. Just days later, the heads of the Senate Finance Committee sent a letter to the Health and Human Services inspector general asking him to investigate spread pricing practices and if they are leading to “inappropriate profiteering and potential anti-competitive practices.”
According to Politico, more than 25,000 comments were filed in response to the Trump Administration’s proposed rule that Medicare & Managed Medicaid should no longer enable rebating for drug formularies unless the rebate is directly passed to consumers at the point of sale. Pharma applauded the proposal, but asked for a few clarifications on how the discounts at the point of sale would work and additional reforms addressing PBM service fees. Payers largely disapprove, noting that it would upend the transition to value-based care and lead to premium increases. A second rule proposed would require PBMs could only take flat fee reimbursement from manufacturers instead of the prior model which used a percentage of the drug’s list price.
What is MACPAC? It’s a non-partisan legislative branch agency that provides policy and data analysis and makes recommendations to policymakers on issues affecting Medicaid and the State Children’s Health Insurance Program (CHIP). They’re now getting into the rebate debate, recommending more flexibility for rebates in the Medicaid program. Currently, rebates are capped at 100% of a drug’s average list price. The group estimates that removing the limit could save the federal government $15B-$20B over 10 years.
Who wrote this? The managing editors of TWTW are Randi Kahn, who is glad she never jumped on the virtual assistant bandwagon, and Dana Davis, who unplugged her Alexa a long time ago and hasn't looked back.
Syneos Health Communications' Reputation & Risk Management Practice is a team of healthcare communications consultants, policy-shapers and crisis response specialists. We provide unique solutions to the evolving communications challenges in today’s healthcare industry, using evidence-based approaches to help our clients successfully navigate the most sensitive of situations.
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