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Policymakers Face Pressure to Act on Drug Pricing

Some proposals appear likely to gain traction

Sen. Todd Young is among the Republicans who say the latest news puts a premium on the Intelligence Committee getting to the bottom of its Russia investigation. (Bill Clark/CQ Roll Call File Photo)
Sen. Todd Young is among the Republicans who say the latest news puts a premium on the Intelligence Committee getting to the bottom of its Russia investigation. (Bill Clark/CQ Roll Call File Photo)

A proposal that would open the door for the import of low-cost prescription drugs from Canada was defeated at a Senate markup Thursday, but the proposal is unlikely to be gone for good. Lawmakers from both parties seem to want to demonstrate concern about drug prices to voters.

The administration also appears interested in addressing the issue, with Health and Human Services Secretary Tom Price holding listening sessions with patient groups and think tanks in recent weeks.

None of the proposals would send drug prices plummeting, but public concern is high and policymakers are feeling pressure to take some kind of step, even if it would have a modest impact.

Price is hearing from a range of organizations, including patient groups, insurers, and, on Thursday, pharmacy and hospital groups. Price and his colleagues did a lot of listening but did not hint about what proposals they favor, say attendees at some meetings. The proposals being pitched to the HHS secretary include boosting competition through generic drug development, price transparency, and more communication between regulators and government payers.

Some of these proposals could gain traction. Across the ideological spectrum, there is an interest in faster generic drug approvals and more transparency in pricing.

“There is an opportunity for some common ground on a number of different ways to tackle this issue in a way that doesn’t inhibit research and development,” Indiana Republican Sen. Todd Young said Thursday at the Health, Education, Labor and Pensions Committee markup of a bill that would renew the Food and Drug Administration’s authority to collect fees from the drug and medical device industries.

Tweaks to boost competition seem likely. The Senate user fee bill would impact generic drug development. Recently, the FDA has been criticized for taking too long to act on generic drug applications. Part of the problem is some drug applications don’t live up to FDA standards, and applicants need to try again. The bill would provide generic drugmakers with more opportunities to meet with the FDA earlier in the application cycle and receive guidance.

Potential action

Some argue the FDA should adjust its rules on how drugmakers communicate with insurers before a drug has received approval for a certain use, which would make it easier for companies to negotiate contracts before a drug is on the market. Drug companies currently cannot tell insurers and others that a drug can be used for a condition unless the agency has approved that use. That’s true even when the FDA is preparing an approval.

Margaret Anderson, head of the advocacy group FasterCures, said she told Price at a May 5 meeting that the FDA should alert the Centers for Medicare and Medicaid Services about drugs that will be approved soon. If a drug can help people avoid costlier hospital care, having reimbursement policies in place sooner could save money.

“When there is a new approval in immunotherapy, you don’t want an eight-month lag on the reimbursement system,” she said. “Patients might die in that eight-month period. The system needs to be poised and ready.”

Some also argue that drugmakers should be transparent about how they price their products, breaking down how much they spend on research compared to marketing, profits and executive compensation.

Others question the efficacy of pharmacy benefit managers, who seek to negotiate lower drug prices for insurers and employers. The benefit managers argue that if they weren’t driving savings, nobody would use their services, but there are questions about how much savings actually accrue as some benefit managers’ profits grow. Pending bills would require the benefit managers to be transparent about the discounts they get and other parts of their finances.

“If you have the transparency in place, all stakeholders can see the flow of money, and who is making what, and that sets competition on a much more level footing, and we believe that will drive down prices,” said Marc Boutin, CEO of the National Health Council, a coalition of patient groups funded by a variety of health sector players, including pharmaceutical companies, which Boutin said should also be more transparent.

“Everybody tells us they are working on behalf of a patient to negotiate prices and get the best price possible — but you know what? We don’t see it,” said Boutin, who attended one of the HHS meetings.

Companies are pushing back against different proposals. The pharmaceutical industry says price transparency would expose the proprietary information of drugmakers. Benefit managers say transparency for their sector would drive up drug spending because it would help drugmakers charge the highest prices.

Supporters of the various proposals agree that none represents a “silver bullet” that could single-handedly solve the problem of drug prices. But Boutin said that together, even if proposals can help drive down spending by a percentage point or two, that would still result in billions of dollars in savings. He said the powerful health industries might not be able to quash all the ideas they oppose in the current political climate.

“We’ve hit a point in time where just saying no doesn’t work. You have Democrats and Republicans saying we need to do something. We have an administration saying we need to do something. I don’t think saying ‘no’ works anymore,” he said.

Drug importation will likely remain in the conversation as well. The House Energy and Commerce Committee will mark up the FDA bill before the end of May, which will give drug import supporters another chance to make their case. Several committee members co-sponsored an import bill and may seek to attach it to the broader bill, but even Democratic committee leaders want to avoid controversy and just pass the FDA bill.

The issue could also emerge when the FDA bill heads to the Senate floor. Although the amendment on drug imports from Sen. Bernie Sanders, I-Vt., was tabled in the HELP Committee, the idea is backed by at least a dozen Republicans. Sen. Susan Collins, R-Maine, said she voted to table the amendment in the interest of getting the FDA bill through committee without controversy, but wants to keep discussing importation.

“I am eager for this bill to get through the committee and to the Senate floor, but I pledge to the senator that I will work with him on this issue which is of great interest of my constituents since we are a border state with Canada,” she said.

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