Lobbyists and advocates are pressing for a number of changes to a drug pricing overhaul as the focus on a $1.75 trillion budget bill shifts from the House to the Senate.
The lobbyists are angling for tweaks on everything from the time period of drug exclusivity to the tax treatment of rare disease drugs and provisions affecting the pharmacy benefit managers that manage prescription drugs for insurance companies.
The budget reconciliation bill includes a host of health-related provisions that have been scaled back along with its original $3.5 trillion topline. The cornerstone of the bill’s health agenda would overhaul how prescription drug prices are regulated, including by honoring Democrats’ long-standing campaign promise to allow Medicare to directly negotiate prices for a small subset of drugs.
The package has yet to pass the House, but lobbyists and advocates say that chamber’s language is mostly baked. Speaker Nancy Pelosi said she expects the legislation to pass after various Congressional Budget Office cost estimates and a final bill estimate are released over the next two weeks.
But the bill is expected to undergo potentially major changes in the Senate, where it’s still unclear what Sen. Joe Manchin III, D-W.Va., will demand to vote for the package.
Sen. Thomas R. Carper, D-Del., told reporters Tuesday that he hadn’t heard any scheduling updates as to when the Senate may take up the bill but said he was optimistic and hopeful the Senate would do so as early as this month. He said senators involved with the drug pricing negotiations were on board with the language the House is set to vote on.
“I thought we worked hard, very hard, to get to yes, and we did a lot of listening, a lot of negotiating,” he said. “I was very proud to have been a part of that and very grateful to our staffs for working with a whole lot of stakeholders to get us where we are at.”
Some changes are already under discussion for the health provisions. Multiple lobbyists told CQ Roll Call that more language affecting pharmacy benefit managers is likely to be added.
Currently, the bill repeals a rule requiring PBMs to share drugmaker rebates with patients at the pharmacy counter. The Trump-era rule has never taken effect but was estimated to cost as much as $170 billion over a decade, including through higher Medicare premiums.
Democrats are weighing whether to include a revamped measure in the current rule’s place, although it’s unclear how they would prevent insurance companies from raising premiums in response.
Senate Finance Chair Ron Wyden, D-Ore., has said the rule doesn’t achieve the aim of lowering prices for consumers and has previously sponsored bills requiring PBM discounts to be passed through to patients.
The Pharmaceutical Care Management Association, which represents PBMs, proactively warned against the move in a statement following the passage of a separate but related infrastructure bill last week.
“It is crucially important that Congress does not undo the progress made by eliminating the rebate rule by including policies in the budget bill, like a point-of-sale rebate policy, that would undoubtedly increase premiums on Medicare beneficiaries,” President and CEO JC Scott said in a statement.
Drug lobbyists are also working to roll back several other provisions, including new restrictions on tax credits for drugs that treat rare diseases. Orphan drugs, as they’re known, would qualify for the research credit for only the first approved use of the drug under the bill, removing the credit for any additional uses approved down the road.
Another target is extending the bill’s protections for drugs before they become eligible for Medicare negotiation, which would cap the maximum price the program would pay for qualifying products. Under the House bill, the Department of Health and Human Services would negotiate prices for insulin and up to 10 drugs without generic competition in 2025, 15 drugs in 2026 and 2027, and 20 drugs afterward.
The current version of the bill would grant nine years of protection from Medicare negotiations for traditional drugs and 13 years for biologics. Drug companies want longer protections, while patient advocates want shorter periods.
The Association for Accessible Medicines, which represents generic drugmakers and biosimilar manufacturers, is also angling to get generics exempted from the bill’s inflationary caps on price increases, Eric Komendant, the group’s senior vice president of government affairs, told reporters last week. The House bill would limit drugs’ annual price increases to inflation starting in 2023, based on the 2021 prices of drugs.
“We’ll continue to talk to lawmakers in the House and Senate to make our case,” he said. “I think we’re actively working on a number of potential solutions here, but fundamentally these policies need to change.”
Members of Democrats’ progressive wing have been fighting to expand the limits on drug prices even as the bill has been systematically scaled back. But while the House agreement does not go as far as Democratic leaders originally proposed, it still represents “meaningful change” when compared with current prescription drug policies, said Juliette Cubanski, the deputy director of the program on Medicare policy at the Kaiser Family Foundation.
The inflationary rebates would provide savings to Medicare beneficiaries and people with private health plans, she said. Prices for as many as half of Part D drugs in a recent year increased faster than inflation, so the provision could apply to a large number of drugs.
The bill includes several bipartisan wins for consumers. A new $2,000 annual out-of-pocket cap on drug costs for Medicare Part D enrollees would likely be the most noticeable way people would see their spending on prescriptions go down in the short term, she said. That change, beginning in 2024, would put Part D plans more on par with private insurance coverage for prescription drugs, which typically already has an out-of-pocket spending cap.
“The fact that millions of older adults and people with disabilities who have Part D coverage and are more likely to use prescription drugs than younger, healthier adults and haven’t had a cap on their drug spending has posed real affordability problems for a lot of folks on Medicare,” Cubanski said. “In that sense, this is a helpful policy change that’s targeted to this population because they’re one of the few groups of insured people who don’t already have a cap on their out-of-pocket costs.”
But Republicans say the restrictions will undercut private market incentives associated with typical negotiation. Edmund Haislmaier, a senior research fellow at The Heritage Foundation, argued that setting a ceiling price effectively scrambles the motives for a drugmaker to accept anything lower.
“The net effect of these provisions essentially boils down to this: The ‘ceiling’ price becomes the ‘negotiated’ price, and it also becomes the ‘floor’ price,” he wrote.
Lobbyists are currently hammering lawmakers with similar arguments.
“There are likely other unintended consequences resulting from this bill that will upend our global leadership in biomedical innovation and undermine the quality of care that patients receive for years to come,” Pharmaceutical Research and Manufacturers of America President and CEO Stephen Ubl said in a statement. “But these consequences aren’t being considered as these decisions are being made behind closed doors, with no congressional hearing and almost no public input.”
The timing of action remains in flux. Carper was asked whether the plan would be for the Senate to consider the bill after the Thanksgiving recess.
“Personally, I’m still hopeful that there will be not a big miracle but a miracle, and we can actually get it done by Thanksgiving,” he said. “We’ll call it a Thanksgiving miracle.”