December 10, 2019

Senate Committee, House GOP unveil new bills to lower Rx drug costs

Daily Briefing

    Leaders on the Senate Finance Committee on Friday unveiled a new, bipartisan bill intended to lower prescription drug prices in the United States and fund some federal health care programs, and House Republicans on Monday released a similar bill.

    Your cheat sheets for understanding health care's legal landscape

    Lawmakers introduced the measures amid reports that the House is scheduled to vote this week on a separate proposal (HR 3) introduced earlier this year by House Speaker Nancy Pelosi (D-Calif.), setting up a potential clash in Congress over the legislation.

    Senators unveil new Rx pricing bill

    The Senate Finance Committee's new bill, called the Prescription Drug Pricing Reduction Act, is an updated version of bipartisan legislation the committee approved in July. While the latest version contains many of the same provisions as the previous one, the new bill contains several changes intended to further lower prescription drug costs for seniors.

    Medicare Part D changes

    The bill would significantly restructure the Medicare Part D benefit, eliminating Medicare Part D's so-called "doughnut hole," and making drugmakers responsible for costs once beneficiaries' catastrophic coverage kicks in.

    Under the bill, beneficiaries would be responsible for paying all costs for drugs covered under Medicare Part D up to their deductibles. Once beneficiaries meet their deducible requirements under their initial coverage phase, they would be responsible for paying 20% of their drug costs, while drugmakers would cover 7% of those costs and beneficiaries' health plans would cover the remaining 73%. The bill also would allow beneficiaries to pay those costs over the course of a year instead of having to pay them up front, as is required under current law.

    The bill would cap beneficiaries' out-of-pocket spending at $3,100, at which point they would enter the catastrophic coverage phase, which shifts the cost of drugs to health plans and drugmakers. The bill would overhaul the shares of beneficiaries' costs that drugmakers, health plans, and the federal government must pay during that phase, requiring drugmakers to pay 14% of those costs for brand-name drugs, down from 20% the previous version of the bill proposed. If signed into law, the new Medicare Part D structure would take effect in 2024.

    The bill also includes a controversial proposal that would require brand-name drug and biologics makers to reimburse Medicare when the prices of their drugs and biologics increase at a rate faster than inflation, as measured by the Consumer Price Index for All Urban Consumers (CPI-U).

    The bill also would require HHS to publicly share more information around pharmacy benefit manager (PBMs) practices and manufacturer drug pricing. Further, the bill would require Part D plans and PBMs "to include concessions and fees they negotiate with a pharmacy in the price beneficiaries pay at the pharmacy counter, reducing out-of-pocket expenses and prohibiting retrospective recoupment of payments to pharmacies," according to a release from the committee.

    Medicare Part B changes

    The bill also seeks to address a number of Medicare Part B billing loopholes that stakeholders have said increase payment rates for prescription drugs. For example, the bill would implement stricter requirements on how average sales prices (ASPs) are calculated by excluding patient coupons from the formula.

    The bill also includes a proposal backed by President Trump that would bring provider reimbursements for drugs covered under Medicare Part B in line with the lower prices paid in other countries.

    In addition, the bill would:

    • Cap at $1,000 the add-on payments that providers can be paid for drugs, biologics, and biosimilars under Medicare Part B beginning Jan. 1, 2021;
    • Increase payments for biosimilars to ASP plus 8% to promote their use over brand-name biologics;
    • Require that manufacturers of treatments that do not have Medicare rebate agreements report ASP information each quarter to the HHS secretary; and
    • Require HHS to publish information on Medicare beneficiaries' cost-sharing requirements for drugs provided in physician offices.

    The bill also would require drugmakers to pay rebates each quarter the ASP for affected products exceeds the amount of the inflation-adjusted ASP payment. HHS would establish a benchmark payment rate for new drugs on the first day the drug is marketed, and would adjust the benchmark by the CPI-U percentage change every subsequent quarter to reach the inflation-adjusted ASP payment. The HHS secretary under the bill could waive or reduce the rebate requirement for treatments included on FDA's drug shortage list. Drugmakers that do not pay the required rebates could be subject to a civil monetary penalty.

    The bill would require drugmakers to pay rebates when single-dose vials of drugs covered under Part B are unused. In particular, the bill would require drugmakers to refund payments to providers for certain unused amounts of single-use vials that exceed a specific threshold. The requirement would apply to all drugs, biologics, and biosimilars that are packaged as single-dose vials and covered under Medicare Part B—with the exception of radiopharmaceuticals and imaging agents.

    Medicaid changes

    The bill also would seek to address drug price increases in Medicaid. For instance, the bill would cap manufacturer rebates in Medicaid at 125% of a drug's average manufacturer price for rebate periods beginning on or after October 1, 2022.

    In addition, the bill would:

    • Authorize an increase in the oversight of drugmakers' price reporting to Medicaid;
    • Ban spread pricing by PBMs in Medicaid manage care;
    • Exclude authorized generics from the average manufacturer price calculations in Medicaid; and
    • Permit state Medicaid programs to use value-based agreements to pay for gene therapies, though states would have to seek CMS' approval for such agreements.

    The bill also would cancel planned cuts to Medicaid disproportionate-share hospital (DSH) payments for fiscal years FYs 2020 and 2021, but would implement $8 billion in annual Medicaid DSH payment cuts for FYs 2022 through 2025. The bill also includes new provider transparency requirements for certain supplemental Medicaid payments.

    In addition, the bill includes funding for various federal health care programs, which senators hope will help the bill's chances of passage. Funding for the programs currently is set to expire on Dec. 21.

    House Republicans release Rx drug pricing bill

    Top Republicans on the House Energy & Commerce Committee on Monday also released a new bill intended to lower prescription drug prices, which has several provisions in common with the Senate Finance Committee's bill.

    For example, the new House bill—called the Lower Costs, More Cures Act—would also set a $3,100 cap on Medicare Part D beneficiaries' out-of-pocket costs, at which point beneficiaries would enter the catastrophic coverage phase, and would allow beneficiaries to pay those costs over the course of a year instead of having to pay them up front.

    Also like the Senate bill, the House bill would change how much drugmakers are required to pay for medications covered under Medicare Part D. However, the House bill would require drugmakers to pay 10% of the costs for such drugs at every coverage phase, diverging from the Senate bill's thresholds of 7% before the catastrophic coverage phase and 14% once the catastrophic coverage phase kicks in.

    The House bill also would cap add-on payments for drugs covered under Medicare Part D and implement new transparency requirements for PBMs.

    But the bill also includes provisions that are not in the Senate Finance Committee's new bill. For example, the House bill would cap copayment requirements for insulin at $50 per month for Medicare beneficiaries. In addition, the House bill calls for creating a "chief pharmaceutical negotiator" role within the Office of the U.S. Trade Representative who would be responsible for representing U.S. patients' interests during international trade negotiations.

    The House bill also includes provisions intended to bolster competition in the prescription drug market. For instance, the legislation looks to ensure generic drugmakers can access samples of brand-name drugs that are necessary for generic drug development and prohibit so-called "pay-for-delay" agreements. The bill also would require pharmaceutical companies to include a drug's prices in TV advertisements for the medication and to justify any price increases that outpace the rate of inflation.

    Congress could be headed for a drug pricing clash

    According to STAT+, the new bills are intended as alternatives to Pelosi's bill, and could set up a clash in Congress over legislation to address prescription drug prices before the end of this year.

    White House Domestic Policy Council Director Joe Grogan and Council of Economic Advisers Acting Chair Tomas Philipson in an op-ed published Friday in FOXBusiness expressed support for the Senate Finance Committee's new bill and said President Trump would sign it into law if Congress approves it. "It is within our grasp to provide a real win for Americans worried about the high price of prescription drugs—if Congress can get it across the finish line before the end of the year," they wrote.

    However, it is unclear whether Senate Majority Leader Mitch McConnell (R-Ky.) will bring the Senate Finance Committee's new bill to the floor for a vote.

    It also is unlikely that Pelosi's bill would make it to the Senate floor, STAT News reports. The White House and other Republicans have said they oppose Pelosi's bill, which also faces opposition from some progressive Democratic lawmakers in the House who feel the bill does not go far enough to bring down drug prices.

    Republican aides in the House have called House Republicans' new bill a "good-faith effort" to address partisan divides over the other measures, in hopes that lawmakers can approve legislation to lower prescription drug prices by the end of this year. But the House GOP's bill likely will not move forward in the Democratic-controlled House, leaving an uncertain future for a bipartisan compromise on a bill to address prescription drug prices (Florko, STAT News, 12/6; Senate Finance Committee release, 12/6; Senate Finance Committee bill text, accessed 12/9; Senate Finance Committee Extenders Release, accessed 12/9; Cohen/Wilkerson, Inside Health Policy, 12/6 [subscription required]; Cohrs, Modern Healthcare, 12/6; Cirruzzo, Inside Health Policy, 12/6 [subscription required]; Owens, "Vitals," Axios, 12/9; Sullivan, The Hill, 12/6; Grogan/Philipson, FOXBusiness, 12/6; Facher, STAT+, 12/9 [subscription required]; Sullivan, The Hill, 12/9 House Energy & Commerce Committee Republicans release, 12/9).

    Have a Question?

    x

    Ask our experts a question on any topic in health care by visiting our member portal, AskAdvisory.

    X
    Cookies help us improve your website experience. By using our website, you agree to our use of cookies.