September 11, 2019

House Speaker Nancy Pelosi (D-Calif.) as early as this week could release a bill to tackle rising prescription drug costs—and a summary of the bill obtained by media outlets suggests Pelosi is considering allowing HHS to negotiate drug prices for certain treatments and establishing a drug price ceiling based on the prices paid for the drugs in other countries.

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Various media outlets have obtained a summary of the bill being drafted by Pelosi. However, Henry Connelly, a Pelosi spokesperson, in a statement issued Monday night said the summary is "an out of date draft." Connelly said Pelosi has not yet released the bill because House committees are continuing to negotiate on certain drug pricing proposals. As such, it is unclear whether the proposals detailed in the bill summary being circulated by news outlets will be included in the final bill.

The proposals included in the summary

However, the bill summary provides a glimpse of the proposals Pelosi and other Democrats are considering to address rising prescription drugs costs.

According to the summary, the bill would allow HHS each year to negotiate prices of the 250 costliest drugs—including cancer treatments, insulin, and specialty drugs—that do not have at least two competitor products on the market. The bill would require drugmakers to adopt the negotiated prices in both Medicare and the private market, according to the bill summary, meaning the negotiated prices would be available to all consumers.

According to the summary, the bill also would establish a drug price ceiling for the negotiations based on the prices paid for the drugs in other countries—which is slightly similar to a White House proposal that would tie payments for drugs covered by Medicare Part B to certain international prices. The bill would not allow drug prices to be set at more than 1.2 times the average prices paid in Australia, Canada, France, Germany, Japan, and the United Kingdom, the summary states.

The bill would allow HHS to penalize pharmaceutical companies that refuse to negotiate prices with the department with a 75% tax on the drug's annual gross sales from the previous year. If a drugmaker negotiates a price with HHS but then overcharges Medicare or does not provide other payers the negotiated price, HHS could levy a civil penalty equivalent to 10 times the difference between the negotiated price and the offered price, according to the bill summary.

In addition, the bill would require pharmaceutical companies to either lower the prices of drugs covered by Medicare Parts B and D if the drugs have experienced price hikes at rates above inflation since 2016 or pay a rebate worth the entire price above inflation to the Department of the Treasury. The bill summary states, "Setting the base year of inflation as 2016 would wipe out the last three years of price hikes in Medicare Part[s] B [and] D, lowering prices further and for more drugs than the Senate Finance [Committee] inflation rebate."

Further, the bill would change how Medicare shares the responsibility for covering drug costs with drugmakers, insurers, and taxpayers, according to the summary. The summary does not include details on how the drug costs would be split, but its notes that drugmakers would be required to offer new discounts for brand-name drugs at the pharmacy counter.

The bill summary did not include one of Pelosi's controversial proposals to use third-party arbitration to gain leverage in price negotiations with pharmaceutical companies.

What's next?

Observers have said Pelosi's bill likely would need to be attached to a larger government spending bill in order to advance in the House, as it is likely to face opposition from Republicans.

In the event the bill did pass the Democratic-controlled House, the Republican-controlled Senate is unlikely to take up Pelosi's proposal.

However, there are some slight similarities between Pelosi's proposal and a Senate bill introduced in July that also aims to address rising prescription drug prices. For example, the Senate bill would cap out-of-pocket costs in Medicare Part D and limit price increases in Medicare Part B. But although the Senate Finance Committee has approved that bill, a majority of Republicans on the committee voted against the measure, and it remains unclear whether Senate Majority Leader Mitch McConnell (R-Ky.) will bring the bill up for consideration before the full Senate.

Chris Meekins—a research analyst at Raymond James, a financial services company, and a former HHS official—said, "Pelosi put forward a more progressive bill than anticipated and one she knows is dead on arrival in the Senate. This proposal reiterates our belief that nothing on drug pricing will be done before the 2020 election"

But the White House on Tuesday welcomed Pelosi's proposal, which could increase pressure on Senate Republicans to act on drug pricing legislation.

White House Deputy Press Secretary Judd Deere told Inside Drug Pricing, "President [Trump] has been focused on this topic since he took office, and he welcomes [Pelosi's] ideas to help build bipartisan, bicameral consensus for the American people." Deere continued, "The White House was supportive of the package that passed the Senate Finance Committee, and we continue to engage with members of the Senate as well as other members and outside advocates to build support and ensure [Trump's] priorities are advanced."

However, the pharmaceutical industry pushed back on Pelosi's proposals.

Stephen Ubl, president and CEO of Pharmaceutical Research and Manufacturers of America, said the proposals included in the bill summary would "end" the United State's market-based system for prescription drugs. "We do not need to blow up the current system to make medicines more affordable for patients. Instead, policymakers should pursue commonsense reforms that lower costs for patients, such as sharing negotiated savings with patients, promoting value-based payment, and lowering out-of-pocket costs in Medicare," he said (Florko/Facher, STAT+, 9/9 [subscription required]; Sullivan, The Hill, 9/9; Owens, "Vitals," Axios, 9/10; Abutaleb, Washington Post, 9/9; Haseley/Wilkerson, Inside Health Policy, 9/10 [subscription required]; Clason/Siddons, CQ News, 9/10 [subscription required]).

New report: 4 steps needed to realize pharmacy’s full value

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