- March 28, 2019
Already since the midterms, Democratic lawmakers have floated a bill directing the Department of Health and Human Services (DHHS) Secretary to break patents and allow generic competition when U.S. branded drug prices come in above their median price in Canada, the U.K., Germany, France and Japan. Additionally, Sen. Elizabeth Warren and Rep. Jan Schakowsky introduced bills that would allow government manufacturing of generic drugs wherever competition is lacking.
But conversation — including bills that may or may not go anywhere — and actual change are two different things. The divided Congress, though certain to spawn even more new bills and, likely, some embarrassing public hearings, could well be gridlocked, experts say.
And even if proposals do make it into practice, just how much would they affect the industry?
That depends, of course, on which proposals. Several now on the table will persist next year, to the consternation of pharma. For one, the Trump administration seems intent on forcing drug makers to include list prices in their TV ads, despite industry arguments that they would only mislead patients. Those stickers do not account for rebates and discounts, drug makers say, though patient advocates and others argue it is at least a step in the right direction.
For another unpopular effort, look at the push to force prices for drugs in Medicare Part B— those administered in a doctor’s office — closer to international levels via an “International Pricing Index.” Given the wide gap between prices in the U.S. and elsewhere, it is no surprise pharma has hit back hard against that idea since it cropped up in October 20189. More than 300 groups voiced opposition in official comments due this.
Meanwhile, the Medicare “doughnut hole,” where pharma suffered a rare defeat in 2018, remains contentious. Under the February change — brought about in a bipartisan budget bill — drug makers will have to offer up more discounts in Medicare Part D’s coverage gap. The change will hit some drug makers more than others; Eli Lilly, for one, has reported it’ll cost about $200 million next year.
And so far, pharma has not been able to change lawmakers’ minds. The White House said it would oppose an about-face on the policy, the Washington Examiner reported in December 2018, and lawmakers do not intend to reverse course during current budget talks, either.
The DHHS has also allowed Medicare plans to implement step edits — just as commercial insurance plans do, often thwarting newer branded drugs by requiring patients try generics first — and, perhaps even more importantly, use their leverage to negotiate prices.
The initiatives are part of the Trump administration’s larger drug pricing blueprint released in May. Championed by DHHS Secretary Alex Azar, the blueprint would boost competition and open up negotiation in drug markets, the government says, while lowering list prices and out-of-pocket costs.
That’s a tall order for a group of proposals that, while substantive, hardly amount to sweeping change. And meanwhile, market watchers are skeptical Congress can move much on drug prices. Democrats might theoretically be tougher on pharma when they take over the House in January 2018, but the Republican-led Senate likely will be a check on any radical proposals. Cowen Washington Research Group healthcare and pharma managing director Rick Weissenstein previously wrote the power shift “likely means gridlock” that actually benefits pharma.
But given the issue’s popularity among a public tired of rising out-of-pocket costs and constantly bombarded with news of rising prices, the two sides could actually shoot for consensus on regulating costs as the 2020 presidential election nears.
It also remains to be seen whether pharma will continue to hold off on price rises to avoid public and political scrutiny — and if not, how much they’d dare to raise them. Pfizer already disclosed plans to hike dozens of drug prices by single digit percentages in January, prompting pushback. And as many companies hold off on price rises, drugmakers are trading away one of their most reliable methods of growing sales.
As those issues play out, Commissioner Scott Gottlieb’s FDA seems intent on doing what it can to help with drug costs. His Agency is approving more generics then ever, tweaking regulations to bolster the stagnant U.S. biosimilar market and cracking down on regulatory “gaming” by branded drug companies that stifles competition.
REFERENCE: Fierce Pharma; 20 DEC 2018; Eric Sagonowsky