A bipartisan Senate bill would yield $100 billion in savings on prescription-drug spending over a decade, two of its sponsors said Tuesday, in part by penalizing pharmaceutical companies for raising prices faster than the rate of inflation.
Charles Grassley, R-Iowa, and Ron Wyden, D-Ore., said the bill also would for the first time limit drug copays for people with Medicare's Part D prescription plan, by capping patients' out-of-pocket costs at $3,100 a year starting in 2022.
The legislation, which has the backing of the White House, contains several proposals designed to reduce government outlays in Medicare and Medicaid.
The senators announced a Thursday vote on the package by the Finance Committee, which oversees Medicare and Medicaid. Grassley is the panel's chairman, while Wyden serves as the senior Democrat.
"We are engaging with coalitions to help build support," White House spokesman Judd Deere said in a statement. "We will work with senators to ensure this proposal moves forward and advances the president's priority of lowering drug prices even further and increasing transparency in health care for the benefit of all Americans."
Still, some lawmakers and business groups are already lining up on the other side, saying the legislation goes too far in limiting drugmakers' discretion to set prices and doesn't do enough to help consumers.
The senators said preliminary estimates from the Congressional Budget Office show that the Medicare program would save $85 billion over 10 years, while the government would save $15 billion from projected Medicaid costs. Senior citizens would save $27 billion in out-of-pocket costs over the same period, and $5 billion from slightly lower premiums.
Getting drug prices under control has been a top priority of the President Donald Trump administration and lawmakers of both parties, but action so far has been limited. Last week, the White House pulled back a proposal that would have curbed rebates paid to drug-plan middlemen, and Democrats in the House recently said they would put off debate on a drug-price bill until September.
The Senate bill would force drugmakers to give rebates to the federal government if they raised the list prices of drugs at a faster rate than other prices in the economy. To keep drugmakers from raising prices ahead of the bill's passage, the inflation cap would be anchored to a medicine's price on July 1 of this year.
Nothing in the measure curbs the price pharmaceutical companies set for new drugs, as lawmakers seek to protect innovation and preserve patient access to new therapies. Drugmakers would still have the ability to set high nominal list prices in order to offset any concerns that a low inflation rate would erode profits.
"Pharmaceutical companies play a vital role in creating new and innovative medicines that save and improve the quality of millions of American lives, but that doesn't help Americans who can't afford them," Grassley and Wyden said in a joint statement. "This legislation shows that no industry is above accountability."
The White House encouraged the Senate negotiations, but Democrats controlling the House want to go farther by granting Medicare legal authority to directly negotiate prices with pharmaceutical companies. Direct negotiations are seen as a nonstarter in the Republican-controlled Senate, but the bill's drug price inflation penalty may yet find support among Democrats in the House.
Top Trump administration officials, including Health and Human Services Secretary Alex Azar and Joe Grogan, director of the White House Domestic Policy Council, met recently with Senate Republicans to push them to embrace some ideas from Democrats, such as the inflation rebate developed by Wyden, that often are counter to GOP orthodoxy.
However, some Senate Republicans balked at the new bill on Tuesday.
"Basically we're talking about price controls and once you open that door, other things will happen," said Pat Roberts of Kansas. Pat Toomey of Pennsylvania said he would offer an amendment to strike the bill.
What this comes down to is: "Will Republican senators take on pharma," Wyden said.
The bill's backers said it would increase transparency in the pharmaceutical supply chain, which depends on a complex web of middlemen and distributors.
The Health and Human Services Department would be required to make public data it receives annually from middlemen, known as pharmacy-benefit managers, including the aggregate amount of rebates they negotiate from drugmakers on the list price of a therapy in exchange for better access to patients. The rebates have been criticized for leaving those with high-deductible coverage with large out-of-pocket costs.
The Campaign for Sustainable Rx Pricing, an advocacy group that supports market-based solutions to drug-pricing issues, said the Senate proposal is a "good first step." The organization represents a coalition of health care providers, hospitals, pharmacy-benefit managers and insurers.
The industry has long claimed any attempt to curb prices would hurt its ability to fund research and stymie U.S. patients' access to new treatments.
The U.S. Chamber of Commerce also opposed what it said would amount to using "the power of the government to impose price controls."
Information for this article was contributed by Anna Edney, Alexander Ruoff, Riley Griffin and Josh Wingrove of Bloomberg News and by Ricardo Alonso-Zaldivar of The Associated Press.
Business on 07/24/2019