Over the last week, Britain has been obsessed with Boris and Brexit while the US is focused almost entirely on Mueller and Trump. But while you weren’t looking, policy makers in Washington (and in several state capitals) have taken steps that could significantly reform and recast the drug pricing system in the US.
Just weeks ago, President Trump announced he was abandoning the proposal to eliminate the rebate system (the arcane way drug prices are negotiated between pharmacy benefit managers and drug companies) in Medicare. At around the same time, federal courts struck down Health and Human Services Secretary Alex Azar’s plan to require drug companies to reveal the “list price” of a drug in all television advertising.
Action on drug prices appeared stalled. Drug companies (who are mostly content with the status quo but, most of all, crave certainty) were pleased. Pharma knows it is losing in the public debate, but it has, so far, succeeded in blocking anything that could be really detrimental to its interests.
Suddenly, things have changed. Bipartisan legislation – something exceedingly rare in Washington these days – has been introduced in the Senate that would make major changes to the way Medicare pays for drugs. And in the House, Speaker Nancy Pelosi’s top aide, Wendall Primus, has announced that drug pricing legislation is “nearly ready” and that it will include the ability for government to negotiate drug prices paid for by Medicare.
The Senate bill is particularly interesting. Its chief sponsors are the Chairman of the Senate Finance Committee, Chuck Grassley (R-IA) and the Democratic Vice Chairman, Ron Wyden (D-OR). PhRMA, the chief lobbying arm for drug companies in the US, hates the bill. Among other provisions, it would require companies to refund Medicare when the price for certain expensive drugs (think oncology, gene therapies and Hepatitis C) exceeds the annual inflation rate. This is radical stuff in the US. The bill, with the price caps intact, was reported out of the Senate Finance Committee on Thursday. All Democrats voted in favor of it. And while most Republicans voted no, six of fifteen voted yes.
Primus, Speaker Pelosi’s top aide, said he’ll roll out the House drug pricing bill in September, after members return from their August recess to avoid giving drug companies time to rally against the bill while legislators are home for the month. Democrats have long favored giving Medicare the authority to negotiate prices, but this is the first time that leadership has backed the concept in legislation. Further, according to reports, the negotiated prices would apply not only to Medicare, but all insurance coverage as well. That’s huge!
The future of these bills is uncertain. Many Senate Republicans will oppose portions of the Grassley-Widen bill. Democrats, who should be able to pass their bill without Republican support, face a challenge on the left (see “The Squad”) who want the bill to go further than it is likely go. Meanwhile, PhRMA has successfully defeated – or significantly watered-down – legislation it has opposed year after year.
And President Trump… well, it’s hard to know what he will do, say or tweet about all of this.
But something has changed. Maybe it is the prospect of Election Day being about fifteen months away or the constant attacks on pharma from the 20+ Democrats running for President. Whatever it is, it feels like something may happen this time… something big.