Drug-Pricing Policies Picking Up Speed

Controlling drug prices

Sparked by the midterm election results that showed health care to be a deciding issue, lawmakers have launched a number of proposals to rein in prescription drug prices.

They are trying to signal to the public that they want to put manufacturers in the hot seat when it comes to addressing prescription drug costs.

♦ Big Pharma is viewed by the majority of Americans as the bad guy. Any politician seeking re-election or a possible presidential run in 2020 needs to show a more aggressive approach then in the past. At least, for the cameras.

• A Kaiser Family Foundation poll found that 77% of Americans say the cost of prescription drugs is unreasonable.

• 92% of Americans support allowing Medicare to negotiate drug prices directly with manufacturers.

♦ GOP leadership and those individuals controlling key committees are largely opposed to anything resembling price controls.

Republicans would rather talk about their pro-business free-market stance. So, it is unlikely that anything will make it to the president’s desk.

♦ A tiny crack appeared in the Republican resistance when Representatives Tom Rooney (R-Fla.) and Peter Welch (D-Vt.) re-introduce legislation to allow the Health and Human Services (HHS) secretary to directly negotiate with manufacturers on behalf of Medicare Part D. Representative Rooney is the sole republican to co-sponsor the bill so far.

Senator Amy Klobuchar (D-Minn.) reintroduced a similar bill in the Senate. Senator Bernie Sanders (I-Vt.) held a press conference to push the bill while promising an end to Big Pharma "greed."

A lot of this is political posturing in run up to the 2020 primaries.

♦ Senate Finance Committee chairman Chuck Grassley (R-Iowa) will prevent any proposal from moving forward in the Senate. Senator Grassley told reporters that he remains opposed to direct government negotiations on prices.

Senator Grassley was a key architect of the law that created Medicare Part D in 2003, when the current rule was put in place to prevent Medicare from directly negotiating with drug manufacturers.

• Senator Grassley said he will work to modernize the program, but he doesn't want direct government negotiation with the private sector. He said, “Part D expenditures have been under budget by about 40%. If it's working, don't mess with it."

• During the presidential campaign of 2016, then candidate Donald Trump called for importation of prescription drugs to help lower high drug costs in the United States.

Soon after his inauguration, President Trump met with executives from major pharmaceutical companies. The executives left on a happy note and the subject was never discussed again.

Trump kicks the hornet’s nest

In October, President Trump proposed tying some Medicare drug prices to lower prices in other countries. This is a departure from the traditional GOP position. At the time, it sounded more like posturing for the November elections.

• Within days, a coalition of conservative groups, including Americans for Tax Reform and FreedomWorks sent the president a letter calling on him to withdraw his proposal.

Critics are crying that President Trump’s proposal is essentially importing price controls from other countries. They want to use the term “free-market” to justify doing nothing.

♦ President Trump’s steps at controlling prices are baby steps. But Big Pharma’s wolves are already howling.

Senators Orin Hatch (R-Utah) and Chuck Grassley, both key senators, immediately picked up the theme. Senator Grassley said he has concerns Trump’s proposal would impose "price controls.”

• President Trump is not proposing a major shake-up. What his administration is proposing would only effect Medicare patients and only those who receive drugs in a doctor’s office or medical facility. It targets Part B drugs and not Part D drugs. Part D being prescription drugs obtained through drug stores.

♦ Not all congressional Republicans oppose President Trump’s move.

Senator Lamar Alexander (R-Tenn.) said he is "encouraged” by the plan. Senator Bill Cassidy (R-La.) said he was “pleased” with Trump’s move.

For now, the administration is not backing down and insists it is willing to fight back against the powerful pharmaceutical industry, which is working to kill the proposal.

♦ The pharmaceutical industry spent more than $27.5 million on its lobbying activities in 2018, and is expected to spend the same in 2019.

2020 hopefuls

Some 2020 hopefuls are trying to get out-in-front of this issue. A number of proposals came out in 2018 and will be discussed more in 2019. Most are common sense, why haven’t we done this already ideas. Many ideas deal with Medicare and Part D prescription costs. A hot button item for seniors.

♦ Sadly, none are expected to be acted on before the 2020 elections.

• Senator Elizabeth Warren has proposed letting the government manufacturer generics if there is a supply shortage or not enough competitors to keep prices down.

• Senator Bernie Sanders proposed legislation to require companies to price drugs no higher than the median price found in countries like Canada, Europe and Japan. If they fail to do that, then give the rights to manufacture the drug to someone else.

• Senator Sherrod Brown also proposes that if a company will not negotiate prices down then take away that company’s patent rights.

• Senator Bernie Sanders proposed to avoid companies stalling the negotiations that Medicare should be allowed to pay the lowest price found in France, the UK, German, Japan or Canada.

• Senator Sanders and Representative Elijah Cummings would like to allow the importing of drugs from Canada initially but possibly other countries down the road.

• Senator Chuck Grassley sees the writing on the wall; he wants to control the importation floodgates. Last year, he proposed limiting importation to just Canada. That legislation died.

• Senator Richard Blumenthal thinks manufacturers should be punished for price-gouging. The EpiPen incident is held up as an example of an industry gone crazy.

• Senator Chuck Grassley put out a proposal to prevent “pay-to-delay” tactics. This is where a maker of a brand drug pays off a competitor to not make a generic version, allowing the brand version to maintain market share longer. The legislation went nowhere last year, maybe this year it will get picked up again.

State legislatures getting more done

State legislatures are taking up the charge much faster than Washington. Since the beginning of 2017, bills have been introduced in at least half of the state legislatures. Few have actually made it through but the trend is clearly there.

♦ Most legislation is focused on drug prices and forcing greater transparency onto manufacturers.

• California, Oregon and Connecticut passed similar prescription drug price transparency laws.

• Maryland tried but failed to pass a bill requiring manufacturers to explain their reason for brand-name drugs with a price tag of over $30,000 a year. The idea was that the state would then review and set a reasonable price, much like European counties do now. This bill is expected to be introduced again in 2019.

• Illinois was able to get a generic drug price-gouging bill half way. It made it through the House but got stuck in the Senate. It is likely to be revisited in 2019.

State legislatures are not rushing to put in place price controls but rather to focus on price transparency.

♦  It follows that if Big Pharma is shown to be greedy and unwilling to reduce prices, then price controls will come.

This year, there is a large generic price rigging scandal that will be making the nightly news.  Investigation began in 2016, it has grown to involve 16 well-known companies and close to 300 drugs.

♦ This scandal might generate enough outrage to beat back the wolves and push the sheep sitting on the fence to move.

Wait and see.