June 04, 2019
The House Ways and Means Committee held a hearing on proposals to reduce prescription drug prices following House and Senate Committee hearings in late January. At the hearing, witnesses recommended a broad range of policy options including:
- Banning “pay-for-delay” patent settlements and other anticompetitive arrangements, which effectively block generic drug competition for branded drugs;
- Modifying patent rules and reducing exclusivity periods;
- Eliminating or modifying the Food and Drug Administration (FDA) interchangeability designation for lower-cost biosimilars to encourage substitution;
- Increasing Part D plan flexibility regarding formulary coverage of drugs in protected classes and allowing for greater use of specialty pharmacy utilization management tools (e.g. step therapy, etc.);
- Prohibiting manufacturer coupons in Part D or requiring they be made available for therapy duration;
- For high cost drugs with minimal competition considering alternative reimbursement and pricing models, such as reference pricing, pricing tied to clinical value, pricing tied to an international pricing index or binding arbitration arrangements if direct price negotiation by the HHS Secretary fails;
- Reforming the Part B provider reimbursement model from one tied to a percentage of the drug price to one that would pay a flat administration fee; and
- Increasing generic substitution in Part D by examining current incentives and evaluating opportunities to reform how rebates interact within the program.
The Business Group does not support government negotiation of Part D drug prices as it will lead to cost-shifting to private sector plans. NBGH is supportive of alternatives to the rebate-driven contracting model but it is unclear if eliminating or modifying rebates in Part D will have a potential spillover effect to private sector plans. NBGH supports many of the other proposals, including modifying patent rules, banning pay-for-delay deals, removing barriers for biosimilars and supporting reference based pricing and has been a vocal proponent of these changes via testimony to the FDA, comments to the Federal Trade Commission (FTC) and comments to HHS.
Impact on Employers and Employees
Many of the Business Group-supported proposals could reduce prescription drug prices for all payers, including employers and employees. Additionally, government programs adopting widely-used private sector prescription drug management tools would bring better purchasing alignment among government and private payers.
However, government action to reduce prices only in the Medicare and Medicaid program will lead to higher prices for the private sector raising costs for employers and employees.
Outlook
Bipartisan concern and increased public attention are likely to spur some government action to reduce prescription drug prices, though specifically what actions are unclear. The Senate Finance Committee will hold a hearing on February 26th where CEOs of pharmaceutical companies are expected to testify.
More Topics
Policy & Advocacy
Pharmacy/Prescription Drugs
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