Drug Pricing Reform During an Election Year

Prescription drug pricing reform is a high-profile issue heading into this year’s elections. President Donald J. Trump, members of Congress, and the presumptive Democratic presidential nominee are all competing to address Americans’ concerns over the high cost of prescription drugs. During a presentation at AMCP eLearning Days, Melissa Andel, MPP, vice president of health policy at Applied Policy in Alexandria, Virginia, discussed the various proposals for prescription drug pricing reform efforts.

She started by noting that the COVID-19 pandemic has likely sidelined drug price reform efforts for this year. However, the COVID-19 impact can still influence the narrative on this topic, as shortages and/or prices related to potential COVID-19 treatments will likely draw a focus to this issue.

She then highlighted actions the Trump administration has taken on drug pricing in the past few years. In 2018, the administration reduced Medicare Part B payment for drugs purchased with the 340B discount to average sales price, less 22.5%. In 2019, they changed the Medicare Part B payment for new physician-administered drugs to 103% of wholesale acquisition (WAC+3%) cost instead of WAC+6%. They also allowed Medicare Advantage plans to use step therapy for drugs covered under Part B. For Medicare Part D, they announced a new model that would start in 2021 and cap beneficiary out-of-pocket costs for some insulin covered under Part D at $35 for a 30-day supply.

In December 2019, the Trump administration released a proposed rule that would allow prescription drugs to be imported from Canada—excluding injectables, biologics, and drugs that require special handling. Manufacturers would be required to apply to the U.S. Food and Drug Administration for the authority to import; however, Ms. Andel noted that it is unclear what would motivate a manufacturer to import its own drugs, and the administration has not coordinated with Canadian officials on this plan.

There are pending drug pricing reform bills in both the House of Representatives and Senate. In December 2019, the House passed H.R.3, which includes a drug pricing negotiation provision, Part D redesign, and inflationary rebate penalties. Republicans have also introduced H.R.19, which includes a Part D redesign, price transparency requirements, and reform to the generic and biosimilar approval process. In December 2019, the Senate released a version of a legislative package that passed in July 2019; the revised version retains a modified Part D redesign and the inflationary rebates. The White House has voiced support of this legislation, but Senate Majority Leader Mitch McConnell appears to be opposed.

Highlights from the Part D redesign proposals include a shift of financial liability from the government toward plan sponsors and manufacturers and elimination of the “coverage gap,” while maintaining deductible/initial coverage limits.

Price negotiations included in the H.R.3 bill include authorization of the federal government to negotiate prescription drug prices for at least 25 drugs. The criteria would include lack of competition and total costs for Medicare and commercial insurance. The maximum negotiated price would be 120% of the average international market price, calculated using a volume-weighted average price from six countries. The Congressional Budget Office (CBO) estimated that this would save $456 billion over 10 years. However, the CBO also assumes that inflation penalties and/or government negotiation would lead to approximately 30 fewer new drug approvals over 10 years and higher launch prices for new drugs during this timeframe, which would lead to higher spending in some programs and in the commercial sector.

And since it is an election year, Ms. Andel highlighted Former Vice President Joe Biden’s drug pricing proposals. His prescription drug proposals include a repeal of the “non-interference” provision of the Social Security Act, establishment of an independent board to evaluate prices of new drugs using either external reference pricing or board-generated recommendations, an inflation cap on annual price increases, importation of prescription drugs on an individual basis, and acceleration of review and approval of generic drugs and biosimilars. He has also called for a public health insurance option like Medicare and expanding Medicaid nationwide, as well as making health care exchange subsidies more generous, capping premium costs at 8.5% of a family’s income and base subsidies on a “gold” plan.

Presentation: Getting Up to Speed on Prescription Drug Pricing Reform Efforts. AMCP eLearning Days, April 20-24.