Drug Pricing Moves to Top of Legislative Agenda

With Senator Bernie Sanders (D-Vt) leading the charge on Capitol Hill, the campaign to limit US outlays for prescription drugs have accelerated, now aiming to include a number of cost-control measures in the massive economic development bill under development. Although such efforts have petered out in the past, the need for added revenues to fund billion-dollar infrastructure improvements has fueled challenges to industry pricing practices.

These developments were debated at a hearing in March before the Senate Health, Education, Labor and Pensions (HELP) subcommittee chaired by Sanders. He and colleagues are sponsoring a three-part legislative package that would peg US drug prices to those in other industrialized nations, facilitate broader reimportation of prescription drugs from certain countries, and permit Medicare to negotiate prices paid by drug plans.

Another popular proposal would require manufacturers to conduct comparative studies to justify “substantial” price increases related to product improvements. Debate continues over additional reforms involving rebates paid to Medicare drug plans and the role of patents in thwarting competition from low-cost generics and biosimilars. Broader disclosure of marketing expenditures and pricing decisions also have gained support.

None of these cost-cutting measures are new, and policy changes under the Trump administration already permit reimportation under certain circumstances. Industry and its Republican allies continue to push back with claims that limits on drug prices would stymie innovation and delay the development of critical new therapies. They prefer specific strategies for reducing patient out-of-pocket expenses through access to rebates and co-pay support programs. There is some agreement on policies to encourage biosimilar prescribing and the development of complex generic medications. Analysts acknowledge, moreover, that high-cost biotech therapies are driving cost trends, but that these can be life-saving treatments for seriously ill patients.

Big savings projected

Despite concerns that price controls would block new drug development, the prospect that such reforms would create $450 billion in savings to offset trillion-dollar expenditures in economic development legislation may be sufficiently potent to drive reform forward. The House passed a broad drug pricing measure in 2019, but it never came up for a vote in the Republican-controlled Senate.

Now with public support growing for controlling medical costs, Senate moderates may join with progressives to lessen restrictions on the government’s role in limiting drug prices. They may be attracted by proposals to use some of those gains to fund new community health centers and further expand the Medicaid program to more low-income consumers. Moreover, Democrats may look to circumvent Republican opposition to pricing measures by including such reforms in budget reconciliation legislation, which requires only a majority to win Senate approval—and not 60 votes. Industry lobbyists will seek to foil that strategy, but there is concern that the rising outcry from individual patients hit by huge costs for vital medicines will sway Congressional action.

Administrative strategies

In addition to enacting legislation to challenge manufacturer pricing, reformers in Congress and consumer advocates are weighing a number of avenues to change. Biden administration officials are considering expanded use of Medicare demonstration programs and of the Center for Medicare and Medicaid Innovation (CMMI), as did the Trump administration, to test new payment models, discount drug vouchers, and other cost-cutting programs. The Department of Health and Human Services (HHS) also may propose new rules, payment policies, and waivers to alter current Medicare reimbursement and coverage requirements, as discussed in a white paper prepared by the Kaiser Family Foundation (KFF).

Congressional reformers also want federal agencies to investigate pharma pricing practices. A group of House Democrats recently sent a letter to Federal Trade Commission acting chair Rebecca Slaughter urging a probe of possible collusion among leading insulin marketers. The request is similar to one made by Senator Sanders in 2016, but may get more attention from Slaughter, who recently announced increased scrutiny of drug industry mergers. The legislators cite reports on coordinated price hikes of insulins since 2012 by Eli Lilly, Sanofi, and Novo Nordisk, and note how the high cost of diabetes medicine is particularly harmful to minority patients [see (20) Rep. Katie Porter on Twitter: "Just 3 companies control nearly all of our insulin supply: Eli Lilly, Sanofi, and Novo Nordisk. Shocker: it turns out they raise prices in tandem—at least 13x in 10 years—while patients are rationing or starving themselves to try to cut costs. I want answers. https://t.co/AtkH3OonTs" / Twitter].

Separately, consumer advocates are urging the National Institutes of Health (NIH) to “march in” and claim patent rights to medicines developed in collaboration with government-funded researchers. NIH scientists have been visibly involved in the research underlying the mRNA vaccines that have proven so effective in combatting COVID-19. A coalition of non-profit public interest organizations is urging NIH to ensure that the new vaccines, which advanced with notable support from the National Institute of Allergy and Infectious Diseases (NIAID), will be made available on an affordable basis to global health organizations for delivery to less developed nations around the world.

The great success of the biopharmaceutical industry in speeding to patients innovative vaccines and therapies able to combat COVID-19 has boosted public confidence in and regard for biopharma companies to notable highs. Industry leaders have highlighted the cutting-edge science and dedicated researchers that have produced these critical new therapies. This success has raised concerns about upsetting the underlying economic and scientific factors driving innovation, but that continues to be offset by vivid reports of patient hardship in accessing vital medicines.