Escalate Life Sciences
Senate's Prescription Drug Pricing Bill's Limited Impact On Drug Prices
Two weeks ago, the Prescription Drug Pricing Reduction Act (PDPRA) advanced out of the Senate Finance Committee. The Act will be considered by the full Senate this fall. If passed and enacted, the bill would cap Medicare beneficiary out-of-pocket costs for prescription drugs at $3,100 per year, beginning in 2022. Furthermore, it would require drug makers to rebate Medicare if they raise prices above inflation.
The Act has been hailed as a means towards reducing prescription drug prices, but in reality it does more to limit out-of-pocket spending by seniors and disabled people than move the needle on drug prices.
Certainly, forcing drug makers to rebate Medicare if they raise prices above inflation could be impactful. However, the inflation provision mirrors what Medicaid has done for several decades. Namely, Medicaid requires drug manufacturers to pay the government a rebate if prices outpace inflation.
A number of Republicans tried to excise the inflation provision, but failed. Their argument was that doing so would constitute too much government intervention in the marketplace.
Conversely, Democrats attempted to include a provision allowing Medicare to negotiate drug prices. Their attempt failed. Nevertheless, ranking Committee member Ron Wyden, a Democrat from Oregon, said Democrats may not allow the full Senate to begin debate on the drug bill unless the Senate also considers allowing Medicare to directly negotiate with drug manufacturers, and reaffirms the preexisting condition mandates established by the Affordable Care Act.
Notably, Senate Finance Committee Chairman, Iowa Republican Chuck Grassley said that he wants to reintroduce reforms to the prescription drug rebate system. Last month, the Trump Administration scuttled its plan to remove the safe harbor exemption that pertained to rebates paid by drug manufacturers to pharmacy benefit managers (PBMs) managing outpatient drug benefits for Medicare beneficiaries. Apparently, there were concerns expressed by Administration officials that removing rebates would cause PBMs to increase prescription drug plan premiums for Medicare beneficiaries. Now, Senator Grassley has stated that point-of-sale rebates – passing rebates through to end-users who pick up their prescriptions at the pharmacy – would be considered during discussions on the PDPRA in the full Senate debate in September.
Published in https://www.forbes.com/sites/joshuacohen/2019/08/07/senates-prescription-drug-pricing-bills-limited-impact-on-drug-prices/#5f88857b1e04
by Joshua Cohen