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News November 2019

Washington Watch

The Confusing, Halting Path of Legislating Healthcare Costs: Yes, No, Maybe, Whatever...?

By Alan M. Schlein

Almost all elected officials – House Democrats, Senate Republicans and the White House – all favor lowering drug costs. The differences come over how to do it.

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Pharmaceutical lobbyists suggest that imposing co-pay limits smacks of government price fixing. Consumer groups counter that limiting price increases could be a valuable way to fight the skyrocketing cost of some drugs like insulin, which has seen increases from $175.57 for a 20-milliliter vial 15 years ago to $1,487 now for the same exact vial.

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The key decision for Trump is: Will it be Tuesday Trump or Thursday Trump? How committed is he to pushing Senate Republicans to get drug pricing legislation done as he has promised since 2016, or instead if he prefers to use non-action as a political hammer in his 2020 re-election fight?

ANALYSIS:

Is all hope for legislation to lower prescription drugs dead now that House Democrats are aggressively pushing an inquiry into whether to impeach President Donald Trump?

The one thing that's clear is it gets tougher every day to see any bill which brings more transparency to healthcare costs and, ultimately, lower costs for consumers, emerging before the end of the year.

Proposals continue to move forward slowly but steadily in Congress, but these days there are more ways for the process to break down than to succeed. No one says they're giving up though. Almost all elected officials – House Democrats, Senate Republicans and the White House – all favor lowering drug costs. The differences come over how to do it.

Starting with a government divided between the Republican-controlled Senate, the Democrat-led House, and an administration led by a mercurial president, expectations were low and the legislative menu was light to start with. Now, layer on the political heat of an impeachment inquiry, and every legislative bill faces serious jeopardy.

Since Speaker Nancy Pelosi turned up the heat by moving to officially open a Congressional impeachment inquiry at the end of September, Trump has operated with a scorched-earth response – refusing to let his administration even cooperate with subpoenas for testimony and documents, and launching machine-gun style verbal assaults, via Twitter and other methods. Trump first accused Pelosi and House Intelligence Committee Chairman Adam Schiff, D-Ca., of "treason," countering that they are the ones who should be impeached.

Just a few days later, Trump charged, without evidence, that the pharmaceutical industry was behind House Democrats’ impeachment proceedings, suggesting it was payback for his administration's effort to lower drug costs. In a speech to seniors in Florida, Trump said he "wouldn't be surprised" if the "hoax" of impeachment was being pushed by the powerful drug lobby. Trump presented no evidence supporting the claim

But Pelosi still may be able to find a workable solution, despite Trump's constantly pushing the "do nothing" label toward Congress. The facts are different than Trump portrays. So far in this session of Congress, the House has been passing legislation at a rapid clip. The House has taken up 51 bills and resolutions since January; 49 of those have passed.

They include approving a bill to lower prescription drug prices by making sure the regulatory process isn't bogged down, resulting in preventing more generic drugs from going on sale. The House has also passed a bill aimed at shoring up protections for those with pre-existing health conditions, part of Democrats' plans for protecting the Affordable Care Act under the Trump administration. That bill would nullify administration guidance that would allow states to ask for waivers to make major changes in the different Obamacare markets.

Make no mistake, the fate of the drug price legislation is huge – especially for the 45 million seniors on Medicare who have a Part D drug plan.

For some political context, it's important to remember the recent history of the drug price problem. It emerged as the public's top health care concern near the end of the Obama administration as people with health insurance got increasingly worried about their costs. In the 2016 presidential campaign, both Trump and Democrat Hillary Clinton called for authorizing Medicare to negotiate prices. This had been expressly forbidden by Congress more than ten years earlier when the Part D prescription drug plan was created, even though other government programs such as Medicaid and the veterans' health system negotiate special discounts.

After his election, Trump shifted his focus to the ongoing Republican push to repeal the Affordable Care Act. That effort is very much alive today in the federal courts with a decision expected soon in a case pushed by the Trump administration that could invalidate the entire Affordable Care Act, including all pre-existing condition protections. That decision could shatter any chance of a drug pricing deal if the ACA was found to be unconstitutional. It could change the dynamics of the 2020 elections as well, motivating each side's base voters

In the meantime, drug prices keep going up. A recent analysis from AARP found retail prices of prescription drugs commonly used by older Americans have continued to increase faster than inflation, for the 12th year in a row.

 

Any Compromises on the Horizon?

In September, Pelosi unveiled her long-anticipated plan to reduce the price of drugs. That bill, cobbled together over the past nine months, would allow Medicare to negotiate lower prices on as many as 250 of the most expensive drugs per year and apply those discounts to private health plans across the U.S. To become law, however, it would not only need to pass the House, but the Republican-controlled Senate and be signed by Trump.

Pelosi's legislation would cover both drugs under the Medicare Part D prescription benefit, and also those under Part B medications which are dispensed in doctors' offices, such as many cancer drugs. Medicare would negotiate for as many drugs as possible on a list refreshed annually, but no fewer than 25. The maximum price would be determined using a blend of international prices, similar to a more limited proposal that the Trump administration has proposed. Drug companies that balk at making a deal would face penalties that start at 65% of sales for the drug at issue, and escalate if they hold out.

But Pelosi's proposal is causing an insurgence: a group of progressive Democrats quickly circulated a letter calling for "necessary improvements" to her legislation. That letter, from Rep. Lloyd Doggett, D-Tex., is particularly important because Doggett is the sponsor of the key alternative bill to lower drug prices that has the endorsement of the powerful Congressional Progressive Caucus.

Doggett's primary concern is that requiring a minimum of 25 drugs per year and a maximum of 250 – rather than for all drugs – is a "very small" number. He also objected to the fact that drugs are eligible for negotiation only if they do not have any competition from generic drugs. He warned that would exclude the EpiPen, a drug at the center of outrage over its price in recent years. The Democrats who signed the letter suggest that the bill does not go far enough to address the launch prices of new drugs arriving on the market for the first time.

Pelosi is also trying to find some potential agreement with Trump administration officials in order to get their support, however limited, for her legislation. It isn't very clear on how it would prevent companies from selling new drugs at exorbitant list prices in the first place. The proposal relies on international reference pricing as a barometer for price negotiations, so a new drug could potentially have less data to work with on this front. That international pricing idea originated in the Trump administration, one of many ideas they've floated and may have been included to potentially garner some administration support.

Meanwhile, across Capitol Hill, a bipartisan effort by Sens. Chuck Grassley, R-Iowa and Ron Wyden, D-Ore. to restrain drug price increases is awaiting to be merged with other Senate health care bills, which include the legislation to end surprise billing and increase access to generic medicines before it may eventually get to the Senate floor for a vote.

 

Problems, Problems, and More of the Same

For any legislation to succeed and become law, the true wild card remains President Trump. No one seems to know what position his administration will take – and if they can count on what they say on Tuesday as being the same on Thursday. Lawmakers jokingly call it "Tuesday Trump" versus "Thursday Trump," because of his constantly changing declarations and political positions. This is especially the case when it comes to drug pricing legislation, where the administration has floated all kinds of general ideas but rarely locked into any specifics.

Here are some of important issues:

  • Giving Medicare the power to negotiate – which Trump had supported during the 2016 campaign –  is now an area of contention. Democrats want to give the federal government, particularly Medicare, the expanded power to negotiate drug prices while Trump and Senate Republicans would prefer that is left to private companies. Several Senate Republicans say this is a make or break issue for them.
  • Disagreement over a controversial provision to prevent drug prices from rising faster than inflation under Medicare, which Pelosi included in her bill, that originated in the Grassley-Wyden Senate bill. But when the Senate Finance Committee considered it, Republicans strongly objected; 13 of the committee's 15 Republicans voted to remove it but their attempt failed, barely.
  • Medicaid tends to pay lower prices on drugs than Medicare; it already uses this strategy, requiring drugmakers to pay the government a rebate if the prices it pays outpace inflation. The Health and Human Services Department's inspector general has said Medicare could collect billions of dollars from the drug industry if it did the same. But many Republicans strongly oppose price setting or what they see as government interference in private markets.
  • One other serious obstacle awaits any action on the Senate floor. Democrats have made it clear, like their House brethren, that they will not vote for any health care measure without cementing insurance protections for people with preexisting conditions.

Despite those obstacles, there are significant overlaps among the major approaches and that leaves open possible compromise. For example, Trump, the Grassley-Wyden Senate bill and Pelosi's House bill all would limit what Medicare enrollees pay annually in prescription co-pays. That would make people on Medicare the biggest winners.

There's a consensus between Pelosi and the Senate bill authors that seniors should get an annual limit on out-of-pocket costs for medications – $2,000 in the Pelosi bill or $3,100 in the Senate bill. Currently, Medicare's pharmacy benefit has no cap on co-pays and drugs costing hundreds of thousands of dollars a year – leaving some seniors saddled with bills that rival a mortgage payment.

 

The Middle Ground

Perhaps the one true compromise that can be found would be on co-pay limits and it is an issue that would play well with potential voters in upcoming elections too. But while this may be an area where a true bipartisan consensus can be formed, Jon Healey, a Los Angeles Times columnist, points out that a better' chance of becoming law "doesn't mean a good one."

Republicans, he points out, aren't marching in lock step with Trump on this. Instead, they are sticking to their economic principles, or as he phrased it "if you want to be less charitable, they're bowing to the interests of Big Pharma." The pharmaceutical lobby ranks first among all industries when it comes to lobbying money. Drugmakers and health product dealers strongly oppose co-pay limits because it might cost them millions of dollars. They stand to lose the pricing power over top-selling drugs, and have spent $4.2 billion in lobbying since 1998, the Center for Responsive Politics reports. Already this year, they've spent $16.3 million on lobbying. 

They suggest that imposing co-pay limits smacks of government price fixing. Consumer groups counter that limiting price increases could be a valuable way to fight the skyrocketing cost of some drugs like insulin, which has seen increases from $175.57 for a 20-milliliter vial 15 years ago to $1,487 now for the same exact vial.

The fear is that imposing co-pay limits might cause drugmakers to set the initial price of breakthrough drug products even higher to make up for any restraint on price growth. And that in turn could drive insurers (including Medicaid and Medicare) to limit access to those drugs even more than they do now.

The key decision for Trump is: Will it be Tuesday Trump or Thursday Trump? How committed is he to pushing Senate Republicans to get drug pricing legislation done as he has promised since 2016, or instead if he prefers to use non-action as a political hammer in his 2020 re-election fight.

It boils down to the crude political calculus of whether in the end this will helps Trump or if Democrats can tolerate letting Trump take credit for such a legislative achievement.

 

[Also contributing to this column were: Washington Post; AP; CNBC, Vox, New York Times and Modern Healthcare.]

 

Alan Schlein runs DeadlineOnline.com, an internet training and consulting firm. He is the author of the bestselling “Find It Online” books.

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