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Regulatory Focus™ > News Articles > 2019 > 7 > Senate Committee Advances Bipartisan Drug Pricing Package

Senate Committee Advances Bipartisan Drug Pricing Package

Posted 25 July 2019 | By Michael Mezher 

Senate Committee Advances Bipartisan Drug Pricing Package

The US Senate Committee on Finance on Thursday advanced a bill aimed at lowering drug prices for Medicare and increasing price transparency within the program in a 19-9 vote, sending it to the full Senate for consideration.
While the bipartisan Prescription Drug Pricing Reduction Act of 2019 was proposed by Committee Chairman Chuck Grassley (R-IA) and Ranking Member Ron Wyden (D-OR), most votes in favor of the bill came from the Democratic minority in the committee.
“This bill will save taxpayers $100 billion, lower premiums, lower out-of-pocket expenses for Medicare beneficiaries and provide peace of mind to millions of seniors who will never have to worry about going bankrupt to pay for medications,” Grassley said, referencing the Congressional Budget Office’s preliminary estimate for the bill.
Grassley also lamented the fact that the Department of Health and Human Services (HHS) recently reversed course on a proposal to eliminate certain rebates paid by drugmakers to pharmacy benefit managers under Medicare.
“That rule would have ensured that the savings from rebates in the Part D program would be passed through to benefit seniors at the pharmacy counter. It happens that I think that is a very good idea,” he said, noting he would like to add a similar policy to the legislation being considered.
During the hearing many Republicans, including Mike Crapo (R-WY), John Thune (R-SD), Tim Scott (R-SC), and James Lankford (R-OK), raised concerns about a key provision of the bill that would penalize drugmakers for price increases beyond the rate of inflation.
Specifically, the proposal would require drugmakers to refund Medicare for any price increase greater than inflation for Medicare Part B and Part D drugs. Those opposed to the provision argued that limiting price increases in this manner would be akin to setting price controls and would undermine the non-interference clause for Medicare Part D. Some Senators also questioned whether caps on price increases for Medicare drugs would lead to drug companies setting higher initial list prices in response to being limited on future price increases.
But a Republican amendment to drop the provision capping drug price increases that exceed the rate of inflation in Medicare did not win over a majority of the committee.
Democrats on the committee argued the package does not go far enough to lower drug prices and leaves out measures that could reduce drug prices in the program such as authorizing Medicare to negotiate drug prices in Part D or using international reference pricing to bring US drug prices in line with other countries.
While Wyden called the bill a “helpful step,” he told the committee that “Democrats will not vote to begin floor debate on the proposal until it’s clear that amendments on two issues—preexisting conditions and negotiating power in Medicare—will get votes on the Senate floor.”
Hearing Democrats’ concerns, Grassley stressed that the bill is the product of bipartisan compromise and that the Senate “ought to concentrate on what’s possible to get done and to get done now.”
Drug industry group PhRMA has already come out against the proposed legislation in a statement issued Thursday.
“The Senate Finance Committee legislation is the wrong approach to lowering drug prices. It would siphon more than $150 billion from researching and developing new medicines and give those savings to the government, insurers and PBMs, instead of using those savings to lower costs for seniors at the pharmacy counter,” PhRMA said.
Grassley refuted PhRMA’s argument during the hearing, saying “the pharmaceutical lobby calls this inflationary rebate a price control, when in fact it controls subsidies to manufacturers, not prices.”
PhRMA CEO Steve Ubl met with President Donald Trump on Wednesday to lobby against the Senate bill.

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