Updates on Drug Pricing

Sarah Nichelson, JD
HOPA’s Health Policy Manager

For a majority of President Trump’s term, he and his administration have championed lower drug prices. However, no real effort has been made to define lower drug prices. Is it lower list prices or lower net prices? Is it a lower out-of-pocket cost for the patient? Or something else? Below is a summary of some of the major developments in efforts to lower drug prices through various means.

"American Patients First" Blueprint
In May 2018, the Trump Administration released “American Patients First,” a blueprint that sought to identify challenges in reforming drug prices and to present opportunities for reform. Four opportunities for reform were identified: improved competition, better negotiation on drug pricing, increased incentives for lower prices, and lowering of out-of-pocket costs. Accompanying the blueprint was a formal request for information (RFI) from stakeholders and interested parties. In July 2018, HOPA submitted comments in response to the RFI. The comments covered educating patients and providers on the safety and efficacy of biosimilars and improving patients’ access to biosimilars. HOPA also expressed concern about the proposed move of Medicare Part B drugs to Medicare Part D, arguing that such a move could increase patients’ out-of-pocket costs, particularly for oral chemotherapy drugs. In addition, HOPA reiterated its opposition to pharmacy gag clauses (language in a pharmacy’s contract with a pharmacy benefit management company that prevents pharmacists from telling consumers when cheaper prescription drug alternatives are available), which hinder patients’ access to needed medications. HOPA also joined its coalition partners in signing a letter written by the Cancer Leadership Council expressing concern about this issue.

Medicare Advantage Step Therapy
In August 2018, the Centers for Medicare and Medicaid Services announced that Medicare Advantage plans would have the option of applying step therapy for physician-administered and other Part B drugs starting in January 2019. (Step therapy—also called “fail first” therapy—refers to a payer’s requirement that a patient try less costly drugs as the first step in treating a disease or condition. Only after a patient tries and “fails” the treatment will the insurance company authorize payment for a more costly drug.) This change is meant to balance drug costs with the costs of providing greater access to drugs and services. HOPA joined the Cancer Leadership Council in expressing serious concerns about this plan. As cancer treatment increasingly becomes patient centered, step therapy may impede the delivery of cancer care to patients.

Modernizing Part D and Medicare Advantage
In November 2018, the U.S. Department of Health and Human Services released a proposed rule offering changes to Medicare Advantage plans and Part D prescription drug coverage. This proposed rule is intended to “support health and drug plans’ negotiation for lower drug prices and reduce out-of-pocket costs for Part C and D enrollees.”¹ HOPA signed several letters expressing concern that changing the protected classes of drugs would harm cancer patients; the specific concern is that an increase in requirements for prior authorization and step therapy may delay proper treatment for patients.

The House and the Senate began hearings on drug pricing during the last week of January 2019. The House Oversight Committee, chaired by Rep. Elijah Cummings (D-MD), is “investigating the actions of drug companies in raising prescription drug prices in the United States, as well as the effects of these actions on federal and state budgets and on American families.”² The Senate Finance Committee, chaired by Sen. Chuck Grassley (R-IA), is holding hearings to identify and address the many reasons for high drug prices. Senator Grassley believes that pharmaceutical companies’ lack of transparency about drug prices is where the investigation should begin. Grassley and Sen. Ron Wyden (D-OR), ranking member of the Senate Finance Committee, introduced the Right Rebate Act of 2018 to close a “loophole” in Medicaid that allows pharmaceutical companies to misclassify drugs for purposes of the Medicaid drug rebate program. This misclassification has resulted in Medicaid’s payment of higher costs for certain drugs. HOPA continues to monitor these hearings.

References

1. “Modernizing Part D and Medicare Advantage To Lower Drug Prices and Reduce Out-of-Pocket Expenses” (A Proposed Rule by the Centers for Medicare and Medicaid Services, November 30, 2018). 42 Code of Federal Regulations 422 2018.2.
2. House Oversight Committee. “Committee to Hold First Hearing on Drug Company Price Increases” [press release]. January 28, 2019. Available at https://oversight.house.gov/news/press-releases/committee-to-hold-first-hearing-on-drug-company-price-increases. Accessed March 7, 2019.