The era of bipartisan work on lowering drug prices might be over

Patient advocacy groups take in millions from drugmakers. Is there a  payback?

Dare we say it: The window for bipartisan work on drug pricing reform may be closed.

Sen. Ron Wyden, top Democrat on the powerful Senate Finance Committee, is focusing on a wish-list item for Democrats but poison pill for the GOP: eliminating a ban on the federal government using its negotiating power to directly force lower drug prices under Medicare.

“I think we’ve got to take bold action on prescription drug prices,” Wyden (Ore.) told reporters yesterday. “We’re going to be looking at all the tools to get this done.”

President Trump made lowering prescription drug prices a major promise during his campaigns. But despite some efforts, there has been major pushback from Capitol Hill and the pharmaceutical industry and not much has actually been accomplished.

Bipartisanship — not to mention mere civility — feels further away than perhaps ever before on Capitol Hill.

Ten House Republicans joined Democrats yesterday to impeach President Trump a second time, amid near-chaos in the chamber and uncertainty about where Trump’s exit leaves the GOP, my colleagues reported.

“Democrats and Republicans exchanged accusations and name-calling throughout the day, while Trump loyalists were livid at fellow Republicans who broke ranks — especially [Rep. Liz] Cheney — leaving the party’s leadership shaken,” Mike DeBonis and Paul Kane write.

None of this bodes well for getting anything bipartisan done in the new session of Congress — including lowering high U.S. drug prices.

Focusing on direct negotiation, as Wyden urged yesterday, would cut Republicans out of the picture.

Back in 2019, Wyden tried very hard to keep Republicans on board such an effort, as he pushed for a limited, bipartisan bill co-written with Sen. Charles E. Grassley (R-Iowa). That measure would have capped out-of-pocket costs for Medicare enrollees and required some rebates from drugmakers. But after passing in committee, the measure languished as Senate Majority Leader Mitch McConnell (R-Ky.) refused to bring it to the floor.

It’s possible to imagine Democrats getting 60 votes to pass such an effort, now that they’ll control the Senate. After all, a half-dozen Finance Committee Republicans voted for it.

But in remarks slamming McConnell, Wyden yesterday said the majority leader proved his ultimate unwillingness to enact any significant drug pricing reforms under heavy pressure from the pharmaceutical industry.

Democrats, Wyden said, should now move aggressively to lower drug prices after years of delays.

“If Mitch McConnell and pharma — two very powerful forces — had been willing to go to the Senate floor, we would have been able to get an enormous vote,” Wyden said. “My bottom line is issues like prescription drugs have been kicked down the road again and again and again.”

Wyden said he now wants to “build on” his legislation with Grassley.

He didn’t rule out using a budget reconciliation measure — which requires just 50 votes — to pass a more aggressive drug pricing bill than Republicans are willing to support. In the normal legislative process, Democrats will have to get at least 10 Republicans on board with legislation because it takes 60 votes to avoid a filibuster.

A starting place could be H.R. 3 — the bill the Democratic-led House approved at the end of 2019 allowing the health secretary to directly negotiate with drug companies for lower prices. That provision would lower federal spending by about $456 billion over a decade, but it could also result in 40 fewer new drugs being developed over the next two decades, according to the Congressional Budget Office.

Yet Wyden acknowledged difficulties in pursuing this course of action. For example, there are strict rules around what can go into a budget reconciliation bill. Democrats will be limited to just two such bills — one for this year and one for next. Plus, they have many competing policy priorities.

New research supports the idea that direct negotiations with Medicare can result in lower government payments for prescription drugs.

This effect is one reason the pharmaceutical industry — and thus many Republicans and some Democrats — hate the idea so much. Because of its vast market power, the government can secure far lower prices when it negotiates for drugs directly (the GOP also argues that direct negotiations would dampen new drug development).

A new report by the Government Accountability Office, provided first to The Health 202, found that Veterans Affairs pays 54 percent less for a unit of drugs than Medicare’s prescription drug program. The report, requested by Sen. Bernie Sanders (I-Vt.), compared how much the government pays for drugs provided through the two programs. 

The price differences partly stem from how the two programs are structured.

VA can save so much money partly because it directly purchases drugs from manufacturers on behalf of all of its nine million enrollees. 

But Medicare Part D has less leverage with drugmakers. Private insurance plans contract with the government to provide pharmacy benefits. Then each plan, on its own, negotiates prices with manufacturers. So while the program covers 42.5 million people — far more than the VA — its negotiating power is dispersed among many different plans.

In its report, the GAO compared the 2017 prices of 399 top drugs in each program. It also found:

  • Of the 399 drugs in the sample, 233 were at least 50 percent cheaper in VA than in Medicare. One hundred six drugs were at least 75 percent cheaper.
  • Just 43 drugs were cheaper in Medicare than in VA.
  • The price differences between the two programs were greater on average for generic drugs.
  • The VA’s prices were 68 percent lower than Medicare prices for 203 generic drugs and 49 percent lower for the 196 branded drugs.
Market power isn’t the only difference between the VA and Medicare plans.

There are statutory discounts available to VA, which also lower its costs for drugs. VA also has more direct control over the medications it will cover, allowing it to steer patients toward certain lower-priced drug options.

All of this bolsters arguments for allowing direct negotiations in Medicare, Sanders argues.

“There is absolutely no reason, other than greed, for Medicare to pay twice as much for the same exact prescription drugs as the VA,” he said, in a statement provided to The Health 202. “If the VA can negotiate with the pharmaceutical companies to substantially reduce the price of prescription drugs, we must empower Medicare to do so as well.”

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