Washington Watch: High drug costs top voter concern
But lower prices are still on legislative life support
April 1, 2020
Despite a genuine consensus that something must be done, Congressional efforts to rein in drug prices remain stalled and more than likely dead until after the November elections. Even with rhetoric rising on how important controlling drug prices is and added pressure due to the coronavirus (COVID-19), nothing is likely to get done as lawmakers are split on fundamental issues of how to solve the problem.
Even President Donald Trump’s support for bipartisan Senate drug-pricing legislation doesn’t appear to be motivating Senate Majority Leader Mitch McConnell, R‑Ky., to let his Republican majority vote on any proposal. A House‑approved drug pricing legislation is also unlikely to ever get a vote on the Senate floor.
Recent efforts to try and add drug pricing legislation to the $8.3 billion emergency funding for the COVID-19 also got shot down – with a strong assist from the powerful pharmaceutical industry. One long-shot opportunity remains, with a May deadline approaching, when Congress must reauthorize the Community Health Center funding legislation. Lawmakers are hoping to add drug pricing measures onto that must‑pass bill if they can get a House‑Senate agreement on an overall package.
But despite no likelihood of a compromise, President Trump is still claiming tremendous successes in reducing drug prices. That comes amid newspaper reports by the Wall Street Journal and others, pointing to Trump’s growing extreme frustration at not making any significant progress on the issue.
What can’t be forgotten when discussing drug prices is that lots of people – including millions of seniors – are suffering and in some cases dying, because they are unable to pay for their prescriptions. With consumers saying they simply can’t afford their medicine, it’s not a surprise that cutting drug prices consistently poll as a top voter concern with a recent Kaiser Family Foundation poll showing that 88 percent – both Democrats and Republicans – favored allowing the federal government to negotiate drug prices for Medicare’s nearly 60 million beneficiaries. Medicare spends more than $100 billion per year on prescription drugs.
The legislative outlook
The Senate bill to control prescription drug prices seemed to have all the key pieces to move forward Trump’s endorsement, truly bipartisan backing led by sponsors Senate Finance Chairman Chuck Grassley, R‑Iowa, and ranking Democrat Ron Wyden, D‑Ore., as well as broad public support. But the legislation remains on life support largely because it’s at McConnell’s discretion to bring all legislation to the Senate floor.
Trump’s support of Grassley’s bill has also been lukewarm. He says he supports the measure, even mentioning it in his State of the Union speech, where he personally recognized Grassley for his leadership on the issue. But his talk has not turned into action. Trump has stopped far short of personally pressuring McConnell or even pushing Republican Senators to move forward. Both McConnell, the top Senate Republican and Sen. Chuck Schumer, D‑NY, the top Democrat each have not endorsed the legislation, though for opposite reasons. Schumer argues that larger action is needed instead of a piecemeal approach.
The Grassley‑Wyden proposal would limit price increases in Medicare’s Part D prescription drug benefit to the rate of inflation or otherwise force companies to pay a penalty in the form of a rebate. It would also limit seniors’ out-of-pocket drug costs to $3,100 a year.
Republican opposition to Grassley’s bill is largely over a provision that would penalize drug companies that raise their prices faster than the inflation rate. Some Republicans oppose this idea, saying it too closely resembles government price‑setting and they have long objected to any kind of price controls.
The House of Representatives, led by Speaker Nancy Pelosi, D‑Calif., passed its own bill that would lower drug prices by giving Medicare the ability to negotiate the prices of up to 250 drugs with the drug and insurance companies. The House‑passed bill, which won with only two Republicans voting in favor, also imposes penalties for drug makers that don’t negotiate an international price index, among other provisions.
In his recent State of the Union speech, Trump largely glossed over health care. But he did try to put one item on Congress’s to‑do list. He promised that if the House passed a bipartisan bill to reduce prescription drug costs, “I will sign it into law immediately.” But that didn’t sit too well with some Democratic lawmakers, who protested during his speech, standing up and holding three fingers in the air and shouted “H‑R‑3”, the number of the House‑passed drug bill.
In March, as the coronavirus issue started to dominate his administration and its agenda, Trump had repeatedly billed a planned meeting with pharmaceutical executives as a scolding waiting to happen. The gathering was intended to pressure the drug industry to bring drug prices “way down” the president said. But the meeting switched to an opportunity to discuss the development of a COVID-19 vaccine. Drug prices didn’t even come up at the meeting, according to some who attended.
Blocking price cuts
The problem for Trump is that key parts of the president’s plan to combat prescription costs have been blocked by courts, dropped by the administration, or delayed. In May 2018, the president held a White House Rose Garden ceremony, to introduce a pie‑in‑the‑sky blueprint of ideas, which Trump promised would mean “much lower prices at the pharmacy counter.”
One element of that called for drug makers to put list prices in television ads. But that requirement was blocked last summer by a federal court after Amgen Inc., Merck & Co., and Eli Lilly &Co sued.
Another part of Trump’s plan aimed to end drug rebates to the pharmacy benefit managers, or PBM – the middlemen in Medicare. Their job is to take care of the prescription drug coverage for that insurance plan, which includes negotiating with drug companies for discounted prices. They are one of the big reasons why overall drug spending has held steady, even as sticker prices continue to rise. The Trump administration dropped that idea last summer because it would cost about $200 billion over a decade.
Another idea in the Trump drug plan – to tie some drug prices to the lower costs in other countries – has stalled, with the White House blaming Democrats for delaying to score political points.
The White House has had some successes, which Trump suggests have resulted in lowering drug prices already.
The administration got a faster‑paced approval of new generic drugs that eventually could drive down prices.
In 2018, Trump signed legislation that empowers pharmacists and insurers to inform consumers they could
pay less out‑of‑pocket for certain drugs. This law, known as the “gag rule”, specifically allows pharmacists and insurance companies to suggest that paying cash would be cheaper than using insurance for their prescriptions. Until that law went into effect, pharmacists couldn’t tell consumers
if it was cheaper to pay cash out of pocket rather than use insurance to get their drugs. That law, the White House suggests, immediately saves consumers money.
The Trump administration has also very publicly pushed for allowing states to re-import lower priced drugs from Canada, even though Canadian officials have balked at the idea over concerns it could undermine their drug supply. Nothing has actually happened beyond a lot of talk on the reimportation front so far, other than a few states developing policies and plans.
Trump’s frustration over a lack of success on drug pricing has boiled over in public settings. Last month, for example, Trump took Health and Human Services Secretary Alex Azar to task, Politico reported, for this lack of success. Azar is the former head of Eli Lilly, a pharmaceutical giant, who Trump has pushed to get a political win by driving down drug prices. Last month, Trump called Azar and yelled at him on speakerphone in the middle of a campaign meeting after he was briefed on internal polls that showed voters trusted Democrats more than Republicans on health care.
Still to be determined is yet another key component of the drug price battle – the future of the Affordable Care Act (ACA). The U.S. Supreme Court has agreed to review the ongoing lawsuit brought by Republican members of Congress, with Trump’s support, seeking to wipe out Obamacare and with it the law that protects pre‑existing conditions for millions of Americans including all Medicare beneficiaries. The court says it will look into the case after the November elections.Even Trump’s budget is now reflecting a deference for Congress to act on the drug pricing issue. His fiscal 2021 budget proposal was intentionally less specific than last year’s proposal to tackle the drug pricing issue. While the budget is just a blueprint of the administration’s suggestions and is never actually accepted by lawmakers, it simply includes a $135 billion allowance for drug pricing proposals and suggests Congress figure out how to get there. But this year’s version has one very specific suggestion. It says the administration supports efforts to establish an out‑of‑pocket cap for Medicare Part D. While House and Senate versions of the drug bill have different numbers, there is a genuine consensus that everyone supports incentives to contain costs and reduce out of pocket expenses for seniors. That could provide a glimmer of hope for some kind of limited drug‑pricing agreement to allow something to move forward.
Also contributing to this story were: Washington Post, Politico, Wall Street Journal, Health Day and Stat.