Senate committee unveils ambitious plan to cap drug price hikes, out-of-pocket expenses

DATE: July 23, 2019
WASHINGTON — A key Senate committee on Tuesday unveiled a long-awaited package of drug pricing reforms that would cap how much drug makers can hike their prices in Medicare. It would also cap out-of-pocket expenses for Medicare beneficiaries and dramatically reform the program’s prescription drug benefit.The bipartisan effort, spearheaded by Sens. Chuck Grassley (R-Iowa) and Ron Wyden (D-Ore.), is projected to save the federal government $85 billion on drug spending over the next decade.

“This legislation shows that no industry is above accountability,” Wyden and Grassley wrote in a joint statement. “Passing these reforms, especially those that will affect some of the most entrenched interests in Washington, is never easy.”

The bill also tweaks other federal drug-payment approaches, including implementing a value-based system for some gene therapies under Medicaid. The bill also ups the maximum rebate allowed under Medicaid, which the committee projected would save taxpayers $15 billion.

The committee estimated the legislation would save beneficiaries $27 billion in out-of-pocket costs and an additional $5 billion in premiums in the coming 10-year period. Those savings are in addition to the $85 billion in savings the bill would generate for taxpayers.

The unveiling comes as Washington has struggled to address rising drug prices despite rising political pressure. In primary debates, Democratic candidates have excoriated the pharmaceutical industry, as has President Trump in his own speeches. But the Trump administration recently withdrew one major policy initiative and saw another struck down in court.

The result: mounting pressure on Congress, including a recent visit from health secretary Alex Azar and other top White House officials to support a potential bipartisan Senate package. Last week, Stephen Ubl, the head of the lobbying group PhRMA, visited Capitol Hill with Giovanni Caforio, the CEO of Bristol Myers-Squibb and chairman-elect of PhRMA’s board.

“While the budget office is still doing its analyses,” Wyden complained to reporters last week, “you’ve got the pharmaceutical lobby all over Capitol Hill buttonholing senators, telling them that if they do anything to hold down prices for consumers and taxpayers, that that’s going to be the end of Western civilization.”

This package, similarly, is sure to be fiercely opposed by the pharmaceutical industry. The cap on price hikes in both Medicare Part B and Part D beyond the rate of inflation is among its most controversial elements. Infighting over that provision, which was spearheaded by Wyden, delayed the bill’s release for weeks.

“The Senate Finance Committee package fails to meet the fundamental test of providing meaningful relief at the pharmacy counter for the vast majority of seniors,” Ubl said in a statement. “The legislation would siphon more than $150 billion from researching and developing new medicines while giving those savings to the government, insurers and PBMs – not seniors.”

The Senate is widely expected to pass legislation that aims to lower drug costs, though it is unclear when and to what degree an eventual bill will mirror the one Grassley unveiled Tuesday.

Judd Deere, a White House spokesman, said on Twitter that the Trump administration plans to formally endorse the measure, calling it a “comprehensive package to lower outrageously high drug prices.”

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