Home health remedies After New Year’s, expect more drug pricing fireworks in 2019

After New Year’s, expect more drug pricing fireworks in 2019

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For several years, pharma watchers have witnessed drug pricing grow into a top issue facing the industry, dominating discussion almost daily. The conversation isn’t likely to subside next year, either. Lawmakers on both sides of the aisle—including the newly Democratic House—and the Trump administration are promising even more action to lower prices. Indeed, drug pricing is among the few issues Republicans and Democrats tend to agree on.

Already since the midterms, Democratic lawmakers have floated a bill directing the HHS secretary to break patents and allow generic competition when U.S. branded drug prices come in above their median price in Canada, the U.K., Germany, France and Japan. Additionally, Sen. Elizabeth Warren and Rep. Jan Schakowsky introduced bills that would allow government manufacturing of generic drugs wherever competition is lacking.

But conversation—including bills that may or may not go anywhere—and actual change are two different things. The divided Congress, though certain to spawn even more new bills and, likely, some embarrassing public hearings, could well be gridlocked, experts say.

And even if proposals do make it into practice, just how much would they affect the industry?

That depends, of course, on which proposals. Several now on the table will persist next year, to the consternation of pharma. For one, the Trump administration seems intent on forcing drugmakers to include list prices in their TV ads, despite industry arguments that they’d only mislead patients. Those stickers don’t account for rebates and discounts, drugmakers say, though patient advocates and others argue it’s at least a step in the right direction. 

For another unpopular effort, look at the push to force prices for drugs in Medicare Part B—those administered in a doctor’s office—closer to international levels via an “International Pricing Index.” Given the wide gap between prices in the U.S. and elsewhere, it’s no surprise pharma has hit back hard against that idea since it cropped up in October. More than 300 groups voiced opposition in official comments due this month.

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Meanwhile, the Medicare “doughnut hole,” where pharma suffered a rare defeat in 2018, remains contentious. Under the February change—brought about in a bipartisan budget bill—drugmakers will have to offer up more discounts in Medicare Part D’s coverage gap. The change will hit some drugmakers more than others; Eli Lilly, for one, has reported it’ll cost about $200 million next year.

RELATED: For pharma, a flipped House would be noisy, but real action? It’s all about the Senate 

And so far, pharma hasn’t been able to change lawmakers’ minds. The White House said it would oppose an about-face on the policy, the Washington Examiner reported this month, and lawmakers don’t intend to reverse course during current budget talks, either.

The HHS has also allowed Medicare plans to implement step edits—just as commercial insurance plans do, often thwarting newer branded drugs by requiring patients try generics first—and, perhaps even more importantly, use their leverage to negotiate prices.

The initiatives are part of the Trump administration’s larger drug pricing blueprint released in May. Championed by HHS Secretary Alex Azar, the blueprint would boost competition and open up negotiation in drug markets, the government says, while lowering list prices and out-of-pocket costs. 

That’s a tall order for a group of proposals that, while substantive, hardly amount to sweeping change. And meanwhile, market watchers are skeptical Congress can move much on drug prices. Democrats might theoretically be tougher on pharma when they take over the House in January, but the Republican-led Senate likely will be a check on any radical proposals. Cowen Washington Research Group healthcare and pharma managing director Rick Weissenstein previously wrote the power shift “likely means gridlock” that actually benefits pharma.

 

But given the issue’s popularity among a public tired of rising out-of-pocket costs and constantly bombarded with news of rising prices, the two sides could actually shoot for consensus on regulating costs as the 2020 presidential election nears. 

It also remains to be seen whether pharma will continue to hold off on price rises to avoid public and political scrutiny—and if not, how much they’d dare to raise them. Pfizer already disclosed plans to hike dozens of drug prices by single digit percentages in January, prompting pushback. And as many companies hold off on price rises, drugmakers are trading away one of their most reliable methods of growing sales.

RELATED: Lawmakers field bill that would tie U.S. drug prices to prices abroad—or threaten generic action 

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