United States: Recent Congressional Actions Bring Drug Pricing Debate Back Into National Spotlight

Ethan Jorgensen-Earp is a Public Affairs Advisor for Holland & Knight's Washington, D.C. office

In late October, Sen. Bernie Sanders (I-VT) and Rep. Elijah Cummings (D-MD) introduced the Medicare Drug Price Negotiation Act of 2017 (S. 2011; H.R. 4138), which would allow the Department of Health and Human Services (HHS) to directly negotiate for lower prescription drug prices in Medicare, as Medicaid and the Department of Veterans Affairs are currently permitted to do. The legislation would also strengthen the patient appeals process and restore rebates for low-income beneficiaries under the Medicare Part D program for patients, and would use formularies to establish a fallback price, based on what other federal agencies and foreign governments pay, to take effect if negotiations are unsuccessful. This legislation is significantly more comprehensive than many previously introduced bills that only permit HHS to negotiate drug prices for Medicare Part D without other provisions, and the Sanders/Cummings legislation has garnered significant press attention and even White House meetings on the subject.

While it may seem that Democrats face an uphill battle to pass these bills, they may find an unlikely ally in their quest to lower prescription drug costs: President Donald Trump. On the campaign trail, the President heavily criticized the pharmaceutical industry for soaring prescription drug costs. After taking office, the President continued to lambaste "outrageous" drug prices and promised to develop a "fair and competitive bidding process" to bring down prices for consumers. The introduction of these bills highlights a key issue on which Democrats believe they may be able to find common ground with President Trump, an issue that has gained renewed attention with Congress' consideration of Alex Azar to replace former HHS Secretary Tom Price.

A Popular Issue

Prescription drug prices have increasingly become a highly salient political issue. Highly publicized cases of exorbitant drug price increases, such as with certain insulin products and HIV medications, have shifted the issue into popular discourse. Recent polls indicate that nearly eight in ten Americans believe prescription drug costs are unreasonable, with six in ten stating that lowering drug costs should be a priority for President Trump and Congress.1 And for good reason, too: the growth in spending on prescription drugs has continually outpaced that of all other parts of the health care sector, and by 2020, net spending on pharmaceuticals will reach $400 billion, up from $310 billion in 2015.2 Studies have found that escalating drug costs have left consumers with higher insurance premiums, increased out-of-pocket costs, and reduced access to treatment. Taxpayers must also foot the bill for increased drug costs in the form of spending increases to public programs such as Medicare and Medicaid.3

In August 2016, researchers at Harvard Medical School undertook a comprehensive examination of the reasons for the rapid rise in drug prices. Their findings, published in the Journal of the American Medical Association, highlighted several key factors behind rising drug costs.4 For example, unlike in countries with national health programs that can negotiate drug prices or decide not to cover highly expensive drugs, drug manufacturers in the U.S. generally set their own prices.  Additionally, they found, abuse of the patent system and other regulatory boundaries may hinder generic drugs from being brought to the market that would offer consistent price competition.  Research from the Pew Charitable Trusts also indicates that a growing share of expensive "specialty drugs," which are used to treat complex, chronic conditions like cancer and HIV, are entering the market.5

Policymakers have taken note of this growing concern. Food and Drug Administration (FDA) Commissioner Scott Gottlieb has committed to expediting the approval of cheaper generic drugs and combatting anti-competitive behaviors that some pharmaceutical companies have utilized to prevent generics from entering the market. On social media and during rallies, President Trump has criticized "ripoff" drug prices, likening the profit margins of pharmaceutical companies to "getting away with murder." In June and October of this year respectively, the Senate Health, Education, Labor, and Pensions (HELP) Committee held hearings to discuss the causes of and solutions to rising prescription drug costs, and members of Congress have introduced over 25 bills to tackle the issue with varying solutions. 

Proposed Solutions

Lawmakers have introduced an abundance of bills to address the rising costs of prescription drugs. In addition to permitting Medicare negotiation, one set of proposals revolves around the importation of drugs from Canada. The Affordable and Safe Prescription Drug Importation Act (S. 469; H.R. 1245), introduced in February, would direct HHS to publish regulations that would allow entities, including wholesalers and pharmacies, to import "qualifying prescription drugs" from certified Canadian sellers. The legislation also allows HHS to open up importation of drugs from other foreign countries after two years with proper certification. More focused bills, such as the Safe and Affordable Drugs from Canada Act (S. 92; H.R. 1480) allows limited, per-patient importation from Canada. While importation bills such as these are gaining bipartisan steam, some in Congress have alleged that such a system could infiltrate the U.S. medicine supply with counterfeit or adulterated products.

Another set of proposals seek to increase the competitiveness of the pharmaceutical marketplace. For instance, the bipartisan Lower Drug Costs Through Competition Act (H.R. 749) would incentivize companies to develop generic drugs by creating a new generics Priority Review Voucher, which would be awarded to manufacturers that bring a drug to market where there is a monopoly or drug shortage. Similar voucher programs have drawn mixed reviews in attempts to spur drug development for tropical and pediatric rare diseases. Other legislation, such as the bipartisan Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act (S. 974), would target two tactics used by manufacturers to delay entry of generic drugs to the market; specifically, sample sharing and shared safety protocols. These bills pinpoint particular issues within the prescription drug market, but critics argue that that the federal government should play a more active role in regulating drug costs.

Such critics have introduced their own set of legislative solutions. These include the Stop Price Gouging Act (S. 1369; H.R. 2974), which would require drug companies to report and justify drug price increases to the Inspector General of HHS, with the promise of financial penalties for noncompliance, and the Prescription Drug and Medical Device Price Review Board Act (H.R. 6501), introduced last Congress, which would establish a national review board that would review drug prices could take enforcement action against manufacturers that charge consumers excessively.

Other attempts are less targeted. Sen. Al Franken (D-MN) and Rep. Janice Schakowsky (D-IL) have introduced a seemingly "catch-all" solution to lower prescription drug costs. The bipartisan, but almost solely Democratic-led, Improving Access to Affordable Prescription Drugs Act (S. 771; H.R. 1776) seeks to comprehensively address what many of the aforementioned bills attempt to do singularly. The bill includes a broad range of proposals, including allowing Medicare to negotiate lower drug prices in Part D, restoring rebates on drugs covered under Part D for low-income beneficiaries, permitting the importation of prescription drugs, capping out-of-pocket costs for drugs in private insurance plans, and reducing monopolies for brand-name drugs. While many of these proposals lack broad political support, they may serve as markers to generate conversation around the drug pricing issue that may distill down into bipartisan proposals in the future, provided both Congress and the Administration see eye to eye.

Challenges

Although public support for a solution to high prescription drug prices remains strong, several obstacles stand in the way of a legislative fix. The bills described above span the ideological spectrum, and coming to a compromise on the substantive details of a legislative solution may be difficult to achieve. Advocates of a stronger federal role in lowering drug costs may reject competition-based bills as weak, short-term solutions, while advocates of limited government and market-based approaches may stress the federal overreach of the more expansive proposals. Indeed, many of these ideas have been introduced in bills during previous Congresses without success.

Additionally, with tax reform, immigration, the budget, and other "must-pass" bills such as a reauthorization of the Children's Health Insurance Program (CHIP) on the minds of congressional leadership, it is unlikely that either chamber will take the initiative to dive into a prescription drug cost bill anytime soon. And although the President has issued strong statements against the drug industry, his administration has invested little political capital in the issue. Indeed, a leaked draft of an executive order designed to bring down drug prices earlier this year was roundly considered industry-friendly and unlikely to substantially decrease drug costs.6 Furthermore,  President Trump's nominee for HHS Secretary, Alex Azar, has been criticized in Democratic circles because of his close ties to the pharmaceutical industry. If movement on the issue occurs, it will likely begin with proposed modifications to existing programs, such as recent proposals to amend the 340B Drug Pricing Program, and while market-based approaches may certainly be viable in this political environment if Republicans retain a majority in Congress, negotiation and implementation of such approaches can be unpredictable, solutions may be potentially costly depending on cost-shifting and other factors, and there will likely be push-back from numerous influential parties. Thus, while prescription drug prices and public pressure to solve the issue remain high, a quick solution is likely not on the horizon any time soon given competing congressional interests and implementation issues.

Footnotes

1 Kirzinger A. et al., " Kaiser Health Tracking Poll - Late April 2017: The Future of the ACA and Health Care & the Budget," April 26, 2017.

2 Pew Charitable Trusts, " Drug Spending Research Initiative."

3 Id.

4 Kesselheim A., Avorn J., Sarpatwari A., " The High Cost of Prescription Drugs in the United States: Origins and Prospects for Reform," Journal of the American Medical Association, August 2016; 316(8):858-871. 

5 Pew Charitable Trusts, " Drug Spending Research Initiative."

6 Kaplan, S., Thomas, K. " Draft Order on Drug Prices Proposes Easing Regulations," June 20, 2017.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

    Disclaimer

    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

    Registration

    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

    Cookies

    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

    Links

    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

    Mail-A-Friend

    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

    Emails

    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

    Security

    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions