Lawmaker Eyes Drug Discounts in Bid to Reduce Rx Pricing

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By Alex Ruoff

A House health panel this summer will turn its attention to drug rebates and how the discounts negotiated by pharmaceutical industry middlemen and others affect what Americans pay at the pharmacy, the panel’s chairman told Bloomberg Law.

When President Donald Trump unveiled his drug pricing plan earlier in May, he was signaling that Congress needs “get off the talking points” and act to lower the cost of medicine, Rep. Michael Burgess (R-Texas), chairman of the House Energy and Commerce health subcommittee and a vocal Trump supporter in Congress, said in a May 24 interview.

Burgess, the most-senior medical doctor in Congress, said he’s still unpacking the president’s proposals to find ideas for new legislation. He said he’s moving forward cautiously out of fear of unintended consequences, such as creating drug shortages.

But, he said he’s interested in exploring how to bring transparency to the confidential discounts that drugmakers negotiate with insurers and benefit managers. Burgess hopes shining a light on these discounts could help consumers get a larger share in the savings.

“To me one of the really frustrating things on drug pricing is that it’s hard to understand because it’s not just the list price and the price to the consumer,” Burgess said. “The whole rebate system I find difficult to comprehend.”

Prescription drug spending per capita is far higher in the U.S. than most other developed countries, according to an analysis by the Commonwealth Fund.

Discounts and rebates for drugs now amount to more than $150 billion a year, up 100 percent since 2012, according to the Pharmaceutical Research and Manufacturer’s Association, the drug industry’s lobbying arm that has blamed the rebates for inflating the cost of some prescription drugs.

Republican leaders in Congress are moving slowly in response to the president’s drug-pricing plan, which doesn’t explicitly endorse any pending legislation. One of the Senate’s main health panels, the Health, Education, Labor and Pensions Committee, will host Health and Human Services Secretary Alex Azar June 12 for a discussion of the plan.

Some HELP Committee members, including Sen. Susan Collins (R-Maine), are pushing to advance a bill (S. 2554) to prohibit contracts that stop pharmacists from telling patients about cheaper medicines.

Starts With Hospitals

The House Energy and Commerce Committee is readying more than 60 opioid bills for a floor vote in June, and then Burgess expects to turn his attention back to possible reforms for the drug discount program known as 340B.

Critics of the drug discount program, which allows some safety-net hospitals to buy medicines at reduced cost, say it has grown too much in recent years and that drugmakers are increasing their list prices to account for the billions of dollars in lost profits.

While lawmakers consider legislation related to drug discounts for hospitals, they may also look broadly at ways to see where the savings from other drug rebates are used, Burgess said.

Under Medicare, senior citizens don’t share in the rebates directly and often have to pay a copay based on a percentage of a drug’s list price. It’s also hard to know how much of a rebate insurers and benefit managers are receiving, because they’re not publicized.

Burgess has praise for Trump’s drug pricing plan, specifically proposals to force foreign governments to pay more for prescription drugs and requiring drugmakers to list the cost of their medicines on direct-to-consumer advertising.

He also wants to look more broadly at the cost of innovative drugs and treatments to see how they reduce other health costs.

Burgess pointed to the price of Sovaldi, once priced at $1,000 per pill, which drove up the cost for some insurance plans and Medicaid programs but effectively cured people of hepatitis C, a costly disorder to treat.

Burgess has been advocating for legislation that would require the Congressional Budget Office to look beyond the standard 10 years to see if measures meant to prevent health spending would reduce federal spending.

He concedes the issue of addressing the rise of drug prices is complicated, often so much so it makes it difficult to find solutions.

“It’s a cop-out, I know, to say it’s multifactorial, but it really is,” Burgess said.

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