Spending Bill May Have Drug Pricing Trade-Offs

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By Alex Ruoff

Changes to help spur generic drug competition and to give drugmakers a break on drug discounts to Medicare beneficiaries could be added to the upcoming federal spending bill, lawmakers and lobbyists told Bloomberg Law.

The omnibus spending bill, a package of appropriations bills funding the government until the end of the fiscal year, is expected to carry a host of other legislation along with it this month, including a slew of health policy changes. Republican leaders insist no decisions have been made about what’s riding on the omnibus.

Lawmakers from both sides of the aisle are pushing to add legislation that would stop branded drug companies from using FDA-mandated risk plans to block generic competition to the spending bill. At the same time, some Republicans are mulling rolling back a recent Medicare change requiring drug companies to pay more for discounts to beneficiaries.

It’s unclear if lawmakers will include in the spending bill a proposal to bolster the nation’s health insurance markets. While influential Republican leaders like Sen. Lamar Alexander (R-Tenn.) and Rep. Greg Walden (R-Ore.) want to pass an Obamacare stabilization bill, staunchly anti-abortion Republicans are pushing to block any new funds from going to plans that offer abortion coverage.

The White House threw another curveball into stabilization talks this week by releasing a list of suggestions that references anti-abortion language Democrats strongly oppose.

Congress must pass a spending bill by March 23 to avoid another government shutdown. The House could tee up the omnibus as early as next week.


Sponsors of a bill to spur new generic drugs are pushing hard to get their legislation into the omnibus. Some felt slighted after the budget agreement passed last month didn’t include the CREATES Act ( S. 974; H.R. 2212), a lobbyist who advocates for drug pricing legislation told Bloomberg Law.

Rep. Tom Marino (R-Pa.) told reporters he met with House leaders March 7 to discuss possible changes to the bill. He said there’s some concern the bill would spur too many lawsuits against drugmakers. Marino didn’t specify what the changes entail.

Marino said he’s not opposed to some changes.

“The only purpose I’m concerned with is cheaper drugs,” he said. “They could take my name off it and put theirs on it if we get that.”

The bill is intended to address situations where branded drug companies use Food and Drug Administration-required risk evaluation and mitigation strategies (REMS) to block or deny access to samples of branded drug products that generic companies need to conduct bioequivalence testing. The legislation would make it easier for generic drug companies to bring federal court cases and receive damages if they believe branded drugmakers are thwarting competition.

Sen. Patrick Leahy (D-Vt.) is sponsoring the bill in the Senate.

Doughnut Hole

Pharmaceutical manufacturers are pushing lawmakers to reverse a change made as part of the budget deal passed in February meant to speed up the closure of the Part D coverage gap, known as the doughnut hole, by one year—from 2020 to 2019.

The change would raise in 2019 and 2020 the manufacturer share of the discount from 50 percent to 70 percent. Beneficiaries’ contribution would drop from 30 percent to 25 percent in 2019 and remain at 25 percent in 2020.

Drug companies said this move unfairly benefits insurers, who would save $40 billion in those two years, over Medicare beneficiaries, who would see only a fraction of those savings.

Drugmakers want to roll back the change to at least 60 percent, according to an industry lobbyist who spoke to Bloomberg Law on condition of anonymity.

Walden, chairman of the House Energy and Commerce Committee, confirmed to reporters his staff is looking into how this change to the doughnut hole might affect drug prices and is mulling an adjustment in the omnibus. He said no decisions have been made.

Stabilization Talks

The effort to pass a bill to stabilize premium prices on the nation’s individual insurance markets hit two snags recently when conservatives in the House demanded any such legislation explicitly forbid new funds from going to health plans that cover abortion services and the White House sought to codify insurance rules Democrats oppose.

Republicans and Democrats have yet to come to agreement on what a stabilization package would look like. Late last year Alexander, chairman of the Senate’s main health panel, and Sen. Patty Murray (D-Wash.), ranking member of that panel, reached a deal to restart the Affordable Care Act’s cost-sharing reduction payments, money given to insurers to reduce out-of-pocket costs for some beneficiaries, and make small changes to the health law.

However, Democrats now say those changes don’t go far enough because Republicans have since ended the ACA’s individual mandate requiring people to have coverage or pay a penalty, and the Trump administration has altered insurance rules to expand access to plans that don’t follow the health law’s coverage rules.

Murray has sought to take the stabilization deal further, blocking Trump’s short-term insurance rule and expanding the ACA’s tax credits. But House Republicans and the White House have pushed in the opposite direction.

The White House has asked lawmakers to back a rule expanding short-term insurance plans, something Democrats oppose, and expand the age band, potentially allowing insurers to charge older beneficiaries as much as five times what they charge younger, healthier beneficiaries, according to a document from the White House given to Bloomberg Law.

Rep. Mark Walker (R-N.C.), chairman of the conservative Republican Study Committee, told reporters he wants to ensure the cost-sharing reduction payments can’t support any abortion services. This is a step further than his stance earlier this year, that any cost-sharing payments have the same abortion restrictions as other federal funds.

“I won’t say it’s the gamebreaker but we won’t rest until we get a little stronger language on it,” he said.

Democrats are widely opposed to anti-abortion riders, Rep. Diana DeGette (D-Colo.) told Bloomberg Law.

“They need us to pass a spending bill, so they can’t add a rider and expect to pass it,” she said.

To contact the reporter on this story: Alex Ruoff in Washington at aruoff@bloomberglaw.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bloomberglaw.com

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