Congress Reconvenes: Drug Pricing, USMCA updates
January 3, 2020
Congress returned yesterday with a number of big ticket items on their plate, including drug pricing and the U.S.-Mexico-Canada Agreement (USMCA), both of which have implications for Utah’s life sciences industry.
Drug Pricing
As the House of Representatives was passing the Democrat drug pricing plan, H.R. 3, the Lower Drug Prices Now Act, in the final days of the 2019 legislative session, the Senate Finance Committee was busy making changes to their bipartisan drug pricing bill.
The revised Finance Committee bill, the Prescription Drug Pricing Reduction and Health and Human Services Improvements Act, tweaks an initial drug pricing bill that was reported out by the Committee in July. However, the new bill does not remove the bill’s controversial inflation rebate provision. Majority Leader Mitch McConnell and many Senate Republicans strongly oppose the rebate mechanism as tantamount to government price controls. Changes to the measure were outlined in a December 6 committee press statement.
The changes focus on further refining the Part D program by reducing the amount of spending that beneficiaries are responsible for during the initial phase of the benefit from 25 percent to 20 percent. Part D plans and their Pharmacy Benefit Managers (PBMs) would be required to include discounts they negotiate with a pharmacy in the price of the medications, reducing the out-of-pocket costs beneficiaries pay at the pharmacy counter. BioUtah and its pharma allies have strongly advocated that these discounts be applied to directly reduce patient out-of-pocket expenses. Beneficiaries would also be allowed to spread high out-of-pocket costs over a number of months — effectively capping the amount a senior would have to pay for drugs in any given month. The White House has announced its support for the revised legislation.
In an effort to create more leverage for action, a package of expiring health care programs that face a May 22 deadline was added to the bill. Backers of the Finance measure hope this deadline will provide impetus for the Senate to consider drug pricing legislation this year. House Speaker Pelosi has said she wants to tie drug pricing legislation to the expiring programs (also known as health care extenders), with the hope that House passage would put pressure on the Senate. Senate Finance Committee Chairman, Chuck Grassley (R-IA) and ranking Democrat, Ron Wyden (D-OR) have been working on a bipartisan basis to advance their version of legislation to lower drug costs.
BioUtah opposed H.R. 3 and continues to be concerned about the impact that price control mechanisms and overreaching legislation could have on innovation and future cures for patients. The President’s Council of Economic Advisers has estimated that H.R. 3 would mean 100 fewer cures over the next decade. A study by Vital Transformation estimated that 56 fewer drugs would come to market. The final Congressional Budget Office report on H.R. 3 forecast that as many as 45 fewer new drugs would be developed over two decades.
In the new year, HHS will also be seeking comment on a proposed rule released in late December to allow the importation of drugs from Canada.
USMCA
The U.S.-Mexico-Canada Agreement (USMCA) passed the House last month and now moves to the Senate. The Senate Finance Committee is scheduled to mark up the trade agreement on January 7. However, timing of consideration in the full Senate could be delayed until the impeachment trial is over.
The USMCA is a mixed bag for the life sciences industry. The agreement represents victories for the medical device industry, including recognition of international standards, elimination of duplicative regulatory requirements, and expansion of intellectual property protections. However, for the drug sector provisions that would have strengthened exclusivity protections for biologic medicines were dropped in final negotiations with House Democrats. The exclusivity periods that protect makers of biologics from generic competition are much shorter in Mexico and Canada than in the U.S. In a statement, BIO President and CEO, Jim Greenwood expressed disappointment in the decision to drop the protections, stating “small U.S. biotechnology companies depend on their government to protect them in global markets and to ensure a level playing field…”