Legislative Update: Drug Price Negotiations Probably Not Imminent

May 2022 Vol 13, No 5

Washington public policy and legislative actions impact the cancer care market greater than any other health payer group, as 50% of the cancer population is financially supported under Medicare and another 10% under Medicaid coverage. A panel of Washington K Street experts, moderated by Lindsay Greenleaf, vice president, Policy, ADVI Health, discussed the current and prospective policy and legislative initiatives that will impact cancer care in the near future.

The 2 main pathways to implementation of health policy are legislation and executive action. “Legislatively, all eyes are on the Build Back Better Act,” said Ms Greenleaf. The proposed act is a $3.5-trillion social spending bill that includes expansion of Medicare, with approximately $700 billion in prescription drug offsets proposed.

“I want to emphasize the authority that the Biden administration has under an agency called the Center for Medicare & Medicaid Innovation [CMMI],” she said. CMMI was established under Obamacare; it has the authority to waive the entire Medicare statute when implementing a demo. It has the power to rewrite law without the burden of answering to stakeholders. “CMMI is a very important agency with a lot of power when it comes to the Medicare program,” she said. “Any policy that affects Medicare is fair game for CMMI,” Ms Greenleaf said.

House Democratic leadership is interested in a broad spending package under the Build Back Better Act. “On the other side, the Senate is in a very, very different place,” said Mike Mattoon, vice president, Government Relations, BIO. “Where it currently sits, there is a group of House Democrats and a small group of Senate Democrats who have been able to move the conversation away from $3.5 trillion. So we’re probably looking somewhere in the $1.9- to $2.3-trillion range. We are going to eventually get to a place where a package happens. That’s my sense right now.”

With a 50-50 Senate and only 3 votes to spare in the House, “the package can be blocked very easily by people who are skittish,” said John McManus, MPH, president and founder, The McManus Group.

The discussion turned to government negotiation of prescription drug prices. “Negotiation is a bit of a misnomer,” said Ms Greenleaf. “Everything that’s being discussed right now really equates to government price setting.” As such, terms would violate the Fifth Amendment’s “Takings” clause and the Eighth Amendment’s “Excessive fines” clause, said Mr McManus. “Once people start understanding that, and that there could be an impact on patient access, they get more comfortable opposing it,” he said.

For a few reasons, drug price negotiation is not imminent, said Jayson Slotnik, JD, MPH, partner, Health Policy Strategies. Republicans are not willing to provide government with the authority to negotiate a launch price, he said, believing in market-based pricing and competition.

A bill in the House was supposed to rely on international benchmarks to set upper limits for pricing, but it appears to be dead. The Senate is considering domestic reference pricing for Medicare negotiations, whereby prices could be based on any number of government purchasers. A federal ceiling price is the price used to determine the maximum amount charged to the Veterans Administration, Department of Defense, Public Health Service, and Coast Guard.

“I will say there is significssant interest in doing negotiation of some type,” said Mr Mattoon. “Forty-nine out of the 50 senators on the Democratic side are publicly supportive of Medicare negotiation.”

Use of an incremental cost-effectiveness ratio, as is done in Europe, may be in the mix, said Mr McManus, because it’s more flexible than government price setting.

Inflationary penalties and Part D benefit redesign are 2 potential reforms that seem to have the most support on the Hill, said Ms Greenleaf. “There’s a growing Republican interest in the concept of inflationary penalties, if it’s done on a prospective basis,” said Mr McManus, but not if it’s a punitive measure against past price increases. The penalty is less of an issue for biotech products that tend to initiate prices at a premium, with only small price increases over time, he said, but for Part D drugs that are eligible for rebates and normally undergo larger price increases to fund those rebates, the penalty would be substantial.

Average sales price add-on reform has potential, said Mr McManus. The provision would establish $1000 as the maximum add-on amount that a provider could be paid for a drug, biologic, or biosimilar covered under Part B. “As long as the provider community thinks it holds on to the current distribution buy and bill system, they would be willing to work with that,” he said.

Home infusion of drugs covered under part B, established during the early stages of the COVID-19 pandemic, has generated safety concerns from oncologists. “My guess is that you’ll see more migration from the hospitals to the clinics rather than from the hospital to the home,” said Mr McManus.

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Last modified: November 15, 2022

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