Senate pushes for stronger drug-pricing policy than Trump proposal

Members of the Senate Finance Committee on Tuesday called on the Trump administration to use stronger tactics to curb high drug prices than its tempered strategy unveiled last month.

In its first hearing on the White House's drug pricing blueprint, lawmakers on both sides of the aisle pushed for price controls and broad-strokes negotiation. The central focus of the White House's proposal is moving Medicare Part B drug purchasing to the Medicare Part D model, in which prices are negotiated by pharmacy benefit managers.

Sen. Debbie Stabenow (D-Mich.) specifically urged HHS Secretary Alex Azar to take a heavier hand on negotiating opioid overdose-reversal drugs like Naloxone and Narcan, the nasal spray version of Naloxone that states are administering widely in first-response efforts. The set discount for Narcan puts the price-per-dose at $78 even though in 2005 Naloxone cost just $1, Stabenow said, escalating the money states need to spend on drugs versus other treatment.

Other lawmakers went further, including Sen. Bill Cassidy (R-La.), who advocated for reference pricing for the U.S. that would use the average prices of drugs in other developed countries as a baseline to determine the U.S. consumer list prices.

Azar objected to the idea, saying that he would rather harness "competitive marketplace" measures.

"That didn't work," Cassidy replied.

The Trump administration's focus on the Part D negotiating system as the answer for Medicare Part B also drew criticism as the committee's ranking Democrat, Ron Wyden of Oregon, flagged a recent government watchdog report that found HHS has paid rapidly skyrocketing prices for the most-needed brand-name drugs in Medicare Part D despite PBM negotiations.

HHS' Office of Inspector General found that Medicare Part D spending spiked 62% between 2011 and 2015, even though manufacturers have more than doubled the amount of rebates they offer for these drugs.

As Azar defended the White House plan, he said he wants to bring more "market-based tools" to Part D negotiation and reserved his strongest criticism of the current system for pharmacy benefit managers such as those who negotiate within Part D and asked Congress to change the policy that sets PBM earnings as a percentage of the list price—a system that he said benefits everyone except the people who have to buy drugs.

Azar also showed willingness to consider trying limited negotiations within Medicaid, as he touted the Trump administration's fiscal 2019 budget request that proposes that Congress allow a five-state experiment to set up their own Medicaid drug formularies. With their own formularies, state programs could try their hand at list price negotiations instead of relying on the federally mandated Medicaid drug rebate program to curb their costs.

Azar admitted that he has been disappointed with recent drug price hikes, but said they have generally been lower than in the recent past. He also assured the panel he is on the alert for any other spikes in the coming month, as manufacturers generally announce increases in early July.

"I want to put the drug companies on notice," Azar said.

The strongest defense of the administration's plan came from Senate Finance Committee Chair Orrin Hatch (R-Utah), who recommended that lawmakers pursue a course of increasing competition of biologics, much as his 1984 legislation with former Rep. Henry Waxman (D-Calif.) boosted production of generics.

"I believe that those who have criticized the blueprint as insufficient are either responding from a lack of knowledge or purely for political gain," Hatch said.

Sen. Bob Menendez (D-N.J.) took advantage of the praise for competition to urge Azar to support the Creates Act, recently passed by Senate Judiciary Committee but stalled in the House.

Azar declined to endorse the legislation on behalf of the administration, but said it resonates with the broader strategy of reducing prices by encouraging competition.

The Creates Act has driven its own controversy in the world of Big Pharma, pitting branded companies against one another over a bill that would relax the regulatory process known as risk evaluation and mitigation strategies for generic and biosimilar versions of drugs and biological products, on the anticipation that cheaper alternatives could be expedited to market without deterrence from branded drug companies.