If the tussle over the drug industry’s uncontrolled pricing power were a football game, you’d have to say we’re into the fourth quarter and neither Congress nor the administration has scored a point.
Let’s face it. When it comes to playing defense, Big Pharma’s Washington lobbyists and lawyers are the Pittsburgh Steelers of the mid-1970s. Or, to put in a plug for my hometown team, the 1985 Chicago Bears.
How effective are they? The CMS recently withdrew a proposed rule that would have allowed Medicare Part D insurers to establish formularies and require “step therapy,” which asks patients to use less costly but equally effective medications first.
An informal proposal to base prices for physician-administered drugs in Part B on an index of international prices, unveiled last fall, has yet to see the light of day after the drug industry launched a massive media and lobbying blitz against the concept. It would take the better part of a year to enact should the CMS ever get around to issuing a formal proposal.
Meanwhile, President Donald Trump, who during his campaign backed the long-standing Democratic Party demand that the CMS be given the power to negotiate drug prices, has gone uncharacteristically mum on the issue. Its enactment now depends on cooperation between the Senate, the House and the president’s top advisers.
And what are they saying? Based on news accounts, HHS Secretary Alex Azar, a former Eli Lilly executive, opposes direct negotiations. Meanwhile, the president’s top domestic policy adviser, Joe Grogan, a former Gilead Sciences lobbyist, wants to limit negotiations to a handful of very expensive drugs.
The Democrats are also divided. House Speaker Nancy Pelosi has rejected calls from progressive members of her caucus for unlimited negotiations and the ability to seize patents if a company refuses to deal. Instead, her team is developing its own version of limiting negotiations to pricier products.
The pragmatic speaker recognizes that a majority of her caucus members are either heavily beholden to drug industry campaign cash or represent districts (like hers) with a strong biotech and pharma presence. Moreover, moderates in the party, especially those newly elected in swing districts, have been lobbied heavily by patient advocacy groups, who fear any form of price limits will retard the hunt for new drugs.
The business-friendly courts aren’t helping. In early July Washington District Court Judge Amit Mehta blocked an administration plan to require drug companies to list prices on their television ads, claiming the CMS lacked the authority to do so.
Finally, the administration earlier this month withdrew its proposal to strip pharmacy benefit managers like CVS Caremark and Express Scripts of the rebates they receive from drug companies. The intent was to pass those rebates directly to consumers.
The idea was based on a misleading Big Pharma claim that high drug prices are due to PBM rebates. When the Congressional Budget Office looked for the alleged savings from this “reform,” it discovered it would raise Medicare costs by $177 billion over the next decade through the higher payments PBMs would be forced to make to drug companies.
In other words, the only “loss” suffered by the drug industry this year was the equivalent of a dropped Hail Mary pass, their desperate attempt to line their own pockets while blaming high prices on someone else. The president reportedly withdrew the plan after learning three days before enactment that it would have triggered a sharp hike in senior drug plan premiums on the eve of next year’s election.
There’s still time to take action on an issue that perennially ranks among Americans’ top healthcare concerns. This game isn’t over. But the odds are against an upset, especially given the time left on the legislative calendar and Big Pharma’s formidable defense.