Senate Finance Committee leaders on Tuesday released their highly anticipated bipartisan proposals to lower drug spending in Medicare and Medicaid after a week of wrangling uneasy GOP lawmakers.
The panel plans to vote on the package Thursday despite continued criticism from Senate Republicans. The Trump administration has promised to work with the Senate to "ensure this proposal moves forward."
The entire package from Chair Chuck Grassley (R-Iowa) and ranking member Ron Wyden (D-Ore.) is projected to save more than $100 billion over 10 years for both the government and Medicare beneficiaries. The lion's share of these savings would come from the legislation's significant overhaul of Medicare Part D, including a controversial cap on drugmakers' list price increases.
Under this cap, drug manufacturers wouldn't be able to raise their prices above the rate of urban inflation. The anchor price would be a drug's cost as of July 2019. Manufacturers that raise prices higher would have to pay back that hike through a rebate to the government, but that provision has proven difficult for some Senate Republicans to swallow.
The package imposes a similar "inflation cap" on price increases for physician-administered drugs in Medicare Part B.
This provision, fiercely opposed by pharmaceutical companies, still rankles committee Republicans. Several GOP lawmakers on Tuesday were already discussing changes, specifically to the inflation caps, and few said they support the package. The Pharmaceutical Research and Manufacturers Association (PhRMA) trade group also attacked the proposal.
"Basically we're talking about price controls," Sen. Pat Roberts (R-Kan.) told reporters. "Once you open that door, other things will happen."
Roberts may introduce a proposed change to the inflation caps provision, and he said he expects Sen. Pat Toomey (R-Pa.) will as well.
Toomey, who declined to specify his own criticisms of the legislation, said he'd probably offer several amendments on Thursday, "but I'm not going to discuss the substance of them yet."
The Congressional Budget Office score of the bill may prevent any major effort to water down the provision or strike the penalty on manufacturers that raise their prices above inflation. That cap drives a big share of the package's $85 billion in Medicare savings.
Michael Zona, GOP spokesman for the committee, said amendments must pass a "germaneness test" to be considered. And they must include a way to pay for any increased cost. Lawmakers who want to offer amendments have to file their changes by noon Wednesday.
Another major undertaking in the legislation is its proposed Part D redesign. There, enrollees would no longer have to pay anything, and Medicare Part D plans would shoulder more of the drug spending in the catastrophic phase where the federal government currently bears most of the burden. Plans' spending would rise to 60% as the government and manufacturers would each be responsible for 20%.
Aides in Grassley's office told reporters this revamp will drive better price negotiations between plans and manufacturers for Part D, and also apply sufficient pressure to bring the costs down for these extremely expensive drugs.
Grassley's staff confirmed the package doesn't include any provision that would directly affect the launch price of new drugs, but noted that the Congressional Budget Office took this under consideration in its analysis of the legislation. The office still predicted lower premiums and out-of-pocket costs for patients moving forward.
For Medicaid, the committee tried to tackle drugmaker pricing games by changing the rebate structure so drug companies have to pay if they raise the average manufacturer price above the rate of inflation.
So-called "spread pricing," which allows a pharmacy benefit manager to charge a plan more for a drug than it reimburses a pharmacy, would also be banned in Medicaid.
Committee leaders have emphasized that people in commercial plans would see savings as the inflation cap for Part D drugs filters through the market. This was a major sticking point for some committee Republicans, who wanted to make sure prices wouldn't rise for the commercially insured before they would agree to support the bill.
All told, the package saves more than $100 billion over 10 years. Medicare beneficiaries would save $27 billion in out-of-pocket costs such as cost-sharing, and $5 billion in premiums. Medicaid would see $15 billion in savings.
It's unclear how the dynamics between reluctant Senate Republicans, the White House and Grassley will play out ahead of Thursday's vote.
"Look, what this is going to come down to is real simple, and that is: Will Republican senators take on pharma?" Wyden told reporters. "This place is crawling with pharma people. If you go to the place where folks normally have coffee and a roll and things like that, practically every table is filled with a pharma lobbyist who's working a Republican health staffer. And so that's what this is all about."
PhRMA CEO Steve Ubl blasted the package, claiming it would "siphon more than $150 billion from researching and developing new medicines while giving those savings to the government, insurers and PBMs — not seniors."
Ubl called on the committee to work with pharma groups "on a better solution."
