Senate Finance Chair Chuck Grassley (R-Iowa) and ranking Democrat Ron Wyden of Oregon on Friday added several measures to their drug-pricing package and plan to use the bill's savings to cancel two years of cuts to disproportionate share hospital payments, as well as fund healthcare extenders.
The drug-pricing changes would reduce costs for beneficiaries who exceed their deductible but do not reach the catastrophic phase of the Medicare Part D benefit, allow Medicare beneficiaries to spread pharmacy drug costs over time, allocate discounts more evenly across drugmakers, and pass price concessions negotiated by pharmacies to consumers. Most of the changes would take effect in 2022, but the new Part D benefit structure would be fully implemented in 2024.
The senators hope the tweaks will build support for the Prescription Drug Pricing Reduction Act, which so far does not have enough Republican votes to pass in the Senate. They also are optimistic using the bill's savings to pay for healthcare programs facing funding expiration at the end of the year will create leverage to move the bill forward.
"We hope this helps," a Finance Committee aide said. "This also solves other problems of leadership's when it comes to extenders."
However, Grassley and Wyden retained the most controversial provision in their legislation, which would require drug companies to pay back Medicare if they hike drug prices faster than inflation. Some Republican senators equate the provision to government price controls, while Grassley has tried to spin it as limiting entitlement spending.
Senate Majority Leader Mitch McConnell (R-Ky.) has not committed to bring the bill for a vote before the full Senate, and several vulnerable GOP senators have so far kept the compromise at arm's length.
The White House, however, backed the Grassley-Wyden legislation as the best vehicle for a drug-pricing deal this Congress, as opposed to House Speaker Nancy Pelosi's (D-Calif.) package, which Domestic Policy Council chief Joe Grogan has called unworkable and hyperpartisan.
House Democratic leaders on Thursday said they would use savings from their bill to expand Medicare benefits, increase financial assistance for low-income beneficiaries, fund community health centers, bolster research at the National Institutes of Health, combat drug shortages and fund other healthcare priorities. Pelosi aims to bring the bill for a floor vote next week.
Senate Finance Committee aides said they had not received a score on their revised bill from the Congressional Budget Office. A preliminary estimate of the original bill showed it would save the federal government more than $100 billion over 10 years. House leaders claim their legislation will save $500 billion over the next 10 years, according to guidance they received from the Congressional Budget Office. They did not provide any further details about the CBO analysis.
Grassley and Wyden propose using savings from their bill to cancel cuts to disproportionate share hospital payments for fiscal years 2020 and 2021 but keep cuts of $8 billion per year in place for 2022 through 2025. The bill would require provider-level transparency for non-DSH supplemental payments.
The bill also included a permanent extension of Medicaid's Money Follows the Person Rebalancing demonstration, a two-year extension of funding for the Community Mental Health Services Demonstration Program that would add 11 new states, and a four-year extension of increased funding for Medicaid block grants to the U.S. territories.
In Medicare, the savings would permanently fund the Medicare dependent hospital program and the increased low-volume adjustment, and provide additional funding for the CMS' quality measurement endorsement program in fiscal years 2020 through 2022.
The Senate leaders decided to spread out drugmakers' discounts throughout the Medicare Part D benefit after concerns that concentrating drugmakers' liability in the catastrophic coverage phase would disproportionately hurt small companies that manufacture high-priced, innovative drugs. Overall, the pharmaceutical industry's share of costs would stay the same.
The bill would also allow beneficiaries to spread their out-of-pocket costs for drugs dispensed at the pharmacy counter throughout the year, which is supported by drugmakers, but insurers did not like the idea because it would require them to front the costs. The bill would create a $3,100 annual out-of-pocket cap for beneficiary spending in Medicare Part D.
Notably, the new version of the Grassley-Wyden bill does not include a policy passing rebates paid by drugmakers directly to patients at the pharmacy counter. Both senators had said during the markup of the drug-pricing bill that they intended to include some form of a point-of-sale rebate proposal in a subsequent version of the package, but they backed off.
Finance Committee aides said they ran into some of the same problems the White House encountered when it failed to advance a point-of-sale rebate rule because the Congressional Budget Office estimated it would cause premiums to rise in Medicare Part D. Hospitals and insurers detested the administration's proposal.
Grogan, a widely known opponent of point-of-sale rebates, bashed the idea of including the policy in the Grassley-Wyden bill in a briefing with reporters on Nov. 8.
"If somebody has an easy legislative solution to the rebate problem I'm all ears, but I think they're not going to get there," Grogan said.
The CMS considered passing pharmacy price concessions to consumers at the point of sale, but did not finalize the proposal in May. Finance Committee aides said the magnitude of passing on pharmacy price concessions to consumers is much smaller than a point-of-sale rebate policy would have been.