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July 17, 2019 01:11 PM

CBO projects Senate drug-pricing proposal will save money

Susannah Luthi
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    Chairman Chuck Grassley, R-Iowa, right, and ranking member Sen. Ron Wyden, D-Ore.

    Senate Finance Committee Republicans have yet to agree on their compromise package to lower drug prices, but Congressional Budget Office staffers estimated Wednesday that the bill would save money for both the government and Medicare beneficiaries.

    The cornerstone of the proposal from committee Chair Chuck Grassley (R-Iowa) and ranking member Ron Wyden (D-Ore.) is a cap on drug price hikes. If manufacturers raise their prices above the rate of inflation, they would have to pay rebates to the government. CBO's projected savings come from the proposed Medicare Part D redesign and these inflation caps.

    A source familiar with the discussion said a full CBO score is expected Friday and a vote on the package is still possible before Congress leaves for its recess in early August. The source emphasized that both taxpayers and patients will see savings although the CBO did not provide hard numbers.

    Still, GOP lawmakers have yet to rally around the plan. One Senate aide characterized the policy as the most significant measure to address price increases that both Republicans and Democrats appear to be able to accept.

    "I think we're still discussing it," Sen. John Cornyn (R-Texas) said after the meeting. He added that "there are no agreements."

    Most GOP senators were tight-lipped after the Wednesday meeting, but Senate Majority Whip John Thune (R-S.D.) described the discussion as "good."

    "It adds more information and perspective about some of these ideas and what impacts they may have," Thune told reporters.

    Sen. Bill Cassidy (R-La.), who has been active on drug reform proposals, said he's "comfortable" with the CBO's analysis, while downplaying the idea that disagreement among the GOP senators hurts the proposal's prospects.

    "I think we're kicking it back and forth," he said. "I don't think there has to be agreement yet, I think there has to be an understanding of the facts and then we can come to an agreement."

    Senators weren't specific about the concerns among the caucus. Sen. Pat Toomey (R-Pa.), who chairs the Finance Committee's health panel, said on Tuesday the proposal is still a work in progress and that there are "some things I like and some things I don't like," although he did not elaborate.

    Meanwhile, conservative groups like the National Taxpayers Union have already condemned the yet-to-be-released proposal as "price controls" — a widely used critique that resonates with many conservatives.

    But this frame of the inflation-caps policy drew harsh criticism from conservative policy adviser Avik Roy, founder of the Foundation for Research on Equal Opportunity. Roy took to Twitter to blast "certain conservatives" who "fight so hard against health insurance subsidies for the working poor, then turn around and fight equally hard to protect and even increase subsidies to the drug industry."

    "If you're a conservative, and you wonder why the GOP has a poor reputation on healthcare, our approach to subsidizing drug companies is exhibit A," Roy tweeted late last week. "The good news is some conservatives/GOPers are starting to realize this."

    Senate Republicans this year have been showing rifts over the price control question when it comes to drug companies. Newer members like Sens. John Kennedy (R-La.), Josh Hawley (R-Mo.) and Rick Scott (R-Fla.) haven't shied away from taking harder stances on the pharmaceutical industry.

    Meanwhile, the stall-out of the Trump administration's regulatory effort on drug pricing, is intensifying the pressure on Senate Republicans to come to an agreement, a source familiar with discussions said.

    Late last week, the Trump administration ditched its plan to eliminate pharmacy benefit manager rebates for Medicare Part D — a blow to the drug industry, which had made the proposal a major priority.

    And early this month a federal judge blocked the HHS mandate on drugmakers to list their list prices on TV ads.

    The fate of the administration's most ambitious idea, which would tie Medicare Part B drug prices to an international price index, is unclear.

    As a result, the White House is looking to Congress. Last week President Donald Trump's top policy aide, Joe Grogan, and HHS Secretary Alex Azar met with Senate Republicans and signaled the president's support for the Senate Finance Committee proposal, according to congressional sources.

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