Drug Industry Tries to Slip $4 Billion Windfall Into Opioid Bill
Source: New York Times
Drug companies usually get what they want in public-policy battles on Capitol Hill, but a move by the pharmaceutical industry to grab $4 billion from the federal Treasury in a bill that is supposed to address the nation’s deadly opioid epidemic is meeting fierce resistance.
At issue is a small measure that the Pharmaceutical Research and Manufacturers of America, or PhRMA, has deemed a “technical correction” to a bipartisan budget law signed by President Trump in February. The law required drug manufacturers to provide deeper discounts to Medicare beneficiaries whose spending on prescription drugs falls within a range called the coverage gap, or the “doughnut hole.” The discount, now 50 percent on brand-name drugs, is set to rise next year to 70 percent.
The change sought by the drug industry has nothing to do with the scourge of opioids, but such provisions are often tucked quietly into popular, swiftly moving bills, then discovered months later. In a sign of the times, members of Congress and consumer advocates quickly mobilized opposition.
“Big Pharma is trying to hijack the bill and turn it into a giant pharmaceutical company bailout,” Senator Tina Smith, Democrat of Minnesota, said in a Twitter post.
The proposal “will increase prescription drug costs for older Americans while providing a windfall of billions of dollars to the drug industry,” said AARP, the lobby for 38 million Americans 50 and older.
Senator Ron Wyden of Oregon, the senior Democrat on the Finance Committee, said the relief for pharmaceutical companies would cost more than twice as much as the bill spends to prevent and treat opioid addiction.
Opponents said Monday that they were confident they could block the relief sought by drug companies, at least for now.
The Congressional Budget Office had initially estimated that the requirement for drug companies to provide larger discounts would reduce federal spending on Medicare’s drug benefit by a total of $7.7 billion through 2027. Shortly after the law was enacted, the budget office discovered additional information and raised its estimate of the savings to $11.8 billion.
Drug makers argue that Congress intended to save just $7.7 billion and should now give back the $4 billion difference. Medicare beneficiaries could still receive discounts of 63 percent, the industry says.
The Trump administration has not publicly engaged in this particular fight, but has stoked skepticism of the industry. Mr. Trump has repeatedly said that drug makers are “getting away with murder.”
Pharmaceutical companies see the opioids bill as an attractive vehicle because swift passage is a political priority for members of both parties this election year. Lawmakers are urgently trying to work out differences between the versions passed by votes of 396 to 14 in the House and 99 to 1 in the Senate.
Medicare’s outpatient drug benefit, known as Part D, is delivered entirely by private companies like UnitedHealth, Humana and CVS Health.
“We are focused on ensuring Medicare Part D is secure for the future by correcting a technical error” by the Congressional Budget Office, said Stephen J. Ubl, the president and chief executive of PhRMA, who has led lobbying on the issue.
Prescription drug plans pay some of the drug costs incurred by people in the coverage gap. In the Bipartisan Budget Act in February, Congress reduced the insurers’ share to 5 percent; it would otherwise have been 20 percent next year.
In a classic spat between two powerful industries, drug companies say insurers should pay more so drug makers can pay less. Insurers will do a better job managing the cost of Medicare’s drug benefit if they bear more financial risk, drug companies say, and many health economists agree.
America’s Health Insurance Plans, the chief lobby for insurers, opposes any changes that would increase their share of drug costs in the coverage gap.
Drug companies are urging Congress to provide relief to some Medicare beneficiaries in another way: by delaying a sharp increase in their out-of-pocket drug costs scheduled to occur in 2020, when the coverage gap grows much wider.
The Affordable Care Act temporarily shielded beneficiaries from 2014 to 2019, but that provision of the law expires in 2020.
Mark E. Miller, the former executive director of a federal commission that advises Congress on Medicare, said: “In the context of the current debate, I would not roll back the drug discounts. We need broader changes in the structure of Medicare’s drug benefit. If the discounts are rolled back, patients and taxpayers should get something in return, to bring more competition to the market and drive down drug prices.”
Congress has been considering several proposals to speed the approval of lower-cost generic versions of brand-name medicines. One would make it easier for developers of generic drugs to obtain samples of brand-name products, which they need to show that the generic version is equivalent to the original.
Allowing generic drugs to enter the market sooner could save money for Medicare, Medicaid and other federal health programs.
Under a proposal approved in June by the Senate Judiciary Committee, a federal court could order a brand-name drug maker to provide samples of its product to a generic company “on commercially reasonable, market-based terms.” The court could also award damages to the generic company.
Lawmakers have discussed adding some version of this proposal to the opioids bill. But House Republican leaders are wary of any changes that could generate additional litigation.
Filed Under: ACA/Health Reform