Republican revolt threatens Senate drug pricing bill

A bipartisan bill voted through by the Senate Finance Committee last week is under threat from a group of Republican senators who say they may try to block its passage.

The bill – proposed by Republican Senator Chuck Grassley and his Democrat counterpart Ron Wyden – was voted through committee by a margin of 19-9 last week, and has the backing of President Donald Trump who said he would try to muster support for the package of measures.

Now a Kaiser Health report suggests that certain Republican senators, including some of those who voted for the bill in committee, may oppose it if it comes to a full Senate vote.

The bill would cap out-of-pocket costs for medicines at $3,100 per year for Medicare beneficiaries beginning in 2022, and would also require drugmakers to pay rebates to Medicare if they raise drug prices above inflation.

The sticking point for the Republicans lies with the inflation-related rebate, which is already used for Medicaid but would be much more widespread if extended to Medicare. There was an attempt to amend the bill to strike that proposal, but that was deadlocked in a 14-14 vote.

Meanwhile, Democrat senators – who made up the bulk of support in the committee – attempted to include an amendment to allow the government to set drug prices but that was voted down 12-16.

The Democrats have also suggested they would block a Senate vote on the bill – effectively killing it – if Republicans don’t agree to hold votes on retaining insurance cover for people with pre-existing medical conditions. That has been enshrined in Obamacare but has been under attack by the Trump administration.

Kaiser notes that there is a sizeable group of Senate Republicans that disagree with Trump’s approach to drug controls, including a controversial attempt to peg the price of drugs in the US to the lowest among a list of ‘favoured nations’.

An amendment to introduce the framework for that also failed in committee, but Grassley and Wyden have indicated they would like to resurrect Trump’s plan to ban Medicare rebates paid by pharma to insurance middlemen – which was dropped earlier this month.

The drug industry trade group PhRMA issued a statement last week, which said it was a wrong-headed approach that would “siphon more than $150 billion from researching and developing new medicines.”

The out-of-pocket cap will only benefit 2% of Medicare patients, according to the trade body, while “harmful price controls in Medicare Part D” (which provides health insurance for people on low incomes) would punish the industry.

The bill would “result in money going to the federal treasury instead of seniors,” it asserted.

That said, AbbVie chief executive Rick Gonzalez made an interesting observation during the company’s second-quarter results call on Friday, saying: “the Senate proposal I think is a good start [and] could be modified in a way that it could solve many of the issues that are out there.”

“We're obviously very supportive of anything that lowers patients' out-of-pocket costs,” he continued, adding that one of the big challenges in the US is that Medicare Part D was created to serve a market that did not include the high level of specialised medicine that is emerging today.

Gonzalez pointed out that it’s not clear whether a $3,100 annual cap will even be affordable for a typical Medicare patient, particularly as the cost for the patients is “very front-loaded” and has to be found in the first few months of the year.

He agreed with PhRMA’s official line that there are punitive elements of the proposals as well that need to be ironed out, but predicted: “these kinds of legislation are complex and they take time, and there'll be likely extensive changes that occur to the draft.”

House of Representatives Speaker Nancy Pelosi said a bill on pricing will be tabled in September, around the time that the Grassley-Wyden bill is scheduled to be debated in the Senate.