United States: No Surprise! – Drug Pricing Legislation Picking Up Steam

Last Updated: June 21 2019
Article by Vince Sampson

Legislation that addresses the cost of prescription drugs is inching closer to moving out of Congress. On Yesterday, the Senate Health, Education, Labor and Pensions (HELP) Committee held a hearing on the bipartisan Lower Health Care Costs Act (LHCCA) discussion draft. Today, the Committee released a new draft based on over 400 comments received on the discussion draft. In addition to its focus on curbing surprise medical bills, the discussion draft includes several provisions aimed at lowering the cost of prescription drugs, as discussed herein. Many of these items have support from the House of Representatives. These include ensuring more generics or bioslimiars are brought to market, preventing abuses of citizen petitions and prohibiting Pharmacy Benefit Manager (PBM) spread pricing.

By way of background, last month HELP Chairman Lamar Alexander (R-TN) and Ranking Member Patty Murray (D-WA) released the LHCCA discussion draft for a brief period of public comment with the goal of getting a version to the Senate floor in July. The main driver of the LHCCA is to address the challenges to patients presented by surprise medical bills. This problem has created concern in both Chambers of Congress and the Administration. Given the momentum behind addressing this problem, the HELP Committee leadership made the political and policy decision to use this as the vehicle to carry other provisions related to prescription drugs. Most of the drug pricing provisions in LHCCA are lifted from bills introduced in recent years.

Provisions of note are described below as summarized in the Committee's section-by-section description:

  • Ensuring timely access to generics: Maintains the use of citizen petitions to allow drug companies to notify FDA of concerns with pending generic and other follow on drug applications. Allows FDA to deny a citizen petition that is submitted with the primary purpose of delaying an application
  • Protecting access to biological products: Clarifies that biological products including insulin, which will move from the drugs pathway to the biologics pathway in March 2020, cannot receive new, extended market exclusivities.
  • Preventing blocking of generic drugs: Prevents first-to-file generic drug applicants from blocking beyond a 180 day period, the entrance of subsequent generic drugs to the market. Triggers the start of the first-to-file 180-day exclusivity when a subsequent applicant has been tentatively approved and the first-to-file applicant has not received final approval within 33 months of filing.
  • Clarifying meaning of "new chemical entity:" Clarifies that eligibility for five-year new chemical entity exclusivity is available only for a drug containing no active moiety that has been previously approved in the U.S.
  • PBMs: Prohibits PMSs from engaging in spread pricing, or charging a plan sponsor, insurance plan or patient more for a drug than the PBMs pay. Requires the PBM to pass on 100% of any rebates or discounts to the plan sponsor.
  • Clarifies that the clinical superiority standard applies to drugs with an orphan drug designation that are approved after the FDA Reauthorization Act of 2017 in order to be awarded 7 years of orphan drug exclusivity, regardless of the date of the orphan drug designation

Given LHCCA's bipartisan support, it is expected to move through the HELP Committee and to the Senate floor before the August break without much difficulty.

With respect to drug pricing on the other side of the Capitol, the House passed in May, H.R 987, which contains a collection of drug pricing-related bills. This package included similar anti-blocking of generics, and PBM reform provisions found in LHCCA, but added the CREATES Act, which makes changes to the REMS approval process. Like LHCCA, H.R. 987 used a larger health care issue to carry drug pricing provisions. However, unlike LHCCA, H.R. 987 used the very partisan issue of the ACA as the foundation making passage of the entire bill in the Senate highly unlikely.

The next major question is when and how n to reconcile these two packages. At this point, hitching a ride on other legislation seems to be the only way to move drug pricing bills. This process is complicated by calls from progressive members, particularly of the House, that these provisions do not go far enough to lower prescription drug prices and that Medicare price negotiations are the only real solution. House and Senate leadership will have to make the decision what version of health care reform can pass both chambers and be approved by the Administration.

Stay tuned.

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