- This week, United States Senator Bernie Sanders (I-VT) and Democratic Representatives Ro Khanna, Lloyd Doggett, Peter Welch, and Cori Bush, along with more than two dozen others, have introduced a package of bills aimed at “drastically” reducing prescription drug prices in the U.S.
- The 3 bills – the Prescription Drug Price Relief Act, the Medicare Drug Price Negotiation Act, and the Affordable and Safe Prescription Drug Importation Act – seek to peg U.S. prescription drug prices based on the median price found in Canada, the UK, France, Germany, and Japan, allow Medicare to negotiate drug prices, and permit prescription drug imports from Canada and then OECD countries
- These bills are the most recent push for drug pricing reform, which has manifested in various proposals and former U.S. President Donald Trump’s like-minded four Executive Orders, including the Most-Favored Nation (MFN) rule
- Here, Pricentric INSIGHTS recaps previous legislative efforts to curb prescription drug prices, explores the feasibility of such measures coming to light, and highlights the industry’s position, which calls on the government to tread lightly and consider downstream repercussions.
WASHINGTON, D.C., United States – United States Senator Bernie Sanders (I-VT) and Democratic Representatives Ro Khanna, Lloyd Doggett, Peter Welch, and Cori Bush, along with more than two dozen others, have introduced a package of bills aimed at “drastically” reducing prescription drug prices in the U.S.
The package is comprised of:
- The Prescription Drug Price Relief Act would require the Secretary of Health and Human Services (HHS)—now former California Attorney General Xavier Becerra—to identify a list of “excessively priced” patented, brand name prescription drugs and ensure Americans pay no more for them the median price of these five countries: Canada, the United Kingdome, France, Germany, and Japan. If pharmaceutical companies refuse to lower their prices down to the median price, the federal government will approve cheaper generics, regardless of any patents or market exclusivities—generic manufacturers will be given a green light to make more affordable versions. As an example, the bill cites Bristol-Myers Squibb’s (BMS) Eliquis (apixaban), whose current average retail price for a month supply of $571 could drop to $286.
- The Medicare Drug Price Negotiation Act would strike a non-interference clause and direct the HHS Secretary to negotiate lower prices with drug manufacturers that participate in Medicare Part D (A.K.A. the Medicare prescription drug benefit) for drugs that place the most burden on seniors and taxpayers—i.e. high-cost drugs, drugs with significant price increases, drugs that drive up Part D spending, and those without competition. Further, the Secretary can leverage government purchasing power by using drug formularies to enhance competition, and fallback prices, established under the Prescription Drug Price Relief Act, would automatically kick in if negotiations with drug manufacturers conclude unsuccessfully.
- The Affordable and Safe Prescription Drug Importation Act would direct the HHS Secretary, within 180 days after enactment of this Act, to issue regulations allowing wholesalers, licensed U.S. pharmacies, and individuals to import qualifying prescription drugs manufactured as U.S. Food and Drug Administration (FDA)-inspected facilities from licensed Canadian sellers, and after two years, importation from countries in the Organization for Economic Co-operation and Development (OECD) would be permitted.
This week, Sanders also led a subcommittee hearing titled “Why Does the U.S. Pay the Highest Prices in the World for Prescription Drugs,” in which he lambasted the pharmaceutical industry for the rising cost of prescription drugs, specifically insulin, considering CEO salaries, manufacturing costs, and the prices for these same drugs in other countries. Sanders has been a consistently vocal critic of the pharmaceutical industry and drug pricing policy in the U.S.
Prescription Drugs Under Fire in U.S.
Prescription drug prices have long come under fire in the U.S. In November 2018, Sanders first introduced the Prescription Drug Price Relief Act in the Senate to reduce drug prices by an average of 40% by aligning them with those found in Canada, the United Kingdom, France, Germany, and Japan.
The legislation followed suit with former-President Donald Trump’s proposed pilot program of enacting an international reference pricing (IRP) scheme to lower the cost of blockbuster drugs for Medicare Part B; however, Senator Sanders and bill co-author Representative Ro Khanna said Trump’s proposal fell short of helping 150 million other Americans who get private health insurance from their employer and 30 million Americans who are uninsured and, thus, pay out of pocket (OOP) for the total cost of the drug.
During his tenure, Trump signed four Executive Orders (EO), providing the groundwork for similar initiatives to those outlined in the Sanders-led package of bills, but these measures were halted by the Biden Administration (Regulatory Freeze Pending Review memorandum) and have been the subject of litigation. Perhaps the most impactful of his Executive Orders, Trump’s “Most Favored Nation (MFN)” rule, which was supposed to take effect on January 1, 2021, stipulated that the U.S. will pay the lowest price for certain Medicare-covered drugs among the following wealthy, developed nations that are part of the OECD: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Iceland, Ireland, Israel, Italy, Japan, Republic of Korea, Luxembourg, Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland, and the United Kingdom.
Bipartisan Issue but No Common Ground
Democrats and Republicans have struggled to find common ground or dovetail their respective concerns regarding prescription drug prices, and their proposals have varied in scope and methodology.
Besides his Executive Orders, Trump was keen on Senator Chuck Grassley’s Prescription Drug Pricing Act, which would have potentially cut down on government spending through a reduction of subsidies “from Medicare to the pharmaceuticals,” and a “year-over-year” price cap would be implemented in line with the rate of inflation. On the other hand, Democrats flocked behind H.R. 3, the Elijah Cummings Lower Drug Costs Now Act, which was bolstered by support from Speaker of the U.S. House of Representatives Nancy Pelosi. H.R. 3 would direct the HHS Secretary to negotiate lower prices for prescription drugs and cap them, based on the prices found in other countries.
Like Trump’s MFN rule, H.R. 3 would significantly impact the pharmaceutical industry. Pricentric Analysts found that H.R. 3 would lead to major price reductions of the costliest drugs for Medicare – Celgene’s Revlimid (lenalidomide), Sanofi’s Lantus (insulin glargine), AbbVie’s Humira (adalimumab), and EMD Serono’s Januvia (sitagliptin), for example – ranging between 62% and almost 89%. The results were similar for Trump’s MFN rule.
At an event hosted by healthcare advocacy coalition Protect Our Care, Pelosi shared that Representatives are considering including some provisions from H.R. 3 in the forthcoming infrastructure legislative package—namely, the ability for the HHS secretary to negotiate drug prices and benchmark them. Pelosi said excluding legislation aimed at lowering prescription drug costs in the infrastructure bill would be a missed opportunity; however, the Speaker underscored that she wants to bill to be bipartisan, so including these additional measures could be problematic.
Pharmaceutical Industry Continues Its Fight
But not everyone is on board with these changes. When Trump announced his prescription drug importation plan, Canadian officials feared overstressing their own drug supply if the U.S. were to import medicines. Canadian Minister of Health Patty Hajdu consequently announced new measures to guard Canada’s drug supply from bulk imports that might exacerbate drug shortages. As such, a number of drugs meant for the Canadian market were banned from distribution and consumption outside Canada if doing so would cause or aggravate a shortage. Even policymakers behind state-level importation initiatives (Oklahoma, North Dakota, and Colorado to name a few) haven’t expressed, with full certainty, that Canada will cooperate with their plans.
The pharmaceutical industry has fought back against all proposals so far, warning that the American market and, in turn, patients will suffer from decreased access. Of Sanders’ recent bills, industry-bloc Pharmaceutical Research and Manufacturers of America (PhRMA) said, “Looking at differences in medicine prices between the United States and other countries can be misleading, often ignoring the complexities in the U.S. system and the repercussions of other countries’ reliance on government price-setting policies.”
PhRMA urged stakeholders to keep five facts in mind:
- Americans have better access to medicines than people in other countries
- Americans benefit from robust generic competition
- Both Americans and those abroad benefit from America’s global leadership in biomedical innovation
- Negotiations between biopharmaceutical companies and payers drive down prices, but patients don’t always pay less
- Americans need smart solutions for lowering prescription drug costs
For PhRMA, “draconian” price-setting policies from abroad aren’t the answer for the U.S.; rather, there needs “responsible solutions” to help lower health care costs, including prescription drugs. Such “common-sense” proposals include capping seniors’ OOP costs in Medicare Part D, allowing Medicare beneficiaries to spread their medicine OOP costs through the year, and making sure savings negotiated in the supply chain are shared with patients at the pharmacy counter.
The industry group has urged policymakers to interrogate the supply chain to find better ways to generate savings that neither hinder access to the best treatments for Americans nor negatively impact biomedical innovation. In a series of recent reports, PhRMA has sought to shed light on hospital and pharmacy benefit manager (PBM) practices that have led to profits not savings.
Stephen J. Ubl, President and CEO of PhRMA, commented, “Many actors – including hospitals, insurers and other middlemen – influence what patients pay out of pocket for prescription medicines. In recent years, nearly half of spending on brand medicines went to someone other than the research companies that developed the medicines. This new report brings transparency to the role hospitals often play in determining the cost of medicines and ultimately what patients pay out of their own pockets.”
Even further, PhRMA has taken aim at “perverse” market incentives that have driven up insulin prices in the U.S., challenging the narrative that insulin prices are spiking. PhRMA argued that the net prices for the most commonly used classes of insulin have gone down by 40%-50%, on average, since 2014, making insulins less expensive today than in 2017. Further, PhRMA said that the net price of insulin was lowered by 83%, on average, last year. through market dynamics. The problem is, patients are not sharing in on any of these savings, said PhRMA.
The Democrats have been favorable of stricter pricing controls and negotiations to drive down prescription drug prices. The Biden Administration has been primarily focused on the COVID-19 pandemic, but during the 2020 Presidential Election, Biden campaigned on expanding access to care through an evolution of former President Barack Obama’s Affordable Care Act (ACA; Obamacare), while “taking on big pharma” and reining in “runaway” drug prices. As with Trump, Biden said he would leverage the negotiating power of Medicare when determining drug prices; he even expressed support for previous legislative efforts to benchmark drug prices against those found in economically similar countries around the world.
With the introduction of Sanders’ three Acts, it’s seeming more likely that the U.S. will enact some sort of pricing controls, which will be a major policy change for the States. Trump’s EOs almost saw the light of day before being stalled by Biden and litigation. But, according to Sanders, the majority of Americans are in favor of reducing prescription drug costs, showing constituent want for the passing of these Acts.
EVERSANA uniquely has the people, methods, and tools to assist businesses in navigating any changing pharmaceutical policies, even in such unsure times. This expertise is built on our combined decades of experience solving problems in and building tools for global pricing intelligence, global visibility, and product launch expertise, which puts us in a trusted position to advise clients on how to handle these changes.
At the same time, Pricentric Insights strives to deliver accurate, comprehensive insights on major policy and regulatory changes, as well as HTA decisions and drug approvals, in over 100+ markets around the world. Our team of researchers checks a database of over 700+ reliable sources, including everything from government databases to local newspapers, to provide readers with in-depth updates on the ever-changing pricing and reimbursement landscape. In addition, we provide conference coverage and utilize our team of consultants to detail how major policy changes, such as those proposed by Biden, can impact market access and the global pricing landscape.