Does President Donald Trump's extensive conversation with the CEO of Pfizer Inc. to get the company to hold off on midyear list price increases constitute government interference with prescription drug prices?
That's one of the questions posed by Sen. Ron Wyden (D-Ore.) in a letter Wednesday to Health and Human Services (HHS) Secretary Alex Azar, who participated in the president's call with Pfizer. Another is whether the president plans to have similar conversations with the other drug companies that recently raised prices on their drugs. If so, he's got a lot more calls to make.
Despite all the hubbub about prescription drug prices, several companies couldn't resist midyear increases. While most of them were "modest" single-digit increases, Aytu Bioscience Inc., of Englewood, Colo., raised more than a few eyebrows when it hiked the price of insomnia drug Zolpimist (zolpidem) more than 700 percent within a month of licensing it. When Aytu acquired exclusive U.S. rights to the drug last month, a 30-dose canister of the oral spray was priced at about $40; its new price is $329.50.
The phone call with Pfizer took place after Trump Twitter-shamed the New York-based company for raising the prices on up to 100 drugs, including a 17 percent price increase for smoking-cessation drug Chantix (varenicline) and a nearly 20 percent increase for glaucoma drug Xalatan (latanoprost).
After the call, Pfizer announced the prices on the drugs would revert to their pre-July 1 levels "as soon as technically possible" and they would stay at those levels until the president's blueprint on drug pricing goes into effect or the end of the year, whichever comes first.
Pointing to the lack of details – such as an exact date for the old pricing to kick in again – and that the call resulted in, at best, a six-month reprieve on price hikes from one drug company, Wyden said, "The president' agreement with Pfizer is long on theatrics and short on real and sustainable relief for patients being mugged at the pharmacy counter."
While the senator's letter is cloaked in political posturing, it does raise some salient points – like the one on government interference. Current law prohibits HHS from interfering in price negotiations between a manufacturer, a Medicare Part D plan or a pharmacy. While several members of Congress, including Wyden, would like to repeal the law and allow for direct Medicare price negotiations, that proposal isn't part of the president's blueprint that was unveiled in May. (See BioWorld, May 14, 2018.)
Noting that a manufacturer's list price is the starting point for negotiations with a Part D plan or pharmacies, Wyden asked Azar to explain how the president's negotiation with Pfizer is not a violation of the noninterference law. "The administration cannot have it both ways by formally rejecting proposals to repeal the 'noninterference' clause but clearly interfering with private drug-pricing negotiations," the senator said.
The other salient point is timing. In agreeing to hold off on the price increases until the end of the year at the latest, Pfizer raised the possibility that at least parts of the blueprint are expected to be implemented by then. But implementation would require formal rulemaking or the launch of Center for Medicare & Medicaid Innovation demonstrations or payment models, "both of which are highly unlikely to be finalized in the next five months based on historical precedent and federal law," Wyden said.
However, HHS already is taking comments on the blueprint and trying to build support for some of its potential policies. One proposal Azar has frequently touted in congressional hearings is banning the rebates drug companies currently give pharmacy benefit managers (PBMs) in exchange for prime placement on their formularies. Such a ban, which would remove the rebates from the anti-kickback safe harbor, would require an entirely new pricing structure – and might be enough to get a drug company to hold off on a pricing increase. (See BioWorld, June 13, 2018.)
Currently, rebates are based on a percentage of list price, so the higher that price, the bigger the rebate the PBM gets and the less the drug company pockets. And it's up to the PBM how much of that rebate it passes on to payers and, ultimately, patients.
"We would love to see a world without drug rebates," said Ceci Connolly, president and CEO of the Alliance of Community Health Plans (ACHIP). In its comments on the blueprint, ACHIP encouraged the administration to lay the groundwork for eliminating or reforming the use of rebates as a way of providing more transparency about drug prices.
"The calculation of drug list prices is a total mystery," Connolly said. "Publishing drug prices and increasing price transparency is the key to increasing affordability for consumers."
Meanwhile, U.S. lawmakers continue to look for new ways to make prescription drugs more affordable. Wyden, along with several other Democratic senators and Rep. Jacky Rosen (D-Nev.), introduced a bill in both the House and Senate Wednesday that would place a monthly cap on the out-of-pocket costs insured patients face.
The Capping Prescription Costs Act would cap prescription drug copays at $250 per month for individuals and $500 per month for families, beginning in 2020. The caps would apply to all group health plans and individual market plans.