COVID-19 undoubtedly will be the top U.S. health care priority for the 117th Congress and the incoming Biden administration, but that doesn’t mean prescription drug prices are no longer an issue. A raft of new-year price increases, many for already costly drugs, is ensuring drug pricing remains high on the congressional agenda.
“Drug pricing is definitely still on the table as we head into the new Congress,” Alexandra Campau, director of health policy at Cozen O’Connor, told BioWorld.
The question now is how a closely divided Congress will deal with the issue, especially when price controls generally come at the cost of innovation. While many in Congress were willing to make that sacrifice in 2019, the pandemic is showing how important continued innovation is to public health – in the U.S. and elsewhere.
Speaking during a Jan. 14 Johns Hopkins Bloomberg School of Public Health webcast on the Biden administration’s priorities in responding to the pandemic, Celine Gounder, a member of the Biden COVID-19 Advisory Board, stressed the need for new therapies beyond the monoclonal antibodies (MAbs) that are in development, especially given the emergence of more transmissible variants of the SARS-CoV-2 coronavirus.
As an infectious disease specialist, Gounder noted that the Infectious Disease Society of America doesn’t recommend MAbs in treating viral diseases because of the potential for the virus to mutate to evade the drug.
Throughout the pandemic, drug companies have attributed their investment in COVID-19 candidates and their ability to quickly pivot to develop new therapies and vaccines in record time to the healthy free market in the U.S. that respects patents and provides enough incentive to take on the high risk of failure.
As a result of its ongoing efforts, the biopharma industry has been at least moderately successful in rehabilitating its public image, Chad Landmon, chair of the intellectual property and FDA practice groups at Axinn, Veltrop & Harkrider LLP, told BioWorld. He noted that people tend to be more positive about the industry today than they were before COVID-19 disrupted daily life.
That may help drug companies when the new Congress debates pricing bills that would generate savings at the expense of innovation. Industry will have compelling stories to tell during those debates about the importance of innovation, Landmon said.
Revival of price controls?
Drug companies need to begin preparing their stories to showcase the hurdles they’ve had to overcome to develop innovative COVID-19 vaccines and treatments, as drug pricing legislation from the 116th Congress is likely to be revived early on in the new Congress. Sen. Ron Wyden (D-Ore.), who will become the new chair of the Finance Committee next week, has indicated he’s open to pursuing the bipartisan Prescription Drug Pricing Reduction Act, which the Senate Finance Committee passed on a 19-9 vote in 2019, or H.R. 3, which was passed in the Democratic-controlled House on a party-line vote but went nowhere in the Republican Senate.
The biopharma industry has said both bills would hurt innovation. Projected to save the government and Medicare beneficiaries $132 billion over 10 years, the Finance bill, drafted by Wyden and outgoing committee chair Chuck Grassley (R-Iowa), would have simplified the design of Medicare Part D by lowering the catastrophic threshold, set an out-of-pocket spending cap for beneficiaries and capped the growth of government subsidies to drug manufacturers at consumer inflation, thus protecting against unlimited price increases.
The bill also would have increased transparency into pharmacy benefit manager practices and manufacturer drug pricing decisions, and it included incentives for negotiating Part D prices – between drug companies and Medicare plans, not the government. The bill was intended to be bundled with related legislation from other Senate committees and then sent to the Senate floor. That never happened, in part due to disagreement among Republicans over the role of government in setting or controlling drug prices.
H.R. 3, or the Lower Drug Prices Now Act, required Health and Human Services to directly “negotiate” the price of certain drugs, setting a ceiling price based on 120% of an average international market price. The price could then be negotiated downward, taking into consideration the R&D and manufacturing costs for the specific drug. Manufacturers that failed to accept the price would face an escalating excise tax on gross sales of the drug.
Various economic analyses of the impact of H.R. 3 estimated that eight to 15, or as many as 100, new drugs wouldn’t make it to market because of the bill’s provisions. When the legislation was being discussed in committee in 2019, Democrats said the predicted $350 billion in savings was worth the sacrifice of 15 new drugs.
H.R. 3 was drafted behind the closed doors of the House Democratic leadership. Its introduction killed House progress on assembling a package of bipartisan bills, such as the BLOCKING Act, that had a good chance of being signed into law. (The BLOCKING Act would have prohibited the “parking” of the 180-day exclusivity for first generics.)
H.R. 3 remains pretty popular with Democrats, Landmon said. But if it were signed into law, its price control mechanisms could face court challenges, he added.
Unless there were major changes to it, H.R. 3 likely wouldn’t make it through the normal procedures of the Senate, which is split 50-50 with the vice president being the tiebreaker. Those procedures require support from 60 senators.
But given the mood of many in Congress, several Capitol Hill watchers expect the Democratic-controlled House and Senate to use their narrow majority to push H.R. 3, or something like it, through the reconciliation process, which only requires a simple majority in the Senate.
Still, bipartisan pricing reforms aren’t out of reach. The fact that ideas about tying U.S. drug prices to international prices has gained some Republican support opens the door to such solutions, Campau said.