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House and Senate Examine High Drug Prices

April 12, 2019

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PRESS CONTACTS
Jason Kleinman, Senior Legislative Analyst, Govt. Relations

Both the House and Senate continued their work to address high drug prices the week of April 8. The House Ways and Means Committee approved a bipartisan bill to increase transparency while the Senate Finance Committee held a hearing with executives from five pharmacy benefit managers (PBMs).

The Ways and Means Committee April 9 unanimously advanced the Prescription Drug Sunshine, Transparency, Accountability, and Reporting Act (STAR Act, H.R. 2113) to increase drug pricing transparency and public reporting of information. Specifically, the bill:

  • Requires drug manufacturers to publicly justify large price increases for existing drugs and high launch prices for new drugs;
  • Requires applicable manufacturers to report to the Health and Human Services (HHS) Secretary the total aggregate monetary value and quantity of samples provided to covered entities;
  • Requires the HHS Secretary to conduct a study on inpatient drug costs;
  • Requires the HHS Secretary to publicly disclose the aggregate rebates, discounts, and other price concessions achieved by PBMs; and
  • Requires all drug manufacturers to submit information to the HHS Secretary on the average sales price for physician-administered drugs covered under Medicare Part B.

Following its passage, Committee Chair Richard Neal (D-Mass.) and Ranking Member Kevin Brady (R-Texas) issued a joint statement praising the bill. They stated, “This bipartisan effort brings sunlight across the health care supply chain, from pharmaceutical manufacturers to pharmacy benefit managers, to help reduce costs for families. There is more work to be done on this bill and on this issue and we look forward to continuing our bipartisan work to address other drug pricing and pressing health care issues the American people face.”

Also on April 9, the Senate Finance Committee held the third in a series of hearings to examine high drug prices [see Washington Highlights, Feb. 1 and March 1]. Witnesses included executives from five PBMs: Cigna Corporation, CVS Health and CVS Caremark, Humana Inc., OptumRx, and Prime Therapeutics LLC.

Committee Chair Chuck Grassley (R-Iowa) noted that he and Ranking Member Ron Wyden (D-Ore.) are working together to bring down drug costs. Grassley highlighted his support for maintaining a system where private entities negotiate with drug companies in the Medicare Part D program, but added, “However, it’s our duty to understand how the system is working today and what we can do to improve it.” He added, “More transparency is needed. The current system is so opaque that it’s easy to see why there are many questions about PBMs’ motives and practices.”

During his opening statement, Ranking Member Wyden noted the hearing was a “chance to examine one of the most gnarled, confounding riddles in American health care today.” Specifically, he raised concerns about spread pricing in Medicaid and Medicare Part D drug rebates. During the hearing, three of the witnesses vowed they would not oppose a ban on spread pricing in Medicare and Medicaid.

Following the hearing, Sens. Grassley and Wyden sent an April 10 letter to the HHS Inspector General expressing their concern about spread pricing in Medicaid. The letter notes, “We request your office conduct a federal-level analysis of PBM practices across state Medicaid programs, including practices that may allow for inappropriate profiteering and potential anti-competitive practices in state Medicaid programs.”

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