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  • Washington Highlights

    House Committees Continue to Review Prescription Drug Prices

    Jason Kleinman, Senior Legislative Analyst, Govt. Relations

    The House Energy and Commerce Health Subcommittee and House Judiciary Committee both held hearings April 30 on rising prescription drug costs.

    The Energy and Commerce hearing focused on prescription drug coverage in the Medicare program and featured Medicare Payment Advisory Commission (MedPAC) Executive Director James Mathews, PhD, as the only witness. Subcommittee Chair Anna Eshoo (D-Calif.) expressed concern about the increase in spending in both Medicare Parts B and D, noting that drug spending in both programs has doubled over the past 10 years. She also highlighted the fact that “Medicare spending on drugs in specialty tiers has grown nearly 1,000% over 10 years — from $3.4 billion in 2007 to $37.1 billion in 2017.”

    Full Committee Ranking Member Greg Walden (R-Ore.) acknowledged that “the overwhelming majority of seniors who have Part D are satisfied with their plan” but echoed concern about its growth. He pointed out that “the share of part D spending attributable to the catastrophic stage of coverage has increased from 14% of program costs in 2006 to 40% in 2017.” Walden recommended, “We should confront these issues now to modernize the Part D benefit, keep drugs affordable for seniors and address misaligned incentives that drive up costs.”

    In his testimony, Mathews outlined MedPAC’s previous recommendations to improve Medicare Parts B and D. In relation to Part B, the commission’s June 2017 report recommended “a set of policies that seeks to improve the current averages sales price (ASP) payment system in the short term while developing, for the longer term, a voluntary, market-based alternative to the ASP payment system.” The recommendations include: improve ASP data reporting, reduce payment rates for drugs paid at 106% of wholesale acquisition cost, establish an ASP inflation rebate, and establish consolidated billing codes [see Washington Highlights, June 16, 2017].

    Mathews also highlighted several recommendations to “improve the efficiency and financial sustainability of Part D while maintaining the program’s market-based approach.” The recommendations include giving plan sponsors greater financial incentives to manage the benefits of high-cost enrollees by shifting the plan payments from open-ended reinsurance to capitated payments and excluding manufacturer discounts on brand-name drugs from counting as enrollee’s true out-of-pocket spending [see Washington Highlights, March 16, 2018].

    During the hearing, Rep. Brett Guthrie (R-Ky.) asked Mathews about differences in charges for administering drugs in hospitals compared to doctors’ offices. Mathews responded that the commission has made previous recommendations to standardize those payments across settings.

    Also on April 30, the House Judiciary Committee approved four bipartisan bills to lower prescription drug costs, including the Creating and Restoring Equal Access to Equivalent Samples Act of 2019 (CREATES Act, H.R. 965). The bill would ensure that generic drugmakers have access to the brand name drug samples they need to prove their versions are safe and effective. The House Energy and Commerce Committee previously advanced the CREATES Act to the House floor [see Washington Highlights, April 5].