Drug Pricing Round Table, Continued

In February 2020, we convened a roundtable of experts to weigh in on important drug price issues, including branded and generic drug price increase trends, pending legislation, and presidential executive action. Now we are asking our stellar panelists to give us their take on what can realistically get done in 2020, when it is expected to begin impacting managed care stakeholders, and what that impact will likely be. Our experts include:

• Melissa Andel, vice president of health policy, Applied Policy, Washington, DC
• Larry Hsu, MD, medical director, Hawaii Medical Service Association, Honolulu, HI
• Charles Karnack, PharmD, BCNSP, assistant professor of clinical pharmacy at Duquesne University in Pittsburgh, PA
• David Marcus, director of employee benefits, National Railway Labor Conference, Washington, DC.
• Gary Owens, MD, president of Gary Owens Associates, Ocean View, DE
• Edmund J. Pezalla, founder and CEO at Enlightenment Bioconsult in Hartford, CT
• Daniel Sontupe, associate partner and managing director, The Bloc Value Builders, New York, NY
• F Randy Vogenberg, PhD, RPh, principal, Institute for Integrated Healthcare, Greenville, SC

What do you think has a realistic chance of getting done in 2020 with regards to drug pricing?

Ms Andel: I don’t know how realistic it is that they actually become law, but I think that the Medicare Part D out-of-pocket caps and inflation penalties seems to have general bipartisan support. [Editor’s note: Ms Andel is referring to a Senate bill introduced by Chuck Grassley (R-IA) and Ron Wyden (D-OR), which we covered last month.]

Dr Pezalla: I agree. Anything done this year will be modest and likely to impact Medicare and perhaps Medicaid.

Dr Owens: I really don’t think any meaningful legislation will be passed in 2020.   With the presidency, all House seats and 35 Senate seats up for re-election, the legislative paralysis of the last two years will only intensify.  

Dr Vogenberg: There may a window to get a bipartisan bill that is watered down, appeals to both parties, and can provide voters with some financial relief. Short of that, it will fall to executive action to address the market pricing issue focused around Medicare.

Mr Sontupe: I do not see anything substantive happening in 2020. If a new president is elected, we may start to gain traction with something in 2021.

Dr Hsu: There will be no changes in 2020. There are too many outside distractions and all issues now seem to be politicized. Additionally, despite the fact that drug pricing is a significant issue for voters, there has not been enough of a backlash from the American public. The pressure to do something has not intensified. If it had, something would be getting done.

Mr Marcus:  At the national level I think that proposals will continue to be introduced but that’s about it. States, however, will take matters into their own hands. We may see states implement regulations and pass laws to curb perceived pharmaceutical abuses, including price increases, pay for delay tactics, out-of-pocket costs, etc.

Dr Karnack: I agree that nothing will happen nationally until after the election. Moreover, if divided government continues into next year, I do not expect any meaningful resolution for quite some time. That might change if a message of unity emerges from the White House in 2021. 

I agree with Mr Marcus that inaction in Washington is leading states and others to move on their own. California is considering selling its own generic prescription drugs. Blue Cross Blue Shield is investing in a nonprofit whose aim is to create cheaper versions of expensive medications. Some hospitals and health systems are also getting in on the act.

When do you think consumers and payers might start to be impacted by whatever is done next?

Ms Andel: The earliest a Medicare Part D law could take effect would be 2022, but it might be 2023 depending on how much of a wholesale program change there would be and how much time CMS [Centers for Medicare and Medicaid Services] would need to implement the new rules. For a 2022 implementation, everything would need to be finalized by April 2021, so if something isn’t passed until closer to the election, it could be a tight turnaround.

Mr Marcus: Regarding executive actions, proposed regulations can take a while to be finalized. Additionally, the long-term viability of executive action depends on the election result.  If President Trump loses re-election, his successor would walk back the Trump regulations and start proposing his or her own. Additionally, state level initiatives may be slowed by litigation. Drug makers are already trying to prevent states from stepping in.

What kind of impact do you think actions taken this year will have on key stakeholders?

Ms Andel: If the Grassley-Wyden bill becomes law, I would look for what happens to premiums and patient access, particularly for higher-cost products. Inflation penalties may slow down annual price increases, but I am somewhat skeptical. We already have inflation penalties for Medicaid, and they have not restrained the growth in price increases. Medicare is clearly a different market, but I am not sure it will have a substantial impact that patients especially will notice. I also question how manufacturers would respond to such legislation. They may decide to increase launch prices in order to compensate for smaller future price increases.

Dr Pezalla: Yes, for all the reasons you mention, the ultimate impact may be modest. And it would be limited to Medicare and Medicaid. Absent more far-reaching price control legislation, commercial plans will feel no impact.

Dr Owens: If anything is done in Washington this year—and that is a big if—it is likely to have only a modest impact.

Dr Karnack: The initiatives I referred to earlier from the state of California, BCBS, and health systems might have a bigger impact on drug pricing than anything coming out of the current administration or Congress.

Mr Marcus: The impact at the national level will be incremental at best. However, because we will see more state involvement in pharmacy regulation, this will create a nightmare for payers. They will need to comply with, if taken to an extreme, 50 sets of regulations.  If the drug industry wants to avoid this, it should take steps to cooperate with federal legislators to push common sense reforms.

Mr Sontupe: I would extend that advice to all managed care stakeholders, not just drug manufacturers. We don’t just need bipartisanship in Washington; we need consensus among stakeholders to create value. It is time to stop blaming each other.