The View From the Nation’s Capital



Guest Contributor: Ted Slafsky
July 15, 2020

Why the November Elections Really Matter for Drug Pricing and the 340B Program

June 29, 2020, was just another Monday for most people in the United States. But for Washington, D.C. health care policy observers, it will be remembered as the day that all hope died for comprehensive drug pricing legislation this year. While the prospects of tackling high drug prices were already on life support, a flicker of hope remained that a bipartisan bill that had passed the Senate Finance Committee comfortably last July would make it to the President’s desk.

Those hopes were dashed when Sen. Ron Wyden (D-Ore.) announced that he is withdrawing his sponsorship of an updated version of the bill, and the bill’s Democratic supporters soon followed suit. The bill, which would cap Medicare Part D beneficiary out-of-pocket costs at $3,100 annually and penalize drug companies that raised prices above the inflation rate, seemed to have the ingredients for success. But in typical Washington fashion, commonsense legislation became a victim of partisan politics.

A circular firing squad
Sen. Chuck Grassley (R-Iowa), who could not convince Sen. Majority Leader Mitch McConnell (R-Ky.), President Trump or House Speaker Nancy Pelosi (D-Calif.) to back the bill, largely blamed the Democrats for abandoning him. “Unfortunately, over the last couple of months, Democrats have left the negotiating table.” Sen. Wyden retorted: “Democrats have not walked away from the table on drug pricing—Republicans never showed up in the first place.”

Concern over the high price of pharmaceuticals is one of the only policy issues that unites Americans, regardless of their political party. Nonetheless, taking on the drug industry continues to be one of the most intractable challenges in our nation’s capital. This becomes particularly difficult at a time when the country is depending on the industry (along with federal and academic researchers) to help find and produce therapeutics and vaccines for COVID-19. The only chance I see for big changes to our current drug pricing system would be if the Democrats take back the Senate, and Democratic-nominee Joe Biden wins in a landslide.

The last time we saw major prescription drug legislation enacted occurred in 2003, when a Republican-controlled Congress passed (and President Bush signed into law) the Medicare Part D program. That bill, which had the backing of the pharmaceutical industry, passed the House 216-215 after a tense and belabored roll call vote.

Don’t expect a revolution
If the election were held today, I predict that Biden would win, the House would easily remain in Democratic hands, and the Senate would flip to Democratic control. But even if this happens in November, don’t expect anything too dramatic when it comes to pharmaceuticals. H.R. 3, Speaker Pelosi’s bill which passed the House on a largely party line vote, is likely about as ambitious as it will get.

The bill would allow Medicare to negotiate on up to 250 commonly-used drugs.  Biden has worked closely with the pharmaceutical industry on President Obama’s Cancer Moonshot initiative and is unlikely to support dramatic change. Moreover, even if the Democrats take back the Senate, they will not have enough votes to enact more ambitious plans backed by the progressive wing. Still, if Congress allows Medicare to negotiate prices even on a small group of drug products, it would be a major departure from how the U.S. health care system has worked for the past 55 years.

340B implications
Not only will the November elections shape where we are headed on big picture drug pricing legislation, it will also determine the direction of the 340B program. The Trump administration and House Republicans (who controlled the chamber until the end of 2018) have repeatedly tried to rein in the program.

The administration quickly acted to cut Medicare Part B reimbursement to 340B hospitals by close to 30 percent. Rather than embracing 340B, President Trump’s Blueprint for Lowering Drug Prices described the program in a negative light and implied that 340B contributes to higher drug prices. At the same, House Republicans held numerous hearings and introduced dozens of bills to place restrictions and additional burdens on 340B providers.

Fortunately, anti-340B legislative efforts have stalled with the House Democratic takeover and the more bipartisan Senate taking a go-slow approach. I was pleased to see that three Republican and three Democratic Senators recently introduced a bill to protect hospitals from losing 340B eligibility during the COVID-19 pandemic.

Nevertheless, it appears that anything more ambitious, such as preventing PBMs and other payors from discriminatory reimbursement, strengthening penalties for drug manufacturer non-compliance, or allowing hospitals to utilize their group purchasing organization when there is a drug shortage, will have to wait for a more welcoming climate.

 

 

Other “View From the Nation’s Capital” Posts from Mr. Slafsky: 

Time to Tackle Racial Disparities in Healthcare – June 2020
The Nation’s View of the Drug Industry and its Implications for 340B Stakeholders – May 2020 
COVID-19’s Impact on the 340B Community: Every Cloud Has a Silver Lining – April 2020
Coronavirus Likely to Sideline 2020 Policy Changes for Prescription Pricing and 340B – March 2020
Four Key Takeaways from the 340B Coalition Annual Winter Conference – February 2020



Ted Slafsky, a leading pharmaceutical policy thought leader, is Publisher & CEO of 340B Report, the first and only independent news service covering the federal 340B drug pricing program.  He is also Founder & Principal of Wexford Solutions, a Washington, D.C. based firm that provides government relations, communications, and business development services. You can follow Mr. Slafsky on Twitter at @tslafsky or reach him at [email protected] or (703) 517-1325.

 

About 340B Report:

340B Report is the only independent news service that provides breaking news and analysis about the federal 340B Drug Pricing Program. We follow all 340B program developments big and small—in federal government agencies, Congress, courts, the states, associations, the private sector, academia, and more.