The pharmaceutical industry is expected to try this month to lobby its way out of giving seniors enlarged discounts on Medicare drugs, putting insurers, hospitals, and patient groups in a defensive posture.
The pharmaceutical industry has one last chance in 2018 to get Congress to undo the added discounts it must provide to seniors in Medicare’s drug coverage gap, which requires seniors to pay high out-of-pocket costs for drugs. Congress must pass legislation by Dec. 7 to fund the government, and — opponents suspect — the pharmaceutical industry will try to attach language to the spending bill to change the discounts and reap a $4 billion windfall.
Earlier this month, a coalition of 17 insurers, hospital groups, drug pricing reform groups, and the AARP wrote congressional leadership calling on them to “stand with Medicare beneficiaries and taxpayers to resist any attempts from the pharmaceutical industry to undo these critical reforms.”
The underlying point of contention is that, starting in 2019, pharmaceutical companies must offer a bigger discount for drugs to seniors that are in the “donut hole,” which refers to a situation in which seniors have to pay higher out-of-pocket costs for their prescription drugs through Medicare Part D, the program’s prescription drug plan.
After a senior’s total drug costs reach a certain amount, they enter a donut hole, and their insurer will stop covering drug costs. A senior exits the donut hole after their drug spending out-of-pocket hits a certain ceiling.
Specifically, drugmakers must give drugs in the donut hole a 70 percent discount, starting in 2019. Congress increased the discount from 50 percent to 70 percent in a March spending bill that also attempts to close the donut hole in 2019.
The Pharmaceutical Research and Manufacturers of America did not disclose its lobbying strategy but said that it does want to change the discount, which it said was based on a technical error that the Congressional Budget Office made in scoring the spending bill.
“Closing the donut hole is a good thing, but how the [Bipartisan Budget Act] did it was wrong for seniors and wrong for the Part D program,” the association told the Washington Examiner.
PhRMA has taken out several ads pressuring lawmakers on the discount.
Any deal to fund the government would likely be the last major legislation of 2018, and the pharmaceutical industry’s best chance to roll back the bigger discount before it goes into effect.
Pushing a fix next year could be more difficult as the House will flip control from Republicans to Democrats, who are more inclined to oppose drugmakers.
A standalone bill to change the discount likely wouldn’t get enough support. Drugmakers’ best bet is to attach their preferred legislation to the must-pass spending bill.
However, any attempt to change the discount could roil any bipartisan compromise on a spending agreement that could already be contentious.
If the pharmaceutical industry wants to change the discount from 70 percent to 63 percent, opposition groups reckon, they would save $4 billion in 2019.
Some Republicans, however, point out that the original 70 percent figure was based on faulty assumptions from the Congressional Budget Office.
“Current law relied on these incorrect assumptions and does not reflect congressional intent,” Rep. Greg Walden, R-Ore., chairman of the Energy & Commerce Committee, said in a statement. “Patients, consumers, and taxpayers will all benefit from fixing the donut hole, and the Chairman hopes and expects bipartisan support for swift action.”
But Republicans in favor of a change would need to get support from Democrats that are opposed to helping the pharmaceutical industry.
“The [Affordable Care Act] helped close that donut hole over a period of years and it has been working,” said outgoing Democrat Rep. Gene Green, D-Texas, a member of Energy & Commerce who did not seek re-election this year. “I am not going to vote for it.”
The pharmaceutical industry tried to insert language into an opioids package in late September to change the discount to 63 percent. The industry also agreed to support a bill called the CREATES Act, legislation that aimed to clamp down on practices brand-name drugmakers use to delay generic drug competition.
But the industry’s effort collapsed after Democrats in the Senate balked at inserting a compromise for the pharmaceutical industry into a bill targeting the opioid epidemic.
