Drugmakers are unlikely to convince Congress to use an upcoming spending package to fix a so-called “donut hole” in healthcare coverage that’s poised to erode profits, people familiar with the legislation told the Washington Examiner, a stinging defeat and one that weakens the industry’s clout.
Since February, pharmaceutical companies have mounted an aggressive lobbying campaign against a provision included in an earlier funding bill that raised the portion of a treatment’s cost that companies must cover under the Medicare Part D program. Starting in 2019, manufacturers must provide an increased 70 percent discount on drugs offered to customers in the program’s donut hole, or individuals not at the catastrophic coverage level.
The change is expected to cost the industry billions of dollars. At Eli Lilly & Co. alone, it represents “about $200 million of incremental impact in 2019,” Chief Financial Officer Joshua Smiley recently told investors.
A compromise may still be reached that would pair a roll-back with a two-year delay of a $1,200 increase in out-of-pocket spending for Medicare beneficiaries slated to take effect in 2020. That package could also include legislation long-sought by the generic drug industry to address refusal by a brand-name drugmaker to provide samples of its product for the creation of lower-cost copycat treatments.
The odds are against the industry, however. The White House has signaled it would oppose a fix to the “donut hole,” and neither Democrats nor most Republicans are looking to give drugmakers a victory amid the intense focus in Washington on high treatment costs, sources say.
The Trump administration is moving expeditiously on its drug-pricing blueprint and recently floated a proposal to tie reimbursement under Medicare Part B to international pricing, an idea that has already elicited significant push-back from the industry.
As Democrats prepare to retake control of the House of Representatives in 2019, party leaders say they will make tackling drug prices a signature part of their legislative agenda for the next two years. With buy-in from Senate Majority Leader Mitch McConnell, the issue may be one of a few that can draw bipartisan support in a divided Congress.
A spokeswoman for the Pharmaceutical Research and Manufacturers of America, the industry’s leading lobbying group, didn’t respond to a request for comment.
The push to reverse the February provision also remains a point of tension within the industry. While several companies are likely to be affected, most brand-name manufacturers don’t offer drugs in the Medicare Part D program.
Some have questioned why PhRMA is lobbying so heavily to reverse the looming shift instead of tackling more pressing issues, like the administration’s Part B proposal, which would affect the industry’s most lucrative treatments, or a potential focus by House Democrats on intellectual property rights for approved drugs.
