Drug Pricing Update–Nothing Moving For Now

Drug Pricing Update – Nothing Moving For Now

By Alan M. Schlein

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Over the past year, the administration’s tone has shifted as Republican state leaders have joined Democrats in talking about importing drugs from Canada, since none of the other potential solutions seem to be moving forward quickly enough.

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A 2018 study found that if 20% of U.S. prescriptions were filled in Canada, Canada would see its drug supply depleted in roughly 200 days.

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Insulin prices have spiked 300 percent in the U.S. over the past few years and has become a symbol of the striking price differences between the U.S. and Canada, where prices are about 10 times less. But the Trump proposal to open up imports from Canada would specifically not apply to insulin, according to HHS Sec. Azar.

If you listen to the Trump administration, you’d think they had already slashed prescription drug costs by allowing the importation of lower-cost prescription drugs from Canada. But what they actually announced recently was simply a plan to make a plan. The administration is considering starting a lengthy rule-making process that might eventually lead to some pilot projects that could move toward the importation of some lower-cost prescription drugs from Canada.

If that sounds like a big announcement about something that may or may not happen down the road, it is. So far, however, on something that would particularly benefit patients, there isn’t much to show for it. Meanwhile, the administration has abandoned two of its other aggressively-promoted solutions to lower drug prices.

Rhetorically at least, President Trump has made lowering drug prices a top priority since he was elected in 2016, and it remains a potent campaign issue in the upcoming 2020 presidential elections. He has ramped up pressure on advisers to deliver wins on the issue, which consistently polls as a top voter concern.

What’s missing is a workable solution.

On Capitol Hill, Democrats and Republicans in Congress have been debating legislation that would allow importation of drugs to obtain cheaper prices, and other measures to try to rein in costs. Sen. Chuck Grassley, R-Iowa, chairman of the Senate Finance Committee that oversees Medicare, is a longtime supporter. He and Democratic presidential candidate Sen. Amy Klobuchar of Minnesota have a bill to facilitate importation of lower cost drugs from Canada. Several major drug price-related proposals are still being worked out and Senate lawmakers appear to be pushing for one sweeping bill in the fall. The House is also working on legislation that would reverse current law and give Medicare the power to negotiate drug

Import Drugs

Congress approved a law back in 2003 that made importing drugs from Canada possible. But it could only happen if the Health and Human Services Secretary’s certifying the drug supply from foreign countries was safe and that it would provide significant savings. Three administrations in a row – the Clinton, Bush and Obama administrations – each rejected the idea because of safety concerns about Americans getting potentially deadly counterfeit drugs.

More recently, when he first became HHS Secretary, Alex Azar, a former Eli Lilly pharmaceutical executive, called the concept “a gimmick.” Canada, he said at the time, simply doesn’t have enough drugs to sell them to the U.S.

Now Azar has reversed his position. What changed his opinion, was pressure from Trump, even if he won’t directly say that. Over the past year, the administration’s tone has shifted as Republican state leaders have joined Democrats in talking about importing drugs from Canada, since none of the other potential solutions seem to be moving forward quickly enough.

Florida governor Ron DeSantis favors such a plan and his state legislature has approved the concept. Vermont and Colorado have also approved laws allowing importation, but the federal government has not yet cleared any states to do so.

Putting the best face on his policy reversal, Azar says new technology has made it safe to import drugs. The combination of the increasing globalization of drug distributors and pharmacies and a 2013 law requiring the FDA to implement a track and trace system for drugs throughout the supply chain have occurred and that makes it easier to ensure safety in the drug supply, Azar argues.

But Bill Pierce, who was at HHS in the Bush administration, says importing drugs on a large scale is a lot more challenging than it sounds. U.S. drugs are carefully tracked from manufacturer to the pharmacy counter. But drugs not originally destined for the U.S. don’t have the same supply chain control. Even though we trust the Canadians, Pierce told National Public Radio, with drugs coming in from Canada, the FDA can’t tell the HHS secretary that they know exactly where those pills have been.

Under the latest White House idea, the onus for importing drugs from Canada would fall on state governments, who would have to come up with a proposal for safe importation and submit it for federal approval. Wholesalers and pharmacies could also submit plans.  

Whatever emerged from the different states would then have to be followed by a proposed regulation, public comment and then final regulations, which could take months if not years. HHS says it is trying to move “as quickly as possible.” Even if that happens, it would only be a pilot program and there’s little clarity on whether that could ever be scaled up nationally.

One thing is clear – the earliest things might happen would be after the November 2020 elections. Experts on the FDA regulatory process suggest it could be three years down the road for the agency to issue a final rule allowing drug importation from Canada. While some rules are developed faster than that, this one is likely to be especially complicated. These experts remain skeptical any drugs would be able to meet all the safety criteria included in such a rule. In addition, add one more likely piece to the complicated regulatory puzzle: any change in importing drugs from Canada or most drug-pricing legislation is also likely to face court challenges from drugmakers.

The Politics

Complex and complicated is an understatement in describing the politics of health care policy in political Washington. The import drug portion, however, is pretty straightforward. Canadians buy the same drugs, made by the same manufacturers, but they get them at a much cheaper cost. So, Trump wants Americans to import Canadian drugs. The idea is extremely popular, with 80% of Americans in a recent Kaiser Family Foundation survey, say they support importing prescription drugs, making it one of the most well-liked ideas to fix drug pricing.

While the administration and lawmakers talk about Canada as a solution, the Canadian government and Canadian medical, pharmacy and patient groups have warned of drug shortages for its 37 million residents if its medicines are imported on a larger scale for the more than 300 million U.S. residents. A 2018 study found that if 20% of U.S. prescriptions were filled in Canada, Canada would see its drug supply depleted in roughly 200 days.

In this country, pharmaceutical companies are the most vocal skeptics of the idea. The two trade associations representing drug companies, PhRMA and BIO, almost immediately fired off statements opposing the administration’s announcement. The loudest proponents of importation include seniors groups like AARP. Drug pricing advocacy groups like Patients for Affordable Drugs and Families USA also support the idea of importing drugs. The American Medical Association, the nation’s top doctor’s group, has said it supports in-person importation, but has opposed importation over the internet. But the AMA has not formally weighed in specifically on the new Trump proposal.

On Capitol Hill, the idea has most loudly been championed by Democrats. Presidential candidate Bernie Sanders, the Vermont senator, has introduced a number of bills on the topic over the decades and has made it a pillar of his presidential campaign. Another presidential candidate, Sen. Amy Klobuchar, D-Minn., has also introduced import legislation over the past few sessions of Congress. Sanders recently led a pilgrimage to Canada to buy cheaper insulin. Some Republicans also support the idea: The Senate’s most senior Republican, Sen. Chuck Grassley (R-Iowa) has backed it.  

Insulin prices have spiked 300 percent in the U.S. over the past few years and has become a symbol of the striking price differences between the U.S. and Canada, where prices are about 10 times less. But the Trump proposal to open up imports from Canada would specifically not apply to insulin, according to HHS Sec. Azar.

There is a potential back door though. Under the administration’s latest import idea, the Food and Drug Administration can show drug manufacturers how they can import their own drugs made in foreign facilities. Should drug makers pursue that path, they could potentially import any drug — including insulin — from any factory around the world. But these companies would have to do this voluntarily. It’s unclear why drug makers would give away potential profits to do this.

Other Drug Measures Updated

While nothing has passed Congress related to drug prices so far, several of President Trump’s other proposals to lower drug prices have faltered. Recently Trump killed a proposal that would have reduced out-of-pocket costs for older consumers out of a concern that it would raise premiums as the 2020 election nears.

The White House also suddenly withdrew its much-promoted plan to ban rebates that drug makers pay to pharmacy benefit managers, a move that HHS Sec. Azar called potentially “the most significant change …ever” in drug prices, when it was first proposed. Another high-publicity proposal the administration floated was wiped out when a federal judge threw out a new requirement that drug companies disclose their prices in TV ads,

The Trump reaction: these setbacks are not failures. Instead, the president doubled down, hinted at a more audacious proposal to tie some drug prices to those set by European governments. That idea, however, is tantamount to price controls and is strongly opposed by many leading Republicans. It faces a serious uphill climb to success.

Only one major health care, drug-pricing bill – an amalgam of different proposals moving through House and Senate committees – is likely to get Congressional approval this fall. What form it will take and what’s in it is still anybody’s guess.

The administration and key Congressional leaders have been discussing legislative proposals including negotiating directly with companies to set price caps on some drugs and placing limits on out-of-pocket spending by Medicare beneficiaries.

Democrats in the House are pressing for a vote on a bill allowing Medicare to directly negotiate prices. Congress has specifically prohibited Medicare from negotiating and that would have to be repealed to allow it. But that is not moving in the U.S. Senate.

Several other pieces of health care and drug-price related legislation are waiting for Senate floor action. The Senate Health Committee has approved a modest package of bills aimed at ending surprise medical bills, increasing access to generic medicines and increased transparency in health care. The Senate Judiciary Committee has advanced four bills.      

recently,
including addressing gaming tactics by pharmaceutical manufacturers to extend patents.

Those are expected to be merged into a Senate Finance Committee bill working its way toward a floor vote sometime this fall. The proposal, by Finance Committee Chairman Charles Grassley, R-Iowa and ranking Democrat Sen. Ron Wyden, D-Ore., would make changes to Medicare by adding an out-of-pocket maximum for beneficiaries at $3,199 starting in 2022. This bipartisan legislation would also penalize pharmaceutical companies if the price of their drugs rises faster than inflation.

This plan and the other committee’s ideas are certain to face stiff opposition from the powerful pharmaceutical and insurance lobbies, which have already taken the administration to court on some issues. The leading drug industry trade group, PhRMA, is a powerhouse that generally gets its way with lawmakers. It spent $128 million on lobbying in 2017, according to its most recent tax filings. So what emerges from the House and Senate is still anybody’s guess.

[Also contributing to this story were Stat, National Public Radio, the New York Times and the Washington Post.]

Alan Schlein runs DeadlineOnline.com, an internet training and consulting firm. He is the author of the bestselling “Find It Online” books.