10/02/2018
12:31 PM EDT
President
Donald Trump may rail against drug companies “getting away with murder,” but
Congress appears to be moving in the opposite direction — helping to boost
industry profits.
While the
pharmaceutical industry lost an eleventh-hour bid last week to attach a $4
billion windfall to Congress’ bipartisan opioid bill, lawmakers and industry
analysts expect it to try again with good prospects of prevailing — perhaps as
soon as the lame-duck session after the November election.
Drugmakers
took a rare financial hit in the bipartisan budget deal passed in February when
they were put on the hook to pay $11.8 billion toward senior medicines over 10
years in the fight over the Medicare drug benefit “doughnut” hole. Now they’re
trying to soften that blow, seeking relief from at least $4 billion of those
costs in what they describe as “a technical correction“ to a
calculation that made the industry responsible for more money than lawmakers
had sought. Congressional aides to senior members of both parties
say they have a good chance of success — a stark reminder of how challenging it
will be for lawmakers to take on the drug lobby, even as voters across party
lines demand lower costs of medicines.
Health
industry lobbyists say the change is being pushed by House Republican
leadership, including Speaker Paul Ryan, Majority Leader Kevin McCarthy and
Energy and Commerce Chairman Greg Walden and Senate Minority Leader Chuck
Schumer on the other side of the aisle, who was also demanding
consumer-friendly trade-offs as part of the package.
But drug
price advocates say that what the industry calls a fix is “really … a
multi-billion dollar bailout with no relief from out-of-control drug prices,”
said Lauren Blair spokesperson for the Campaign for Sustainable Rx Pricing, a
coalition of health insurers, hospitals, physicians and other groups focused on
the cost of medicines.
K Street
watchers say the industry’s clout is largely a function of its lobbying might
along with the geographic dynamics of the industry. Drug companies employ many
Americans, with the largest concentration in more liberal states like
California and New York, creating alliances with lawmakers who might otherwise
be more willing to push back on the industry. And they’re adept at conveying
the message that their products extend and improve lives.
“This is
an industry that has deep pockets that can afford to check all the boxes,” said
Sheila Krumholz, executive director of the Center for Responsive Politics, a
nonprofit that tracks money and its influence on politics. “And voters
themselves are conflicted.”
“On the
one hand, there is a view that these companies are rapacious in their drug
pricing and we have the poster boys in Martin Shkreli and Heather Bresch,” she
added, referring to the Turing Pharmaceuticals CEO who jacked up prices and
mocked Congress before being jailed on unrelated charges and Bresch, CEO of the
company that makes Epipens. “On the other hand, we look to these companies as
star innovators in the constellation of U.S. industry and the saviors in terms
of providing cures for horrific disease.“
The drug
lobby justifies its push for $4 billion in relief by saying that the
Congressional Budget Office initially estimated the February 2018 change would
save the government $7.7 billion over 10 years for senior medicines, but
shortly after the law was enacted, CBO learned of new data on prescription drug
spending that changed its estimate of government savings to $11.8 billion. The
budget measure requires drug manufacturers to provide deeper discounts to
Medicare beneficiaries whose spending on prescription drugs falls within a
range called the coverage gap, or the “doughnut hole.” The discount, now 50
percent on brand-name drugs, is set to rise next year to 70 percent.
The
change was designed to provide some financial relief to Medicare Part D
beneficiaries with high prescription drug expenses who have to pay the cost of
their medicines out of pocket once they reach a certain cost threshold — until
they hit a yearly limit. It also shifted more of those costs from insurance
companies to the drug industry in an effort to lower insurance premiums and
save taxpayers money.
The
Pharmaceutical Research and Manufacturers of America said it plans to keep
working with lawmakers of both parties to change its doughnut hole
contribution, as well as to seek changes to a so-called “doughnut hole cliff,“
that will require seniors to spend more money to get out of the coverage gap
period of their drug benefit starting in 2020.
Fixing
that would save money for seniors and the drug companies, as would rolling back
drug companies’ doughnut hole responsibility, PhRMA argues, because the current
framework doesn’t incentivize insurance companies to negotiate for lower-cost
drugs. Under PhRMA’s proposal, insurance companies would pay more for drugs,
and drug companies say that should motivate them to get better deals for
seniors.
Correcting
CBO’s error “would protect seniors by helping restore balance to payment
responsibility and securing the Part D program for the future. Further,
combining that fix with a solution to prevent the looming $1,250 spike in
our-of-pocket costs in the [doughnut] hole, would save seniors money and leave
seniors ... better off,” PhRMA said in a statement.
GOP
lawmakers have echoed this messaging. Walden “is supportive of
continued efforts to correct for a faulty CBO analysis,” a committee aide told
POLITICO.
Democratic
support for the change is less assured — buy-in after the November elections
will likely depend on the package of trade-offs, as well as the makeup of the
new Congress. Schumer declined to comment for this story.
Health
industry lobbyists say the most likely vehicle for the change is when lawmakers
extend the funding of several agencies subject to a continuing resolution,
which expires Dec. 7. But groups that successfully mobilized to prevent PhRMA’s
win in the opioids package say they’ll be ready to oppose it again.
“I have
no clue what politician in their right mind would push a $4 billion bailout for
drug companies when drug companies’ unpopularity are at the highest levels in
American politics,” said Ben Wakana, executive director of Patients for
Affordable Drugs NOW. “It seems like political malpractice.”
In
Washington, though, money talks and the drug industry has a lot of it.
The
pharmaceuticals and health products sector spends more money on lobbying than
any other industry in Washington — nearly $151 million so far in 2018, compared
to the next biggest spender — the insurance industry, at $82 million, according
to the Center for Responsive Politics. The bulk of that spending is by
pharmaceutical companies and trade groups, Krumholz said.
That
includes contributions from the main drug lobbying organization, PhRMA, which
has spent $15.7 million this year on lobbying, making it the third highest
single spender on lobbying. PhRMA also spent over half a million on direct
campaign contributions for the 2018 election cycle.
The
pharmaceutical and health products sector also has 980 lobbyists who previously
worked in government, giving them personal connections to many of the
Congressional offices and agencies they target — that’s more former government
employees than any other industry and makes up nearly two-thirds of the
industry’s lobbyists, per the Center for Responsive Politics.
“For a
long time, politicians have been able to do pharma favors, bring in a lot of
cash and that didn’t hurt you in the polls,” said Shawn Gremminger, senior
director of federal relations at Families USA, a left-leaning group focused on
improving U.S. health care for American consumers. “So long as our campaign
finance system remains essentially the same, I think the pharmaceutical
industry is going to continue to exercise really outsized influence in D.C.,”
Gremminger said.
But others
say it’s too simplistic to attribute the legislative support for PhRMA’s
proposal simply to the industry’s financial clout.
Former
Pennsylvanian Republican Rep. Phil English, who now lobbies for a few drug
companies, says it’s important to think about how geography creates close
alliances between some very progressive members of Congress and pharmaceutical
companies.
“There
are places in the U.S. where life sciences and pharmaceutical companies are the
core part of the good-paying jobs — suburban Philadelphia, New Jersey, some of
the suburbs in Boston, California, Chicago,” English said. “For representatives
of these areas, what happens to the drug industry is a constituent issue as
much as anything else,” English said.
The drug
industry also indirectly influences lawmakers through its support for patient
advocacy groups, to whom it contributed at least $116 million in 2015, per an
analysis by Kaiser Health News.
“And as
the years go by, you see the progression of the disease, people talking about
how important these prescription drugs are for them,“ said Jason Altmire, a
former Democratic representative from Pennsylvania, who has lobbied on behalf
of other parts of the health sector. “There’s nothing stronger than seeing that
right in front of you, with people that you have become friends with that have
a personal story to tell. It’s not about money. It’s about your constituents
and people that you know.”
The drug
industry has also gotten pro-consumer measures on the table as part of the
discussion. Besides the fix to the Medicare Part D cliff, it is also pushing a
version of a bill known as the CREATES Act, which aims to speed generic
competition to branded medicines by preventing brand drug companies from
abusing FDA-mandated safety programs to keep out cheaper competition.
A Democratic
source familiar with the negotiations over PhRMA’s provision in the opioid bill
blamed lack of agreement on the CREATES Act, for keeping the changes out of the
opioid measure.
But
opponents also say these trades aren’t enough to justify what they call a
windfall to the industry
Seniors’
groups including AARP, the insurance industry lobby and the Campaign for
Sustainable Rx Drugs say they will continue watching closely to try to block
PhRMA’s continuing efforts.
“They
have the ability where … they just wait out the clock, wait until people aren’t
paying close attention, wait until it’s a low-profile spending bill at the end
of the year … and before you know it, there is a provision in there that gives
pharma a big handout,” said Families USA’s Gremminger. “So just because we’ve
won the last three rounds doesn’t mean we are going to win round four. I
certainly hope so and we’re fighting for it. But you know, they are really,
really clever.”
No comments:
Post a Comment