Drug Pricing Bills Win Senate Panel’s Backing Following Delay

Senators had a rare show of bipartisanship Thursday in advancing a slate of bills aimed at driving down US drug prices, including legislation to encourage generic drug approvals and address fees from the businesses that manage pharmaceutical coverage.

Four bills and a series of amendments aimed at lowering prescription drug costs received overwhelming support by members of the Senate Health, Education, Labor, and Pensions Committee. This comes just over a week after Chair Bernie Sanders (I-Vt.) postponed votes following criticism from Republicans who wanted more information on the potential impacts of a series of amendments offered by Democrats.

The committee’s support of the bills, which include proposals to limit drug manufacturer use of the Food and Drug Administration’s citizen petition process and rare disease drug exclusivity to limit competition, marks a pivotal step in efforts to get a sweeping drug pricing package to the Senate floor.

Lawmakers must now work on putting together drug pricing proposals from various committees in both chambers, and also work toward an agreement on lowering what Americans pay for insulin.

“We’re here to lower health-care costs, to improve access to the best possible care for fellow Americans, and the legislation we’re considering today to reform the rules that govern PBMs and generic drugs does that,” Sen. Bill Cassidy (R-La.), the committee’s top Republican, said in opening remarks at the markup Thursday.

The hearing comes one day after the HELP committee questioned the heads of the three major drug companies that make insulin—Novo Nordisk Inc., Eli Lilly & Co., and Sanofi—and leaders from the three largest pharmacy benefit managers—CVS Health Corp., Express Scripts, and OptumRx.

Drug manufacturers have characterized PBMs, which manage prescription drug coverage for health plans and others, as the main source of high US drug costs due to rebates and fees PBMs collect from manufacturers. But PBMs argue their main mission is to bring discounts to patients, and that manufacturer price setting and use of patents to restrict generic competition are what’s fueling high drug costs for Americans.

Patients for Affordable Drugs Now praised the favorable votes on the drug pricing bills, which the group’s executive director, Merith Basey, called “a significant step towards restoring accountability to the U.S. drug price system so that it prioritizes patients, rather than the bottom line of the pharma and PBM industries.”

“We call on Senate Majority Leader Schumer to bring these bills to the floor for a vote as soon as possible,” Basey added.

PBMs

One of the bills that advanced Thursday in an 18-3 vote is the Pharmacy Benefit Manager Reform Act (S. 1339), which would require PBMs to pass on all of the rebates they get from drug manufacturers to health plans. The legislation would also ban spread pricing, in which PBMs charge health plans more than they reimburse to pharmacies for their work dispensing medications to patients, allowing PBMs to capture the spread in between.

Senators voted to adopt several amendments to this bill Thursday aimed at increasing transparency over PBMs, including one led by Sen. Mike Braun (R-Ind.) that would direct the Department of Labor to conduct a study on PBMs and another co-led with Sen. Roger Marshall (R-Kan.) that would require PBMs to disclose certain spending information.

Improving oversight of PBMs has been a top priority among members in both chambers. The House Oversight Committee is conducting an investigation into the industry’s role in shaping health-care costs, and the Senate Commerce Committee recently advanced legislation that would improve Federal Trade Commission oversight of PBMs.

But the Pharmaceutical Care Management Association, the trade group representing the PBM industry, has argued that lawmakers are caving in to pharmaceutical industry pressure to put the blame on PBMs for high drug costs.

“Just one day after examining the pricing power drug companies use to block competition, the HELP Committee took drug companies’ bait and wrongly blamed the one actor in the supply working to reduce drug costs,” PCMA spokesperson Katie Payne said after the markup.

“The committee advanced legislation, without allowing common sense amendments, that would increase prescription drug costs,” Payne added.

Spread Pricing

While there’s bipartisan agreement on the need to improve oversight on PBMs, some Republicans expressed concern that a ban on spread pricing would hurt smaller members of the industry. The three largest PBMs control roughly 80% of the market.

At Wednesday’s hearing, OptumRx CEO Heather Cianfrocco said spread pricing contracts can offer more predictability and can be less expensive for clients. Sens. Rand Paul (R-Ky.) and Mitt Romney (R-Utah) echoed this argument during the markup Thursday, with Romney saying that “spread pricing will provide employers predictability,” and that “banning spread pricing is not going to help small or mid-sized businesses.”

Romney proposed an amendment that would allow employers to consider spread pricing, but also require PBMs to provide plan sponsors with at least one non-spread contract.

Sanders and Cassidy ultimately moved in support of tabling the amendment, with Sanders citing concerns that moving it forward would hurt the chances of S. 1339 getting the 60 votes needed in the Senate to pass.

Romney, Paul, and Sen. Tommy Tuberville (R-Ala.) ultimately voted against advancing S. 1339 Thursday.

Romney said in an interview after the hearing that he would try to re-introduce his amendment if the bill gets to the floor, but wouldn’t commit to whether he would support a broader drug pricing package.

“I want to do whatever I can to assure as much choice as possible in contacting between employers and drug companies,” Romney said.

—With assistance from Alex Ruoff