Drug Industry Middlemen Take Center Stage in Senate Price Fight

Lawmakers are ramping up their fight to lower US drug costs by focusing on a handful of bills likely to secure strong, bipartisan support, including limits on fees from the entities that manage pharmaceutical coverage and legislation to encourage generic drug approvals.

The Senate Health, Education, Labor and Pensions Committee on Tuesday will mark up a bipartisan drug pricing package, which in part focuses on limiting certain behaviors by drug manufacturers, including using the FDA citizen petition process to limit competition and taking advantage of rare disease drug exclusivity to limit the entry of additional treatments to the market.

Another primary area under the microscope are pharmacy benefit managers—which manage prescription drug benefits on behalf of health plans, employers, and others. Other congressional committees, including the House Oversight Committee, have taken an interest in probing PBM practices.

These areas are ripe for attention from Congress as lawmakers look beyond the Biden administration’s landmark drug pricing law, the Inflation Reduction Act, for additional ways to tackle drug prices—an issue that’s top of mind for US voters.

“The price of medication is hurting patients,” said Robin Feldman, a law professor at University of California College of the Law at San Francisco.

“The inflation Reduction Act was a major change in federal policy, but I believe there is general agreement that it is the first but not the last change needed,” Feldman said.

Sen. Bill Cassidy (R-La.), the top Republican on the Senate HELP Committee, described the package he and Chair Bernie Sanders (I-Vt.) put together as “silver buckshot.”

“When it comes to lowering the cost of medicine, I’ve said there’s no silver bullet but there is silver buckshot,” Cassidy said.

Dozens of advocacy organizations including AARP and Patients for Affordable Drugs Now—both of which backed Democrats’ move last year to give the government authority to negotiate with drugmakers—sent a letterTuesday urging Senate leaders to act on the drug pricing bills various committees have marked up.

That several committees—Commerce, Judiciary, and now HELP—have worked on drug pricing legislation signifies bipartisan interest in the issue, Sarah Kaminer Bourland, legislative and policy director for Patients for Affordable Drugs Now, said. She said in particular the bills promoting generic drug approvals could result in lower prices for consumers.

“Our drug pricing system in so many ways hinges on the ability of generic drug companies to come into a market and compete,” she said.

Generic, Rare Disease Drugs

Two of the bills up for discussion Tuesday aim to bring more FDA approvals of generic alternatives to costly brand-name prescription drugs.

The first (S. 1067) aims to deter pharmaceutical companies from using the Food and Drug Administration’s citizen petition process to delay the entry of generic competitors to the market. A 2017 study Feldman co-authored found that one out of every five FDA citizen petitions “has had the potential to obstruct generic competition.”

But Sarah Ryan, a spokesperson for the leading drug industry trade group, the Pharmaceutical Research and Manufacturers of America, argued that the “claims that manufacturers use innovator citizen petitions to delay competition is false.”

“This process is critical to promote the transparent exchange of information and ideas about scientific, legal and regulatory matters, all of which are vital to achieving the FDA’s public health mission,” Ryan said.

The HELP committee is also looking at a bill (S. 1114) that would limit so-called “pay for delay” deals between a brand-name manufacturer and a generic manufacturer. In these agreements, the brand-name maker agrees to not sue a generic competitor over their entry into the market so long as the generic company blocks other manufacturers from filing applications for their products within a 180-day period.

“There is generally more consensus” on the patent process and the idea that “if you can clear out anti-competitive behaviors, you’ll get more drugs on the market and you’ll get a lower price,” said Mark E. Miller, executive vice president of health care at philanthropy-funded Arnold Ventures.

Also on the agenda Tuesday is the Retaining Access and Restoring Exclusivity Act, or RARE, Act (S. 1214). This would clarify that the protections for a rare disease treatment under the Orphan Drug Act apply to the use or indication approved by the FDA and not across the entire disease space. The legislation aims to prevent lawsuits like the one Catalyst Pharmaceuticals Inc. won last year that granted it exclusive rights to market a drug to treat a rare disease.

Pressuring PBMs

Tackling the PBM industry has become a major priority in both chambers, and the Senate HELP committee aims to continue the effort.

The bipartisan Pharmacy Benefit Manager Reform Act (S. 1339) would prohibit a practice called spread pricing, in which PBMs charge health plans more than they reimburse to pharmacies, allowing PBMs to capture the spread in between. The legislation would also require PBMs to pass on all the rebates and fees they collect from drug manufacturers to health plans.

The attention to PBMs “speaks to the totality of everyone recognizing, ‘if we’re really being serious about a holistic solution around drug pricing, it’s not just about putting price controls over here on one piece, but you got to look at this piece of the pie and you’ve got to do it in a rigorous manner,” said Nick Shipley, chief advocacy officer at the Biotechnology Innovation Organization.

The pharmaceutical industry has long pushed for actions on PBMs, and on Monday launched an ad campaign targeting the entities, which they argue drive up consumer drug costs and restrict the medications that health plans cover for patients.

But the legislation under consideration by the HELP committee “would mandate a one-size-fits all contracting approach between pharmacy benefit companies and clients, which would be a dramatic shift from the flexibility and range of choices available in the marketplace today,” the PBM trade group the Pharmaceutical Care Management Association said in an emailed statement.

It “also fails to recognize the important cost-saving role that pharmacy benefit companies serve on behalf of their clients and, in turn, patients,” PCMA said. The group added that lawmakers should focus their energy on “holding big drug companies accountable for common and egregious abuses of the drug patent system, which block competition and keep drug prices high.”