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Senate Hearing Opens Policy Discussion on Prescription Drug Costs

A Senate committee hearing opened discussions about prescription drug costs between policy experts and advocacy groups.

Senate committee hearing discussed policy adjustments on prescription drug costs

Source: Thinkstock

By Thomas Beaton

- At a Senate HELP Committee hearing this month, policy experts and advocacy groups suggested several strategies that could lower prescription drug costs, including removing Medicare Part D cost-sharing, increasing federal oversight of the pharmaceutical industry, and expanding access to generic drugs.

The testimonies were submitted in response to a National Academies of Sciences, Engineering, and Medicine (NASEM) report about lowering prescription drug costs through changes in federal policy. Leaders from NASEM, the Patients for Affordable Drugs Group, and the American Action Forum provided additional context to the findings in the report.

Generally, the experts agreed that changing federal policies will be vital for effectively addressing the underlying industry factors that contribute to rising prescription drug prices.

Many of the thought leaders agreed that removing Medicare Part D cost-sharing and adding out-of-pocket spending limits for Part D beneficiaries could help to control spending.  

Norman Augustine, Chair of the Committee on Ensuring Patient Access To Affordable Drug Therapies with NASEM, said that Medicare Part D beneficiaries should not have to pay cost-sharing amounts if a beneficiary's catastrophic coverage threshold has been reached.

David E. Mitchell, President and Founder of the Patients for Affordable Drugs Group added that Part D beneficiaries should not be charged retail prices on drugs when paying for prescriptions with out-of-pocket funds.

“We should also cap patient exposure at the catastrophic level of Part D,” Mitchell said. “When drugs cost $20,000 a month, the current system can be crushing for patients.”

Douglas Holtz-Eakin, MD, President of the American Action Forum argued the opposite of Augustine and suggested that lowering Part D cost-sharing may simply shift costs to private payers instead of lowering costs for all.

Holtz-Eakin believes that if manufacturers have to sell their products at lower prices to public payers, then manufacturers will make up the difference by marking up private payer costs.

He added that the 340B and Orphan Drug programs are ineffective, and should be reformed, even though they were well-intentioned consumer-focused programs.

Adjusting federal prescription drug policies to enhance oversight of the pharmaceutical industry were also among the solutions presented in the testimonies.

Augustine said that federal policies should discourage direct-to-consumer prescription drug advertisement. The federal government should do more to distribute information to consumers about cheaper drug alternatives to limit unnecessary consumer demand for higher-priced drugs, he stressed.

Mitchell suggested that pharmacy benefit managers (PBMs) should be required to disclose their drug discount and rebate amounts on a quarterly basis. This level of transparency would allow payers and related stakeholders to determine if PBMs are developing one-sided arrangements that benefit the PBM over the drug purchaser.

He supported his argument by adding that 75 percent of PBMs have significant control over the prescription drug market, and that the combined operating profit of the three largest PBMs increased by 30 percent ($10.1 billion) 2015.

All of the experts expressed support for new policies that promote the expansion generic drugs and boost prescription drug market competition.

Augustine suggested passing federal laws that prohibit provider practices to delay generic drugs into the market, and laws that accelerate the review process for generic drug producers.

Mitchell said federal policy should remove loopholes that brand-name manufacturers use to limit generic drug competition.

One of these loopholes is product hopping, which is when a manufacturer slightly modifies a drug to break into a new market. A bill that is currently being considered in Congress could address this issue, he said.

The bipartisan CREATES Act (S. 974, H.R. 2212) will help speed generics to market, increase competition, and provide patients access to more affordable drugs,” Mitchell said. “It is supported by experts across the ideological spectrum – from scholars at the Heritage Foundation to academic experts at Harvard University.”

Holtz-Eakin also noted that increasing generic drug volume in the prescription drug market is going to be a major driver in lowering overall prescription drug prices.

“Lowering prescription drug costs is going to primarily driven by increasing market participation and getting more than one drug within markets,” Holtz-Eakin said.

Holtz-Eakin referenced the NAESM report and agreed that introducing more biosimilars into prescription drug markets at a faster rate is one way to do this.

The testimonies provided by the stakeholders all point towards increasing generic drug competition, holding the pharmaceutical industry accountable, and changing federal policies in order to manage national prescription drug costs.

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