by Johanna Gray, Advocacy Consultant
All eyes in Washington are turning towards the Senate, which is likely to consider drug pricing reforms as part of a reconciliation package later this month. Whether the final bill comes together remains up in the air – but as of this writing, all 50 Democratic Senators, including Senator Joe Manchin, support the policy. The draft legislation that has been released by the Senate Finance Committee has a few main policies as detailed below, but the upshot is that the policy is not likely to affect HTCs or treatments for bleeding disorders. We are continuing to monitor progress of the bill and the potential for any harmful policies for covered entities in general, or HTCs specifically. Please let us know if you have any questions!
Part 1 – Lowering prices through drug price negotiation
The legislation calls for a Drug Price Negotiation Program, which gives the HHS Secretary authority to negotiate prices for certain drugs under Medicare Part B and Part D. Beginning in 2026, s/he will select and publish a list of 10 drugs that will be subject to price negotiation; in 2027 and 2028, 15 drugs; in 2029, 20 drugs. The eligible drugs will be limited to single source drugs and will be chosen from a list of the drugs with highest total expenditures under Part D for 2026 and 2027, and Part D and Part B beginning in 2028 and subsequent years.
There are a number of exceptions, including for small biotech drugs, vaccines, and new formulations of existing drugs. Exclusions will also exist for certain orphan drugs, low spend Medicare drugs, and plasma-derived products (biological product derived from human whole blood or plasma). Specifically, for orphan drugs, the exclusions will apply to drugs designated for only one rare disease or condition and for which the only approved indication (or indications) is for such disease or condition.
The Secretary cannot choose the same drug twice and the drugs must have been on the market for several years (drugs must have been approved at least 7 years prior; biologics must have been approved at least 11 years prior). All Part D drug plans would have to cover Part D drugs with prices negotiated under this proposal. The agreement is in effect until drug is no longer a selected drug.
The legislation contains specific text related to the 340B ceiling price. If a drug is chosen, the manufacturer will not be required to provide access to the maximum fair price under the 340B program (if the ceiling price is lower than the maximum fair price for this particular drug) but if the maximum fair price is below the ceiling price amount, then the maximum fair price must be offered.
The legislation outlines specific factors to be taken into account when negotiating the price including manufacture specific information and information on alternative treatments. For example, the Secretary will consider the extent to which drugs address unmet needs for a condition for which treatment or diagnosis is not address adequately by available therapy. There are also specific criteria for when a drug is eligible for renegotiation, including when there is an addition of a new indication.
PART 2 – Prescription Drug Inflation Rebates
This section requires rebates to be paid by drug manufacturers of Part B and Part D drugs if the price of the drug grows faster than inflation.
PART 3 – Part D Improvements and Maximum out-of-pocket cap for Medicare Beneficiaries
Beginning in 2024, beneficiaries will pay nothing in the catastrophic phase, and beginning in 2025, there will be a cap of $2,000 for out-of-pocket spending under Medicare Part D. This cap will remain in subsequent years but will be adjusted based on the rate of increase in per capita Part D costs. Also beginning in 2025, enrollees will have the option to pay cost-sharing in monthly capped amounts.
Part 4 – Repeal of Prescription Drug Rebate Rule
Prohibits implementation of rule relating to eliminating the anti-kickback statute safe harbor protection for prescription drug rebates.
Part 5 – Miscellaneous
Part 5 of the legislative text calls for cost-sharing and deductibles for adult vaccines covered under Part D to be consistent with those covered under Part B, meaning vaccines under Part D will be free.
This section also includes provisions related to payment for biosimilar biological products; expanding eligibility for low-income subsidies under Part D; and, improving access to adult vaccines under Medicaid and CHIP.