Legislative Update: Drug Pricing Reforms
May 7, 2019
Congress is making drug pricing reform a bipartisan priority. While there has been an overwhelming amount of legislative activity around the issue of drug pricing, much of the legislation responds to a few core ideas. The strongest pieces of legislation align with NETWORK’s own principles of drug pricing reform: companies must justify their price increases, companies cannot block their competition from entering the market, and drugmakers must disclose how they set prices. While they seem small, if implemented, all of these details will have a dramatic impact on overall prescription drug affordability. Put together, these reforms would save the federal government billions of dollars a year and ensure countless people can access to the drugs they need.
One of the most straightforward reforms is allowing government agencies to negotiate drug prices. Other government agencies like the Bureau of Veterans’ Affairs already negotiate prices with suppliers, yet Medicare Part D is not able to negotiate their drug prices. Medicare Part D covers prescriptions Medicare users fill at pharmacies. As the largest purchaser of prescription drugs in the world, Medicare has significant bargaining power that is not being leveraged. There are multiple pieces of legislation addressing Medicare negotiation, including H.R. 1046, the Medicare Negotiation and Competitive Licensing Act. This bill would use the mechanism of competitive licensing to incentivize companies to negotiate with government buyers. House leadership is currently working on a drug pricing bill that will include drug pricing negotiations, but bill text has yet to be released.
An ongoing issue that keeps drug costs high is the delay tactics the pharmaceutical industry employs to block competition and charge monopoly prices. The CREATES Act (H.R. 965) addresses tactics that large pharmaceutical industries use to prevent generic competition from entering the market, which provides consumers with more affordable options. The Preserve Access to Affordable Generics and Biosimilars Act (S.64) and the Protecting Consumer Access to Generic Drugs Act (H.R. 1499) are other reforms that prohibit these delay tactics.
Finally, there is an overall lack of justification for how prices are being set and no accountability for unjustified price spikes. There are a few pieces of legislation that address the issue of price gouging. The aptly-named Stop Price Gouging Act (H.R.1093/S.378) would require companies to report on their price increases and would fine companies for excessive, unjustified price increases. These revenues would be reinvested in future drug pricing research in the public interest. The Stopping the Pharmaceutical Industry from Keeping drugs Expensive (SPIKE) Act of 2019 (S.474) and the CURE High Drug Prices Act (S.637) take similar approaches.
These reforms work together to address the root causes of why our prescription drug prices are abnormally high. While the industry would like you to believe it’s simply a case of bad actors or pharmacy benefit managers, in reality, the system itself is designed to exploit vulnerable patients and maximize profits. In order to make a substantial impact on the affordability of prescription drugs, we have to enable transparency measures like government agencies negotiating prices, ending delay tactics that prevent healthy competition, and holding companies accountable for price gouging life-saving drugs. The innovations of prescription drugs are only useful if people can actually access lifesaving treatments. We must mobilize around these issues to ensure no one else has to die because they can’t afford treatments as simple as insulin or a rescue inhaler. There is bipartisan energy to do something about drug pricing, but these reforms will only materialize if we continue to put pressure on our lawmakers to act.