GOP senator urges drug industry to lower prices - Albuquerque Journal

GOP senator urges drug industry to lower prices

Drug company executives indicated recently they would be willing to slash their prices if they no longer were forced to pay middlemen the kind of discounts that many blame for driving up the cost of prescription drugs for consumers.

Now, a first-term Republican senator is trying to turn that pledge into a reality with a new bill banning the practice of “rebates” in which drugmakers pay middlemen in the confusing drug-pricing chain to make sure their drugs are covered by insurers. Sen. Mike Braun, R-Ind., has introduced a measure to end rebates negotiated between drugmakers and pharmacy benefit managers in transactions conducted in the private sector.

The proposal would do for private health plans what the Trump administration has already proposed doing for government-sponsored health plans as the president has publicly taken aim at drug prices, to mixed results so far. The Health and Human Services Department in January announced draft rules allowing drug companies to offer discounted prices directly to consumers, aiming to stop the controversial rebate practice. But those rules would apply only to Medicare drug plans and Medicaid managed-care plans.

Braun’s bill would ban rebates in all private plans, including employer-sponsored ones. When the administration’s proposal was announced, HHS Secretary Alex Azar encouraged lawmakers to “get to work on extending this proposal to the commercial market, too.” Here, Braun has done just that.

“In an effort to lower drug prices, President Trump’s HHS is exposing the hidden system of kickbacks to middlemen known as pharmacy benefit managers (PBMs),” Braun said in a statement to The Washington Post. “I believe Secretary Azar will support this basic measure that amplifies his efforts to provide greater drug price transparency.”

Braun told reporters he believes drug companies will get on board with his plan because they know the rebate system “doesn’t make sense.”

During last week’s testimony by drug executives before the Senate Finance Committee, Chairman Chuck Grassley, R-Iowa, asked whether their companies would lower prices if the Trump rule applying to public-sector plans is ultimately implemented.

The executives were reluctant to make firm commitments, but some signaled they would be willing to lower prices if rebates were banned in the private sector, too.

“If the rebates were removed from the commercial sector, as well, we would definitely reduce our list prices,” AstraZeneca chief executive Pascal Soriot told Grassley.

In a statement to The Health 202, the company reiterated Soriot’s remarks, saying that if rebates for both private and public plans were eliminated, “we are prepared to reduce list prices by an equivalent amount of rebates less appropriate market-based fees to those in the supply chain. This would reduce overall costs to patients and the government.”

Merck head Kenneth Frazier told lawmakers he would “expect our prices would go down if we changed the system again, on the commercial side, as well as the Medicare side.”

During the hearing, Bristol-Myers Squibb chief executive Giovanni Caforio said he shared the same position. After a follow-up question, Bristol-Myers Squibb said it remains “committed to working with Congress and the Administration on reforming the rebate system with a focus on what is best for patients.”

After the hearing, Sen. Ron Wyden, Ore., the committee’s ranking Democrat, called on the seven drug executives to answer in writing whether they would commit to lowering list prices if rebates went down. “Big Pharma is eager to point the finger at the middlemen, and now is their chance to follow through on their promises to be a part of the solution,” Wyden said in a statement last week.

David Mitchell, president and founder of Patients for Affordable Drugs, was skeptical, however. He said while Braun’s bill is a step in the right direction, without specific provisions to require list price reductions, “we cannot trust the drug companies to voluntarily lower list prices.”

“Let’s say a drug is $100 and a rebate is $30. If rebates go away, first we have to compel the drug companies to bring the price to $70, then we have to make sure they don’t start raising prices again willy-nilly,” Mitchell told me.

And the much-villainized middlemen, a trade group for the PBMs, said it would work with lawmakers, but pointed the finger at those who pay them the rebates to begin with: drug companies.

“(T)he legislation appears to do absolutely nothing to address the root cause of the problem: high list prices that only the drug manufacturers have the power to set,” J.C. Scott, president of the Pharmaceutical Care Management Association, told The Post in a statement. “Despite drug manufacturers’ rhetoric, their pricing strategies are unrelated to the rebates they negotiate with PBMs.”

Mitchell said the bill still highlights the “bipartisan energy” around addressing skyrocketing drug costs.

And Rachel Sachs, an associate professor of law at Washington University in St. Louis, said the GOP senator’s proposal puts the onus on drug companies to act.

announced draft rules allowing drug companies to offer discounted prices directly to consumers, aiming to stop the controversial rebate practice. But those rules would apply only to Medicare drug plans and Medicaid managed-care plans.

Braun’s bill would ban rebates in all private plans, including employer-sponsored ones. When the administration’s proposal was announced, HHS Secretary Alex Azar encouraged lawmakers to “get to work on extending this proposal to the commercial market, too.” Here, Braun has done just that.

“In an effort to lower drug prices, President Trump’s HHS is exposing the hidden system of kickbacks to middlemen known as pharmacy benefit managers (PBMs),” Braun said in a statement to The Washington Post. “I believe Secretary Azar will support this basic measure that amplifies his efforts to provide greater drug price transparency.”

Braun told reporters he believes drug companies will get on board with his plan because they know the rebate system “doesn’t make sense.”

During last week’s testimony by drug executives before the Senate Finance Committee, Chairman Chuck Grassley, R-Iowa, asked whether their companies would lower prices if the Trump rule applying to public-sector plans is ultimately implemented.

The executives were reluctant to make firm commitments, but some signaled they would be willing to lower prices if rebates were banned in the private sector, too.

“If the rebates were removed from the commercial sector, as well, we would definitely reduce our list prices,” AstraZeneca chief executive Pascal Soriot told Grassley.

In a statement to The Health 202, the company reiterated Soriot’s remarks, saying that if rebates for both private and public plans were eliminated, “we are prepared to reduce list prices by an equivalent amount of rebates less appropriate market-based fees to those in the supply chain. This would reduce overall costs to patients and the government.”

Merck head Kenneth Frazier told lawmakers he would “expect our prices would go down if we changed the system again, on the commercial side, as well as the Medicare side.”

During the hearing, Bristol-Myers Squibb chief executive Giovanni Caforio said he shared the same position. After a follow-up question, Bristol-Myers Squibb said it remains “committed to working with Congress and the Administration on reforming the rebate system with a focus on what is best for patients.”

After the hearing, Sen. Ron Wyden, Ore., the committee’s ranking Democrat, called on the seven drug executives to answer in writing whether they would commit to lowering list prices if rebates went down. “Big Pharma is eager to point the finger at the middlemen, and now is their chance to follow through on their promises to be a part of the solution,” Wyden said in a statement last week.

David Mitchell, president and founder of Patients for Affordable Drugs, was skeptical, however. He said while Braun’s bill is a step in the right direction, without specific provisions to require list price reductions, “we cannot trust the drug companies to voluntarily lower list prices.”

“Let’s say a drug is $100 and a rebate is $30. If rebates go away, first we have to compel the drug companies to bring the price to $70, then we have to make sure they don’t start raising prices again willy-nilly,” Mitchell told me.

And the much-villainized middlemen, a trade group for the PBMs, said it would work with lawmakers, but pointed the finger at those who pay them the rebates to begin with: drug companies.

“(T)he legislation appears to do absolutely nothing to address the root cause of the problem: high list prices that only the drug manufacturers have the power to set,” J.C. Scott, president of the Pharmaceutical Care Management Association, told The Post in a statement. “Despite drug manufacturers’ rhetoric, their pricing strategies are unrelated to the rebates they negotiate with PBMs.”

Mitchell said the bill still highlights the “bipartisan energy” around addressing skyrocketing drug costs.

And Rachel Sachs, an associate professor of law at Washington University in St. Louis, said the GOP senator’s proposal puts the onus on drug companies to act.

Drug companies have been “very successful in demonizing PBMs over the last few years,” she told me. “Now that it looks like Congress is thinking about giving the pharmaceutical industry what they have asked for on PBMs, the pharmaceutical industry needs to step up to the plate and make serious concessions, or they may face more extreme reactions from Congress.”

Braun said his bill, dubbed the Drug Price Transparency Act, can start to bring transparency to an industry that has “given us a system that is as broken as one can be.”

“This bill doesn’t outlaw PBMs. It doesn’t even outlaw rebates. What it’s going to do is shed light on the process, so they’re not going to be able to get by with the argument that there’s room for a whole other layer of a middleman,” Braun said. “You don’t need it.”

Home » From the newspaper » GOP senator urges drug industry to lower prices


Albuquerque Journal and its reporters are committed to telling the stories of our community.

• Do you have a question you want someone to try to answer for you? Do you have a bright spot you want to share?
   We want to hear from you. Please email yourstory@abqjournal.com

taboola desktop

1
NM's methane rule unfair on low-producing wells
From the newspaper
Family operators will have to cap ... Family operators will have to cap hundreds of low-emitting sites early
2
Editorial: Vo-tech, welfare reform can fix our dismal worker ...
Editorials
New Mexico is in an economic ... New Mexico is in an economic rut.    It's not due to a shortage of jobs. More t ...
3
Our military veterans deserve a leg up into federal ...
From the newspaper
Let's make the most of their ... Let's make the most of their valuable skills, perspective and diversity
4
Congress invests in science and technology of future
From the newspaper
As the final days of summer ... As the final days of summer wean off their last few minutes of sunlight, kids revive their calculato ...
5
Tips to start coming back from the pandemic's isolation
From the newspaper
Wondering about the social effects of ... Wondering about the social effects of COVID-19 restrictions such as limiting gatherings, orders clos ...
6
Ethics questioned as cannabis regulators join the private sector
ABQnews Seeker
Some are unsure if the state's ... Some are unsure if the state's 'revolving door' policy indeed curbs conflicts of interest
7
County's cool with casitas
ABQnews Seeker
Bernalillo County is ready for a ... Bernalillo County is ready for a new kind of tiny home. Meanwhile, county voters in November will have their say on $40.5M worth of ...
8
Couy Griffin back in court to fight for his ...
ABQnews Seeker
Lawsuit contends that his role on ... Lawsuit contends that his role on Jan. 6 violated the 14th Amendment
9
'Art of Indigenous Fashion' showcases the works of Native ...
Arts
The IAIA Museum of Contemporary Native ... The IAIA Museum of Contemporary Native Art exhibition 'Art of Indigenous Fashion' runs from Aug. 19 through Jan. 8, 2023.