Drug price reforms appear to be out of infrastructure bill

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Medicare drug pricing negotiation authority appears to be out of the final infrastructure package, but some Democrats aren't giving up. (Pixabay)

A major effort to give Medicare the power to negotiate lower drug prices and to cap Part D prices is in free fall Thursday as a new legislative framework from the White House didn’t include it.

However, the legislation nixes a controversial Part D rebate rule in a key win for insurers and pharmacy benefit managers.

The White House released a new framework Thursday that outlined what will be in a massive infrastructure package. Missing from that framework was any reference to giving Medicare power to negotiate drug prices and several Democratic senators admitted that it wasn’t in the bill.

“There is no doubt that is disappointing, but we live to fight another day,” said Sen. Chris Murphy, D-Connecticut. “This is not the last chance to right this wrong.”

Murphy couldn’t say why negotiations were not included in the legislation.

“I was deeply involved in those negotiations and there were a lot of ideas on the table. In the end, there was a smorgasbord of ideas to pick from,” he said.

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But centrist Democrats in the House and Senate were concerned about adding broad negotiation powers to Medicare.

Rep. Scott Peters, D-California, told Fierce Healthcare earlier this week that he could not approve a bill that gave Medicare the power to negotiate over drug prices on products that still had market exclusivity. He has endorsed competing legislation that would let Medicare negotiate on Part B drugs that no longer had exclusivity and no competition.

Senate Finance Committee Chairman Ron Wyden, D-Oregon, refused to say that the issue was dead, though.

“We are staying at it. This is too important,” he said. “I’ve had a number of conversations on that this morning and that is very much an active effort.”

He said on Thursday that he has had talks with lawmakers in both the House and Senate over the issue. 

"To me what is non-negotiable is the idea that somehow you would pass on this," Wyden said. "This has got to get done because seniors have expected it."

Murphy said he doesn’t think the final bill will “change a lot” from the framework the White House released Thursday but conceded that the drug pricing provisions could still be addressed.

“Obviously I think that will be the most interesting topic of discussion over the next 24 to 48 hours,” he said.

It isn’t just drug price negotiations that were left out of the framework. Lawmakers had been touting other drug price reforms including forcing drug makers to give a rebate to the federal government if Part D and B product prices rise faster than the cost of inflation.

Another provision was to redesign the Part D benefit to add a hard cap on out-of-pocket drug spending at $2,000 starting in 2024 to offer catastrophic coverage for beneficiaries facing high costs.

Advocacy groups slammed Democrats over the lack of drug pricing provisions.

"This framework fails to deliver on repeated promises to the American people to lower prescription drug prices,” said Lauren Aronson, executive director of the Campaign for Sustainable Rx Pricing, an advocacy organization whose membership includes provider and payer industries and groups.

But the legislation does appear to completely nix a controversial rule that would eliminate the safe harbor for Part D drug rebates, according to Sen. Tim Kaine, D-Virginia.

The controversial Trump-era rule would eliminate the safe harbor from anti-kickback prosecution for rebates and replace it with a new safe harbor for discounts offered at the pharmacy counter. But the rule has been fiercely opposed by the insurance and pharmacy benefit management industries, which say it will raise premiums on seniors.

The Biden administration delayed the start date of the rule when it came into office back in January until 2023. A bipartisan, roughly $1 trillion infrastructure package included a further delay to help pay for the package.