News & Views: 11/2 - 11/8

November 9, 2021

After weeks of negotiations, Congress released the text of the reconciliation deal which includes minimal drug pricing reforms.

The bill includes an out-of-pocket cap in Part D, inflation rebates, and a limited Medicare negotiation agreement. The Part D benefit will have a $2,000 out-of-pocket cap and limits insulin copays to $35. Part D beneficiaries will also be able to smooth their cost-sharing over the span of the calendar year. Additionally, manufacturers who raise prices faster than the rate of inflation will be subject to a fine of the difference back to the government. The inflation rebates are benchmarked at the fourth quarter of 2021. Finally, the Secretary of HHS will be able to negotiate prices for up to 20 drugs a year by 2028 (up to 10 in the first year). Negotiation eligible drugs must be among the top-spending drugs in Medicare and be passed their initial period of exclusivity. To read the full bill text and drug pricing reform overview, click here and here respectively.  

A US District Court for the Southern District of Indiana ruled that the previous HRSA threat of enforcement for 340B is consistent with the 340B statute and Constitution.

The court ruled against Eli Lilly saying that manufacturers must honor contractual agreements to charge covered entities, in this case contract pharmacies, no more than the 340B ceiling price. However, the court also found that due to HRSA’s 1996 and 2010 guidance documents where they are specifically noted that they are unable to enforce regulations, the dramatic change in position without good reason was ruled as arbitrary and capricious. Therefore, while contract pharmacies must be able to access 340B prices, manufacturers are not in an immediate threat of refunds or fines unless HHS appeals the decision. To read the full article, click here.

A researcher from PBGH analyzed the impact of drug pricing reform limited to the Medicare program in a Health Affairs blog post.

The blog post outlines the reasons to why the pharmaceutical industry would simply shift costs to the commercial market if they were only regulated in Medicare in an effort to make up lost profits. The discussion includes the historical price increases past the already high launch prices and explaining the monopoly that the pharmaceutical industry has over patients. Medicare-only reform is a significant risk to the commercial market where patients are already paying high prices, according to the post. To read the full blog post, click here.

Researchers from USC estimated the share of expenditures on insulin received by manufacturers, wholesalers, PBMs, pharmacies, and plans in a JAMA study.

The study found that between 2014 and 2018 the list price of insulin increased by 40.1% while the net price received by manufacturers decreased from $10.53 to $7.29, on average. Meanwhile, pharmacies and PBMs saw a 228.8% and 154.6% increase in payments, respectively, for insulin during the same time. To read the full study, click here.

CIDSA Experts in the News

Rena Conti and Mariana Socal spoke with reporters at Marketplace on the Medicare negotiation mechanism included in the reconciliation package. Socal is quoted by saying that even if the power of negotiation only applies to a few drugs, it could still have a significant impact. Conti however highlights that this policy would not help to mitigate high launch prices, as the policy included in the package defines an eligible drug after its initial period of exclusivity ends. To read the full article, click here.  

Stacie Dusetzina spoke with reporters at Bloomberg Law on what would happen without impactful drug pricing reform through Congress. Dusetzina refers to the drug pricing reform included in the reconciliation bill as “a gift to the pharmaceutical industry,” as manufacturers are still able to set prices as high as they wish with no real consequences. To read the full article, click here.

Rachel Sachs detailed the Democratic prescription drug pricing reform details in a Health Affairs blog post. Sachs reviewed the key elements of the policy, including the Part D cap, inflation rebates, and Medicare negotiation. While a less robust policy than the original H.R. 3, Sachs argues that this policy could still be a significant advance for patients. To read the full post, click here.

Rachel Sachs spoke with reporters at Axios on how Democrats are trying to reduce the burden of high costs for employers too. Sachs highlights that if inflation caps were extended to the commercial market, employers would not need to worry about drugs that continue to get more and more expensive. To read the full article, click here.

Ameet Sarpatwari spoke with reporters at Pharmacy Practice News on the Biologics Price Competition and Innovation Act (BPCIA). In the article, which cites one of Sarpatwari’s studies from August 2021, Sarpatwari explains that while the BPCIA is a “complicated, but clearly laid out, stepwise process of litigation,” it is not as clear in practice. Of the 21 lawsuits investigated, Sarpatwari and colleagues found that 19 had claims that the biosimilar manufacturer did not properly follow the BPCIA. To read the full article and study, click here and here, respectively.

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