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HHS, Lawmakers Consider Plans to Lower Drug Prices

Secretary of the U.S. Department of Health and Human Services (HHS) Alex Azar spent last week touting and expounding upon the Administration’s plan to lower the price of prescription drugs. While the plan was panned by Democrats for its failure to endorse direct Medicare negotiation of drug prices, Secretary Azar stated that Part D plans will be given more power to negotiate prices, and that he also plans to bring negotiation to Part B drugs.

One option would be allowing Part D plans to negotiate for drugs in protected classes. Azar stated that Part D’s star rating program may be incentivizing insurers to be timid in the formulary management and price negotiation of six protected classes of Part D drugs. He suggested that Part D plans might not be utilizing management tools like prior authorization or step therapy, which are employed in the commercial market to contain costs, out of fear that they could be penalized under the program’s rating system. The Secretary argued that these tools are “completely appropriate and medically supported,” dismissing concerns about restricting patient access in Part D.

The Secretary also revealed that the Department is considering whether to restrict all pharmaceutical manufacturer remuneration to pharmacy benefit managers (PBMs). Azar suggested that HHS could use its authority under anti-kickback statute to eliminate drug rebates and other payments in public programs. This idea has previously been suggested by Commissioner of Food and Drugs Scott Gottlieb. Azar stated that he would also consult with HHS legal counsel to determine whether he has the administrative authority to eliminate such rebates in private insurance plans.

In related news, the Food and Drug Administration (FDA) has begun to publicly disclose the names of branded pharmaceutical companies suspected of gaming the generic approval system. The FDA published a list of 52 branded drugs whose manufacturers may be using delay tactics to prevent generic drug companies from bringing competitors to the market. The agency will post the letters it has sent to branded companies on behalf generic drug companies, urging them to sell drug samples that can be used to create generic versions of products.

House Speaker Paul Ryan (R-Wis.) announced last week that a compromise is being worked out between the Energy and Commerce Committee and the Judiciary Committee on H.R. 2212, the Creating and Restoring Equal Access To Equivalent Samples (CREATES) Act. CREATES aims to reduce drug prices by cracking down on delay tactics from branded drug companies to prevent genein rics from coming onto the market. It has stalled over concerns from some Republicans that it would invite frivolous lawsuits against pharmaceutical manufacturers.

Chairman of the House Ways and Means Committee Kevin Brady (R-Texas) announced plans to conduct hearings on some of the Administration’s proposals, but said that it was too early to tell if the panel would move legislation on the issue. Brady indicated that he was particularly supportive of ideas to increase competition in the market and to ensure consumers benefit from rebates and discounts between insurers and drug companies.

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