PhRMA submission to HHS on blueprint to lower drug prices and reduce out-of-pocket costs

Today, PhRMA submitted comprehensive comments to the Department of Health and Human Services (HHS) request for information.

Holly Campbell
Holly CampbellJuly 16, 2018

PhRMA submission to HHS on blueprint to lower drug prices and reduce out-of-pocket costs.

Today, PhRMA submitted comprehensive comments to the Department of Health and Human Services (HHS) request for information (RFI), HHS Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs. While some of the changes in the RFI could make improvements to the system, others would be a step backward for patients:

  • Rebates: How we pay for medicines has evolved into a complex system of list prices and rebates in an opaque supply chain. Pharmacy benefit managers (PBMs) and other entities in the supply chain have incentives to favor medicines with high list prices and rebates. This hurts patients and increases costs. The industry supports reforms that prevent PBMs and other entities in the supply chain from being paid as a percent of the list price of a medicine. Instead, such entities should be paid a fee based on the value their services provide.

  • Medicare Part D: Changes are needed to improve affordability and predictability in the Medicare Part D program, but some of the RFI proposals would be a step backward for patients. We urge the Administration to strengthen out-of-pocket protections, maintain current formulary protections and continue current treatment of coverage gap discounts in the calculation of true out-of-pocket spending.

  • Global free riding: Many of our trading partners abroad mandate price controls and other harmful trade practices to artificially depress the market value of innovative medicines. These practices stifle global R&D, competition and savings. The result is that Americans are increasingly shouldering the burden of global investment in discovering new medicines. We propose the Administration end the most unfair and discriminatory trade practices, including negotiating and enforcing stronger trade agreements and ensuring foreign government pricing and reimbursement policies are transparent and do not condone compulsory licensing.

  • 340B program: We support the goals of the 340B program, but increasing evidence from independent watchdogs has raised concerns about patients not benefiting from the program. While 340B has continued to grow exponentially, hospitals - not patients - have benefitted from the increased manufacturer discounts. We urge the Administration to revisit current 340B policies and make changes to strengthen the program.

  • Value-based contracts: The biopharmaceutical industry is working with health plans and others to develop new contracting approaches that tie payment more closely to value. To encourage voluntary value-based contracts, we urge the Administration to issue an Anti-Kickback Statute safe harbor for value-based arrangements and clarify the rules for the reporting of Medicaid best price.

  • Medicare Part B: Under the Part B program, vulnerable Medicare patients with a range of complex conditions have access to medicines that are generally administered by providers. As changes to this program are considered, it is critical to preserve patients’ access to the full range of treatment options. In addition, the Administration should refrain from moving coverage of medicines from Part B to Part D and avoid the implementation of a competitive acquisition program that would undermine strengths of the current system.

  • Medicaid: Spending on medicines represents a small share (7 percent on average) of total state Medicaid budgets. However, the expansion of Medicaid rebates under the ACA, along with the pharma tax, may have placed pressure on list prices, forcing companies to raise prices overall in the market. Moreover, to avoid further market distortions, the Administration should maintain the cap on Medicaid rebates.

  • Direct-to-consumer (DTC) advertising: The mandated disclosure of list prices in DTC ads would not benefit patients as they are often not the prices insurers pay and are generally not a good indicator of what patients will pay at the pharmacy counter. Any such requirement would raise significant legal issues, including First Amendment concerns. 

View PhRMA’s full submission here and executive summary here.

Read PhRMA’s press release here.

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