Senate drug price hearing turns into debate over healthcare reform

Members of the Senate Health, Education, Labor and Pensions committee gathered last week to discuss the rising costs of prescription drugs. But the hearing quickly morphed into a heated back-and-forth between senators over the Republican’s efforts to reform healthcare.

Democratic senators, including Sens. Patty Murray (D-Wash.) and Chris Murphy (D-Conn.), used their time to criticize their Republican counterparts for writing the GOP healthcare bill behind closed doors.

“I know you’re a part of the discussion. You know what’s in it, we have no idea. We haven’t seen it,” Murray said to chairman Sen. Lamar Alexander (R-Tenn.).

“Let’s be blunt,” Sen. Elizabeth Warren (D-Mass.) reportedly said. “It is insane to have a bipartisan hearing on drug prices while the GOP is writing a secret bill to take away prescription drug benefits.”

Murphy agreed, pointing out that their conversation about drug pricing may be irrelevant if the GOP’s healthcare bill does not include prescription drug coverage as an essential health benefit.

Lawmakers sat through presentations from Dan Mendelson, president of Avalere Health; Allan Coukell, senior director of health programs at Pew Charitable Trusts; Gerard Anderson, professor at Johns Hopkins University School of Medicine; and Paul Howard, from the Manhattan Institute.

The pharmaceutical industry has been called out by lawmakers on both sides of the aisle for its drug pricing practices. Companies set list prices for their medicines, which are not necessarily guided by market forces, Anderson reportedly told the committee.

After a company sets a drug’s list price, pharmacy benefit managers and 3rd party payers negotiate for lower prices. But Anderson pointed out that the list price can be used to determine the percentage of cost sharing that patients pay.

The rebates that payers receive during the negotiation process aren’t shared with patients, but consumers still benefit from them, Mendelson said, because they “leverage effective price competition.”

Sen. Bill Cassidy (R-La.) disagreed, saying that he doubted rebates are “actually bringing benefits” to American consumers.

The experts also discussed the possibility of value-based contracts – deals that link the price of a drug to particular outcomes. Although health plans seem interested in pursuing value-based contracts, Coukell said it is unclear whether or not those types of plans would reduce spending.

Last week, senior officials in the Trump administration reportedly met to discuss an executive order regarding drug prices. News reports revealed that the working group is consider proposals that largely reflect the agenda of the industry’s lobbying group, the Pharmaceutical Research and Manufacturers Association (PhRMA).

Joe Grogan, a former lobbyist for Gilead Sciences (NSDQ:GILD), is the associate director of health programs for the Office of Management and Budget and has lead the working group.

The group reportedly discussed speeding up the drug approval process at the FDA and extending monopoly protection rights for drugs in foreign markets.

Some of the documents produced from the meeting seem to directly reflect policy papers written by PhRMA, according to Kaiser Health News. The document from last week’s meeting includes a subtitle, “Encourage Use of 21st Century Tools for Drug Evaluation, Review and Approval” and calls for the FDA to use less rigorous standards for clinical trials to fast-track drug approvals.

The document cited a paper with the same subtitle and same regulatory recommendation, published  by PhRMA in March last year.

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