Last year, Congress passed and President Biden signed into law the Inflation Reduction Act (IRA), which included provisions to allow Medicare to directly negotiate the price of drugs along with other cost control measures that, taken together, represented the most sweeping and impactful drug pricing policy reform in generations. “We finally beat pharma,” the President declared.
President Biden doubled down in his State of the Union address, repeating the mantra that Americans “pay more for prescription drugs than any major country on earth” – to back up his promise to veto any effort in Congress to repeal the IRA. Given the albeit slim Democratic majority in the Senate, the odds of legislation to repeal the IRA hitting the President’s desk in the next two years are nil. But putting political rhetoric aside, the reality is that the congressional environment for pharma remains threatening on a number of fronts.
Democrats in Congress continue to see drug pricing as a winning issue. Senate Finance Committee Chairman Wyden has essentially already rejected the idea of amending the IRA to put small molecule drugs on the same timeline for negotiation as biologics. Wyden also recently sent a letter to the Centers for Medicare and Medicaid Services to make certain that the IRA’s inflation rebate provisions are timely and completely implemented. At the same time, as a counter balance, new House Energy and Commerce Chair McMorris Rodgers and others plan to use their oversight authorities to force transparency from Administration regarding the impact of the IRA on drug innovation and other issues.
For his part, new Senate HELP Committee Chair Sanders is a long-time vocal industry critic who upon taking the gavel said he would move “very aggressively” on the high cost of prescription drugs. Like Chairman Wyden, Sanders has been clear in his intention to use his oversight levers to ensure that the IRA is given full effect. He has also come out of the gate with letters to manufacturers challenging post-pandemic pricing of COVID vaccines. In light of divided government and the unlikelihood that further sweeping drug pricing legislation will pass, expect to see an uptick in these kind of “naming and shaming” investigatory efforts by Chairman Sanders and others – to build a record for their legislative agendas and for stand-alone visibility purposes. The potential Senate counterbalance, new HELP Ranking Member Cassidy, has talked about tackling the high cost of drugs but in a manner that is “conscious of the tension between affordability and innovation.”
So, what if anything is in the realm of the legislatively possible for the remainder of this Congress in the drug pricing space? It remains to be seen whether consensus can be reached on additional reforms in this historically partisan policy area – although the staunch congressional defenders of industry are fewer and farther between these days, and the growing populist strain among Republicans could make certain drug cost control proposals attractive to some in the GOP Caucuses.
One such concept that could gain some measure of bipartisan traction is expansion of drug importation – a historic priority for Chairman Sanders that he will likely revisit this Congress. Another issue that is the subject of growing bipartisan, bicameral buzz is legislation and oversight to force greater transparency and accountability for the Pharmaceutical Benefit Management (PBM) industry – the so-called supply chain “middlemen” who face increasing scrutiny in Congress and at the Federal Trade Commission regarding their responsibility for drug prices.
In fact, earlier this month the Senate Judiciary Committee included a PBM accountability measure among a package of intellectual property focused drug pricing related bills reported out on a bipartisan basis – along with others that addressed issues such as “product hopping” and “patent thickets.” These bills, with the exception of the one dealing with PBMs, all target the biopharma industry. The political fate of this package, both on the Senate floor and in the House, is still to be determined. Come what may, at the end of the day, notwithstanding the enactment of the IRA’s landscape-altering price control provisions just last year, on the whole the biopharma industry once again finds itself on the defensive in Congress. No doubt a tough pill to swallow.