Policy Perspectives: Drug Pricing Legislation and More

Drug Pricing Legislation

Drug pricing legislation has continued to progress in the 116th Congress as the end of the year draws near. The Administration has made a strong push for drug pricing legislation to be passed in 2019. In May 2018, President Trump’s Administration laid out its Drug Pricing Blueprint, which put forth a number of different policy ideas on how to lower the cost of prescription medication. The suggestions included, drug importation, the International Pricing Index, value based purchasing and Medicare program redesign. With the end of the Congressional year quickly approaching, there is pressure from the Administration to get legislation passed.

The most recent movement in the drug pricing space is with Speaker Pelosi’s bill, H.R. 3Lower Drug Costs Now Act of 2019. The House bill aims to establish price negotiations in the Medicare program to protect from excessive price increases and to cap out-of-pocket costs for Part D enrollees. The bill also includes language regarding the International Pricing Index (IPI) model that was proposed in the Administration’s 2018 blueprint. The IPI model looks at prices for a list of certain drugs in other countries and compares U.S. costs against those and limits American prices charged in similar countries.

The Senate Finance Committee held a markup on S. 2543, The Prescription Drug Pricing Reduction Act of 2019 (PDPRA) and passed the bill out of committee in July. The text of the bill can be found here. PDPRA aims to modernize and improve Medicare Parts B and D. The legislation has been placed on the Senate calendar under General Order, however, there has not been any further movement of the legislation in the Senate. There has been bipartisan bicameral negotiations on drug pricing as legislation has recently moved through the House committees of jurisdiction. See below for the House markups on the drug pricing legislation. With each chamber sending their version of the legislation to their respective floors for votes, we can expect to see a conference between the chambers to sort through the differences between the bills or for one chamber to adopt the others’ bill. This negotiation process is still unfolding.

Latest Drug Pricing Markups

On Thursday, October 17, the House Education and Labor Committee held a markup of H.R. 3. The opening remarks from the hearing pointed out that the bill is an ambitious plan to lower drug costs for Americans and that current drug prices are a drag on the American economy. An amendment in the nature of a substitute (AINS) was offered that made changes to Title I of the legislation that increases the number of drugs subject to negotiation and that drugs are eligible for negotiation until two generic competitors are available. During the markup 13 amendments were offered to the legislation and 5 of the amendments were adopted. These amendments offered by different members on the committee clarified out of pocket costs and required certain GAO studies. The bill was reported favorably out of committee to the House of Representatives.

Also on October 17, the House Energy and Commerce Committee held their markup on the drug pricing legislation which had 23 amendments all of which were rejected or withdrawn with the exception of the amendment in the nature of a substitute. The legislation was reported favorably to the full House by a roll call vote of 30-22. Of note for ASTCT, Rep. Mullin offered an amendment that put forth the proposal to offer risk-sharing value-based payment agreements for covered outpatient drugs under Medicaid. The proposal gave states the option to pay for covered outpatient drugs that are “potentially curative treatments intended to one-time use” that are administered to individuals by entering into risk-sharing agreements with drug manufacturers. This amendment would have allowed state Medicaid programs to offer oncology therapies such as CAR-T to Medicaid patients who are currently struggling to receive access to these therapies. The amendment was withdrawn and not included in the bill that was reported to the House floor.    

On Tuesday, October 22, the House Ways and Means Committee held a 12-hour markup on health legislation that included: H.R. 3Lower Drug Costs Now ActH.R. 3398 Pathways to Health Careers ActH.R. 4650 Medicare Dental Act, H.R. 4665 Medicare Vision Act, and H.R. 4618 Medicare Hearing Act. Twenty-nine amendments were offered on the Lower Drug Costs Now Act of 2019 legislation all except for 2 amendments were either rejected or withdrawn. The AINS was adopted and the bill title change amendment of "Elijah E. Cummings Lower Drug Costs Now Act" was also adopted. The bill was reported favorably to the floor.  

With all of the committees of jurisdiction in the House having marked up the bill, the legislation can now be moved to and voted on the House floor. Democratic leadership intended to hold a vote on the legislation in October, however, the House leadership decided to delay the drug-pricing bill vote to the middle of November. ASTCT will continue to monitor this legislation as it goes to the House floor and the movement in the Senate as well.

CBO Score

The Congressional Budget Office released its preliminary data of H.R. 3 on October 11. The CBO report can be found here. According to the report, provisions of Title I of the legislation would reduce federal direct spending for Medicare by $345 billion over the 2023-2029 period. The report also looked at the effect of Title I on revenue collection for the excise tax and it was concluded that it would not be significant. However, the savings would come in the form of lower prices for existing drugs sold internationally. With manufacturers having the ability to negotiate prices with the Secretary and make business decisions based on international transactions, there is the potential for manufacturers to not offer their products in U.S. markets if they are limited by foreign prices. Additionally (and of significant importance to the Society) is that the bill would affect the use and availability of drugs over time. In the short term lower drug prices would impact the budget, however, the reduction of manufacturers’ revenues could result in lower spending on research and development and slow the process and introduction of new drugs, thus limiting innovation.

This CBO score was based on the original text of the legislation from September so we can expect to see changes from the data based on what is evaluated and applied with the other titles of the legislation. ASTCT will monitor the status of the score and the legislation itself.


New MS-DRG for CAR-T

On November 1, ASTCT Government Relations Committee submitted a letter to CMS on the potential for a new MS-DRG for CAR-T therapies for FY 2021. The Agency solicited input on the potential for a new payment for these therapies and ASTCT ran a number of simulations to determine the most beneficial option for this therapy. The letter which will be posted on ASTCT’s website, asks CMS to continue the NTAP payment through FY 2021 for an additional year and to delay the creation of an MS-DRG. Although the Society has previously made this request of the Agency and it has not yet been adopted, we are again making this request to the Agency to express the need to collect further case data for an additional year. The small number of cases will not be an accurate depiction of the actual costs of what it takes an institution to deliver these therapies. Additionally, the inclusion of clinical trial cases in the current DRG claims will unfairly determine the weight of a new DRG because the price of the drug is not included for those cases and an accurate cost cannot be determined.

We believe a new DRG for CAR-T is still premature and that the best solution would be to extend the NTAP payment. However, there is no precedent for the Agency extending the NTAP payment. Thus, we put forth additional options for CMS to consider if it chooses to proceed with creating a new DRG for FY 2021 rather than FY 2022. ASTCT has worked with other stakeholders to come to an agreement that works best in this space and it has been agreed upon that at a minimum CMS must handle the clinical trial cases for CAR-T. There is wide agreement that the Agency should consider the impact these cases have on the overall costs and subsequently reimbursement for these therapies. ASTCT understands that CMS does want to over pay for claims, nor underpay, so our letter addresses this issue by offering options that balance the scales.  

ASTCT asks that if the Agency chooses to continue with creating a new DRG for FY 2021 that it use the data from FY 2019 CAR-T claims data with no clinical trial diagnosis codes and with pharmacy charges greater than $373,000. This request will show the Agency a majority of the commercial cases to gauge the cost of care and will hopefully remove the clinical trial cases that don’t accurately depict the cost of delivering care for this therapy. We also ask that CMS use an off-set mechanism to pay for a new DRG where centers receive the product cost at no charge to account for clinical trial claims. ASTCT further recommends that the Agency provide sub-regulatory guidance on billing, coding, and charging practices so that there is more accurate reporting going forward.

While we have seen some movement out of the Agency this year on CAR-T therapies, such as the finalization of the NCD which included ASTCT’s recommendation not to include coverage with evidence development, and the increase of NTAP payments from 50 to 65% of the product cost in the finalized IPPS rule, we also know that there is a lot more work to be done in this area. ASTCT reminds the Agency that this is the first of many therapies of its kind and that we will continue to work with them to get these reimbursement (and coverage in Medicaid) issues correct. 


Hematology Advisor Article—A recent clinical trial study found that young patients with relapsed/refractory B-cell ALL reported improved quality of life by treatment with tisagenlecleucel. “The findings from this study suggest that rapid improvements in broad aspects of patient-reported quality of life occurred after one-time treatment with tisagenlecleucel,” stated the investigators in their report.

BGov Article on Drug Legislation—The article outlines the progress of movement of the House drug pricing legislation and committee support for the bill.

Senate Vote on ACA Waivers—Senate Democrats sought to overturn a rule from the Administration that allowed flexibility in the types of plans states could us ACA subsidies to purchase. The vote failed on the Senate floor and the rule stands.

What the Health Podcast—Kaiser Health News podcast episode that addresses drug pricing and the latest from Capitol Hill.

Plenary Session Podcast—A podcast on medicine, oncology and health policy. This episode addresses an article “Talking about Toxicity.”

New NCCN Guidelines—NCCN released new guidance on how to manage complications and how to improve patient readiness for stem cell transplants.


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