The Midterms shook up the Republicans’ hold on Congress, but the change in power in the House doesn’t mean policymakers’ focus on drug prices or opioids will go away. Many newly elected Democrats made these issues a central part of their campaign and say they are willing to work with the opposing party to address them.
While Affordable Care Act repeal efforts died in President Donald Trump’s first term, the administration refocused its healthcare priorities on drug prices. Experts predict drug pricing will stay top of mind when the new, divided Congress starts work this month.
“The House flipped to the Democrats and that means hearings, hearings, hearings on drug pricing,” said Kate Rawson, senior editor at Prevision Policy and The RPM Report, at a post-election policy conference in November. “For the industry, that could mean requests for information on things such as R&D spend vs. DTC advertising spend. The biggest risk to pharma,and it’s a distinct one, is the president will be able to strike a deal with House Democrats and bring them on board for a drug pricing plan.”
What could that look like? There are several blueprints already in the public domain, including bills meant to foster more competition from generics such as the CREATES Act, or to require drugmakers to justify price increase as with the SPIKE Act, or a pilot program that bases Medicare drug prices on an international pricing standard.
These measures, and others meant to lower drug prices, have bipartisan support as lawmakers continue to hear from their constituents that drug prices are too high.
A divisive issue
However, one notable proposal has less support, at least from legislators: The idea of putting drug prices in DTC television ads. The industry has lobbied hard against the proposal, suggesting the number would be misleading, and lawmakers are split on the idea.
Sens. Richard Durbin (D-IL) and Chuck Grassley (R-IA) crossed party lines to secure funding for the idea in September, but it was later halted by the House.
“I hear a lot of concerns about what [patients] will pay,” Sen. Christopher Coons (D-DE) said at the conference, which was hosted by the Coalition for Healthcare Communication (CHC). “The price consumers pay and the list price are significantly disconnected. I’m concerned about broadcasting on national TV these list prices and how this will improve a patient’s ability to access medicines.”
While some changes to TV drug ads seem inevitable after the Trump administration’s proposal and PhRMA member companies agreeing to new advertising guidelines, other proposals are in the works, and the industry is positioning itself for a challenge. PhRMA EVP of public affairs Robert Zirkelbach said the industry lobby is particularly focused on messaging about the international pricing standard program, changes to the drug supply chain, and the role of PBMs and hospitals in high drug prices.
Even bills that aren’t healthcare-specific could take swipes at the industry. One threat is the budget. As legislators look for ways to make up money for tax cuts or funding big projects such as the border wall, pharma could be caught in the crosshairs.
The price consumers pay and the list price are significantly disconnected. I’m concerned about broadcasting on national TV these list prices and how this will improve a patient’s ability to access medicines.Sen. Christopher Coons (D-DE)
Pharma advertising money could get caught up in budget bills, said Jon Bigelow, executive director of the CHC. Advertising expenses are currently tax-deductible for pharma companies. However, lawmakers have proposed ending that practice, and the idea could come up again as legislators consider the budget.
“One shovel-ready way of gaining income for the federal government is through the deductibility of marketing expenses for pharmaceutical products, a proposal that’s bounced down several times,” Bigelow said. “The fact is [this proposal is] out there and it had a lot of supporters in the past.”
The pharma industry is also keeping a close eye on White House staff turnover. With administration officials coming and going, some health policy experts predict a change in leadership at the Food and Drug Administration isn’t out of the cards.
Dr. Scott Gottlieb, who has served as FDA commissioner since May 2017, has been an activist commissioner. Although he has not indicated he plans to leave, Rawson cautioned many recent FDA commissioners only served in the role for one to two years.
“On the one hand, Gottlieb has a huge agenda, all outward indications are that he is not ready to leave,” Rawson explained. “On the other, he may want to leave on a high note. At some point, the noise from the House Democrats is going to be turned toward FDA issues and, while he remains very popular on both sides of the aisle, he may want to time his departure before that happens.”
If Gottlieb goes, the next commissioner could be an “untraditional” pick or a “disruptor,” based on President Trump’s other replacement choices, Rawson added.
“I would argue [Gottlieb] is probably the most activist commissioner we’ve seen,” she said. “He has achieved a lot in just a very short time, and he is well liked by industry. Everyone agrees the longer he stays at FDA, the better for your clients.”
Part of Gottlieb’s agenda is to streamline the heavily regulated drug approval process. The FDA has already been chipping away at this problem with updated rules and guidelines that mostly apply to generic and biosimilar approvals, and experts expect this trend to continue.
The administration is also looking to cut back on regulations of the supply chain and payment system. For example, health officials have suggested lifting the ban on kickbacks.
“Of course, the Trump administration has been looking at deregulation pretty much across the board,” Bigelow explained. “This may be an area where there are benefits for industry.”
Instead of the government saying it needs to be done like this, we need to create a system where there’s a lot more experimentation and testing going on in the private marketRobert Zirkelbach, PhRMA
These benefits could help pharma work out new payment methods, as the old ones fall under scrutiny. Zirkelbach wants the industry to experiment within the supply chain and drug pricing system. That could mean a move to value-based care, or even another payment system that hasn’t been tried, Zirkelbach noted.
“We need new and different ways to pay for medicines,” he said. “It could be outcomes measured or a money-back guarantee. If it doesn’t work, we don’t get paid. We need to adapt, test, and try out new arrangements. Instead of the government saying it needs to be done like this, we need to create a system where there’s a lot more experimentation and testing going on in the private market.”
As the industry ponders the new Washington dynamics, it’s important to remember many of the old rules apply. Even with the administration looking at reducing regulations, pharma and the drug supply chain will continue to be heavily monitored.
Making sure pharma clients are well within federal requirements may become trickier as the regulations change, but pharma still needs to be cautious. James Czaban, partner and chair of the FDA practice group at law firm DLA Piper, advised attendees of CHC’s event to remember that “you’re not selling widgets.”
“The devices that we all promote have a tremendous power to cure, prevent disease, treat, and heal, but they have also encountered harm,” Czaban explained. “Your clients are in a highly competitive industry, you are in a highly competitive industry. There’s demands for extreme creativity and aggressiveness and, of course, results. We want to be on the leading edge, not the bleeding edge. Don’t push your clients too far.”