Senate Finance Committee Deals a Blow to Big Pharma
July 26th 2019
By Karl Evers-Hillstrom and Jessica Piper
The Senate Finance Committee advanced a blockbuster drug pricing bill to the Senate floor Thursday while shooting down amendments supported by the pharmaceutical companies, dealing an unlikely blow to the influential industry.
The bill, co-sponsored by Sens. Chuck Grassley (R-Iowa) and Ron Wyden (D-Ore.), aims to reduce drug prices for seniors and save taxpayers billions on government-run healthcare programs. It was heavily marked up before passing the committee Thursday, receiving a colossal 110 proposed amendmentsas some senators attempted to soften key provisions.
Two industry-friendly amendments introduced by Sen. Pat Toomey (R-Pa.) were shot down as the committee deadlocked at 14-14. One amendment would have prohibited the future use of an international price index to set drug prices while the other would have struck down one of the bill’s key measures requiring drug manufacturers to provide a rebate if drug prices increased above the rate of inflation.
Grassley and Sen. Bill Cassidy (R-La.) were the only Republicans to vote against Toomey’s amendment to remove the proposed rebate, a provision strongly opposed by the pharmaceutical industry and conservative groups, which equate it to government price fixing. Sen. Bob Menendez (D-N.J.) was the lone Democrat to vote for the amendment.
The bill also caps out-of-pocket drug costs for Medicare Part D participants and requires pharmaceutical companies to justify drug prices increases to the Department of Health and Human Services.
The bill ultimately passed 19-9, with all 12 of the committee’s Democrats and seven Republicans voting for it. Whether Senate Majority Leader Mitch McConnell (R-Ky.) will let the bill come to the floor remains to be seen. Even Grassley isn’t so sure it will be a hit on the Senate floor.
Pharmaceutical Research & Manufacturers of America, the industry’s main trade group, opposes the bill, calling it “the wrong approach to lowering drug prices.” The group blames pharmacy benefit managers and other parts of the supply chain for rising costs.
“We want to work with the Administration and Congress on a better solution that avoids price controls and provides greater cost relief for seniors,” the organization said in a statement.
The bill’s committee victory represents a defeat for an industry with a lengthy history of legislative wins under its belt. The pharmaceutical industry successfully prevented Medicare from negotiating drug prices with the passing of the Medicare reforms in 2003 and won key concessions in the Affordable Care Act. Most recently, the industry scored a major victory with President Donald Trump’sproposed North American trade deal, which protects brand-name drugmakers from competition for 10 years when they sell new drugs in Canada and Mexico.
PhRMA is among the biggest lobbying spenders in Washington, spending $16.3 million on lobbying during the first half of 2019, while the pharmaceutical industry as a whole shelled out a whopping $155 million so far this year. The lobby group is, as usual, engaged in a lobbying and public relations war with AARP, the seniors group that is pushing for stronger price controls on prescription drugs and strongly supports Grassley and Wyden’s bill.
Other actors have jumped into the fray in an attempt to influence lawmakers. FreedomWorks, a conservative group that spent a record $700,000 on lobbying in the second quarter of 2019, is running ads urging senators to reject all “socialist” proposals from Democrats on the committee. The conservative National Taxpayers Union has run ads opposing an international price model.
As the Trump administration explores executive action to lower drug prices and Congress tries to come up with its own answers, drugmakers, private insurers, hospitals and pharmacy benefit managers are engaged in a lobbying war. Those groups air ads on television, print and online platforms to influence lawmakers and the general public on their preferred method to reducing health care costs.
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