On May 21, the Subcommittee on Health of the Committee on Energy and Commerce held a hearing entitled, “Improving Drug Pricing Transparency and Lowering Prices for American Consumers." The panel of witnesses included representatives from the Pharmaceutical Research and Manufacturers of America (PhRMA), the Pharmaceutical Care Management Association, the Coalition of State Rheumatology Organizations, Families USA, Arnold Ventures, and the American Action Forum. The panelists represented diverse perspectives across the pharmaceutical supply chain from manufacturers, pharmacy benefit mangers (PBMs), providers, and patients, as well as thought leadership organizations. Throughout the discussion, the members questioned the panelists on their role in the supply chain and the impact of various pieces of transparency legislation being considered on their industry, drug prices, competition, access, and more.

Throughout the hearing, several questions were posed around the role of rebates and list prices, echoing a theme from previous hearings. The representative from PhRMA said that high rebates are often demanded by PBMs and members can have a difficult time getting lower list price drugs or authorized generics placed on formularies, adding that PBM fees have risen in the past years. Regarding list prices, she said increases can result from increased costs, supply chain changes, expanded indications and value, and noted that 90% of research and development (R&D) fails. She expressed concern with the FAIR Act (H.R. 2296), which would require advanced notice of a price increase to Health and Human Services (HHS), noting that it could lead to behavior such as stockpiling of drugs, and expressed concern with other legislation that would increase reporting burdens as well as the difficulty in abiding by the patchwork of state laws. On the other hand, the PBM representative, explained that they have no impact on the list price of drugs and their formulary determinations are based on therapeutic efficacy and net prices. She also explained that while rebates are almost primarily used to buy down premiums in Part D, it is up to the plan sponsor to use them for cost-sharing or premium purposes in the commercial market. She also expressed concern with H.R. 2115, which would require PBMs to disclose their rebates and discounts, saying it would undermine their negotiations. The provider representative cautioned that the Sunshine for Samples Act (H.R. 2064), which would require manufactures to report on product samples given to providers, could lead to less samples for patients, which provide cost-free access to drugs and help those waiting for prior authorization. Economists Dr. Holtz-Eakin and Dr. Miller also discussed their views on the proposals, in which Dr. Holtz-Eakin expressed his support for the administration’s rebate rule while Dr. Miller noted its potential to increased premiums in Part D. Along with Mr. Isasi, who represented the patient voice, they agreed that transparency legislation must have “teeth” and that they will not impact prices on their own. The legislation discussed during the hearing included:

• H.R. 2296, the "Fair Accountability and Innovative Research Drug Pricing Act"
• H.R. 2069, the "Stopping the Pharmaceutical Industry from Keeping Drugs Expensive Act"
• H.R. 2087, the "Drug Price Transparency Act"
• H.R. 2115, the "Public Disclosure of Drug Discounts Act"
• H.R. 2064, the “Sunshine for Samples Act of 2019”
• H.R. 2376, the "Prescription Pricing for the People Act"
• H.R. 2757, the "Creating Lower Cost Alternatives for Your prescription drugs Act"

For more details, see the attached Tax Alert or click here.

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Drug Pricing and Transparency