This Week in Washington: Debt Ceiling Continues to Loom Over the Capitol; DEA Extends COVID-19 Controlled Medications Prescribing Telehealth Flexibilities
House Ways and Means Health Subcommittee Holds Hearing on Therapy Access and Medical Innovation
On May 10, the House Ways and Means Health Subcommittee held a hearing to examine policies that inhibit medical innovation and patient’s access to therapies. Witnesses included:
- Tony Gonzales, National Early-Stage Advisor at the Alzheimer’s Association
- Ted Okon, Executive Director of Community Oncology Alliance
- Darius Lakdawalla, Professor of Pharmaceutical Economics and Public Policy at the USC Leonard D. Schaeffer Center for Health Policy and Economics
- Joshua Makower, MD, Director of the Stanford Byers Center for Biodesign at Stanford University
- Aaron S. Kesselheim, MD, JD, MPH, Professor of Medicine at Harvard Medical School
During the hearing, Republican subcommittee members raised concerns about oversight of the Center for Medicare and Medicaid Innovation (CMMI). The Center creates payment and service delivery models that seek to save money within the Medicare program has been controversial since its inception. Subcommittee members pointed out that few of the payment models have been incorporated into Medicare. CMMI recently released three payment models the goal of which would be to lower drug prices. One would pay a lower amount for drugs that are approved through the Food and Drug Administration’s accelerated pathway. Republican subcommittee members argued at the hearing that such an approach would devalue drugs that use the accelerated pathway.
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Senate HELP Committee Advances PBM and Generic Drug Bills
On May 11, the Senate Health, Education, Labor, and Pensions (HELP) Committee concluded the markup of legislation concerning drug prices and pharmacy benefit managers (PBMs). Originally, the markup was to occur early in the month, but a compromise developed by the Chair and the ranking member fell apart and the markup was delayed. The following bills were considered:
- 1067, the Ensuring Timely Access to Generics Act of 2023
- This bill would allow the Food and Drug Administration (FDA) to deny citizen petitions that are submitted to intentionally prevent generic drug approval. It would also allow the FDA to deny citizen petitions that do not raise valid scientific of regulatory issues. The committee voted 21-0 in favor of the bill as amended.
- 1114, the Expanding Access to Low-Cost Generics Act of 2023
- This bill would seek to put an end to an anti-competitive drug practice known as “parking.” “Parking” refers to a practice in which a brand-name drug manufacturer agrees to not sue a generic drug manufacturer in exchange for the delayed release of the generic drug manufacturer’s product to the market. During this time, no other generic drug manufacturer may bring a drug to the market for a period of 180 days. The committee voted 20-1 in favor of the bill as amended.
- 1214, the Retaining Access and Restoring Exclusivity (RARE) Act
- This bill would specify that a seven-year orphan drug market exclusivity period for rare disease drugs outlined in the Food, Drug and Cosmetic (FD&C) Act, bans only the approval of other drugs with the same approved use or indication, not drugs that seek to treat the same disease or condition. The committee voted 21-0 in favor of the bill as amended.
- 1339, the Pharmacy Benefit Manager Reform Act.
- This bill would restrict ban pharmacy benefit manager (PBM) spread pricing, require all rebates to be passed to insurance plans, and strengthen annual PBM reporting requirements. The committee voted 18-3 in favor of the bill as amended.
It is unclear when the full Senate will take up this legislation, but it is expected to be soon.
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Senate Finance Committee Holds Hearing on Pharmaceutical Manufacturers and International Tax Policy
On May 11, the Senate Finance Committee held a hearing on pharmaceutical manufacturers and U.S. International Tax Policy. Witnesses included:
- Brad W. Setser, Senior Fellow at the Council on Foreign Relations
- Diane M. Ring, Professor of Law and Distinguished Scholar at the Boston College Law School
- William Morris, Global Tax Policy Leader at PwC
- Daniel Bunn, President and CEO of the Tax Foundation
Committee members discussed tax practices used by U.S pharmaceutical companies to lower their tax bill. Committee Chair Ron Wyden (D-OR) criticized pharmaceutical companies for moving their profits overseas, in an effort to obtain tax breaks, and denounced them for also placing their intellectual property in other countries. He also criticized a 2017 Republican tax law that cut taxes for some U.S pharmaceutical companies by more than 40 percent.
The Chair also announced the release of new findings from an ongoing investigation into drug company tax practices. The Senate Finance Committee majority staff have been investigating the tax practices of pharmaceutical companies since 2021. The findings of their work demonstrate that U.S pharmaceutical companies report more than 75 percent of their taxable income as offshore income. Additionally, the findings show that pharmaceutical companies are making use of profit shifting structures to circumvent certain taxes.
The findings of the Chairman’s report are available here.
The committee’s hearing on U.S. international tax policy is available here.
Senate HELP Committee Holds Hearing on Insulin Product Prices
On May 10, the Senate Health, Education, Labor, and Pensions (HELP) Committee held a hearing on the pricing of insulin and other diabetes medication. Witnesses included:
- David Ricks, Chair and Chief Executive Office at Eli Lilly and Company
- Lars Fruergaard Jørgensen, President and Chief Executive Officer at Novo Nordisk
- Paul Hudson, Chief Executive Officer at Sanofi
- David Joyner, Executive Vice President and President of Pharmacy Services at CVS Health
- Adam Kautzner, President at Express Scripts
- Heather Cianfrocco, Chief Executive Officer at OptumRx
Committee members questioned witnesses on the prices they charge for diabetes medications and discussed how complicated pricing is hurting patients. Chairman Bernie Sanders (I-VT) criticized witnesses for increasing the price of insulin products despite making record profits and stated that the high price of insulin was contributing to the deaths of thousands of Americans who cannot afford it. Several committee members pressed witnesses on the role of pharmacy benefit managers (PBMs) and criticized PBMs for placing higher list prices on insulin products to generate more rebates that are not being passed along to patients.
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Read more on healthcare policy in McGuireWoods Consulting’s Washington Healthcare Update.