5 Ways Proposed Drug Legislation Would Affect Patients and Providers

This past week saw several pieces of legislation introduced to lower the cost of prescription drug prices.

Amid opposition from the drug industry and some Republicans, the Senate Finance Committee voted 19-9 on legislation aimed at lowering drug costs. It isn’t clear what the bill’s chances are yet, however, and Democrats are threatening to keep the “Prescription Drug Pricing Reduction Act of 2019” from coming for a vote unless Republicans agree to hold votes cementing insurance protections for people with preexisting conditions and also giving federal health officials the right to negotiate drug prices.

In addition, another bill seeks to curb the rising cost of insulin.

Here are 5 ways patients and providers would be affected by the bills.

1. Capping out-of-pocket (OOP) costs for prescription drugs in Medicare Part D

The Congressional Budget Office (CBO) estimates that beneficiaries would save $27 million in out-of-pocket OOP costs over 10 years. The Part D redesign would eliminate the coverage gap and initiate 25% cost sharing between the annual deductible and the catastrophic threshold starting in 2022. It would also eliminate cost-sharing for beneficiaries once they entered catastrophic coverage. A catastrophic threshold of $3100 would also be established.

The AARP, in support of the bill, noted that Medicare Part D enrollees take an average of 4.5 prescription medications each month; additionally, while the average annual income of a beneficiary is just over $26,000, the average annual price for a single specialty drug used for a chronic condition is $79,000.

2. Restructuring rebates, refunds, and reporting requirements for Medicare Part B

Medicare would change how it calculates Part B prescription drug payment amounts and limit Part B drug payments.

Scott Gottlieb, MD, in comments made to The American Journal of Managed Care^® (AJMC^®), said the patient out-of-pocket costs “are the real critical issue” and that benefit design must be examined. Just because a drug is priced higher does not necessarily mean it will be a burden on the patient, and just because a drug is inexpensive doesn’t mean a patient might no have significant burdens, he said. That is particularly true for diseases like cancer, he said.

3. Changing payment rules to increase access to biosimilars

Patients might have more access to less expensive biosimilars through a provision meant to incentivize providers to use them by increasing the add-on fee for Part D. The proposal would increase the add-on payment for a biosimilar from 6% of the reference product’s average sales price to 8% over a 5-year period starting in January 2020. It would also establish a maximum add-on payment amount of $1000 for separately payable drugs.

4. Increase access to gene therapies for low-income patients in Medicaid

Patients enrolled in Medicaid would have greater access to gene therapies. The bill would allow new gene therapies for rare diseases to be paid through new risk-sharing value-based agreements. With gene therapies coming with price tags of up to $2 million, the change will aim to increase access to these life-saving treatments for patients with limited options.

5. Providing relief to patients with type 1 diabetes

A bipartisan bill would stop insurers and pharmacy benefit managers (PBMs) from engaging in rebate schemes with insulin manufacturers that bring their 2020 list prices in line with 2006 levels. Going forward, price hikes could not exceed medical inflation for that year.