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Drug Pricing In The New Congress

  • Drug pricing presents intriguing political dynamics. Whether and what policy prescriptions actually come to fruition in the next two years remain to be seen, but the rhetoric around the imperative to lower drug pricing — and the political pressure to act — will be more intense than we have seen to date.

  • President Trump and House Democrats might vie for ownership of this populist issue that continues to resonate.  Ironically, there is substantively less distance between the Administration and Democrats in this space than perhaps any other.  The big question will be whether there is the political will to capitalize on this philosophical common ground and work together to legislate — as the President has already expressed interest in doing — or will the two sides instead engage in a rhetorical “can you top this” contest, teeing up drug pricing as a 2020 national election issue?

  • The President staked an early claim on drug pricing and has kept the drumbeat going — via tweets, issuance of the Blueprint and subsequent targeted rulemaking, including use of foreign reference pricing to force negotiations in Medicare Part B.  A Martian landing on Earth could reasonably conclude that this kind of proposal surely came from a progressive Democratic Administration!

  • So, what might actually happen in this world turned upside down in which a Republican Administration and a Democratic controlled House express support for similar drug pricing policy solutions?

  • Some “bridge too far” Democratic priorities will get air time but will not have the support needed to get done.  In this bucket is repeal of the non-interference clause to allow direct negotiations in Medicare Part D  — and authorization of compulsory licensing of intellectual property where negotiations do not bear fruit.  HHS Secretary Azar opposes these proposals, which also would not get through the Republican controlled Senate.

  • The “realm of the possible” bucket for bipartisan support includes:  the pending drug payment pilot and related negotiating mechanisms in Medicare Part B; revisiting of Part D “doughnut hole” responsibilities and related issues around the catastrophic coverage “cliff” for beneficiaries; rebate reform and additional pricing transparency for manufacturers and PBMs; passage of the CREATES Act and others means to speed development of generic drugs; DTC advertising disclosure requirements, promotion of value-based contracts, and possibly even some form of a price gouging enforcement.  Congress could also respond to the forthcoming Part D rule depending on its content.

  • Be on the lookout too for a long time Democratic favorite — drug importation, which was not in the President’s Blueprint and is not supported by Secretary Azar but remains a popular issue and is politically difficult to oppose on its face, including for many Republicans.

  • A Democratic House as well as the GOP Senate will see the ascendance of new leaders in committees of jurisdiction.

    • Frank Pallone will be chair of the full Energy and Commerce Committee — he represents a bio-pharma industry heavy district but has also been a drug pricing critic from time to time.

    • Democrats are expected to choose among up to three candidates for Chair of the Health Subcommittee — Anna Eshoo, who led the way on protection of intellectual property rights for innovative biologics and Diana DeGette, who co-led the landmark 21st Century Cures Act — or Jan Schakowsky, who has been a forceful critic of industry and drug pricing.  This decision could significantly impact the agenda next year on drug pricing.

    • Similar decisions and philosophical contrasts await in the House Ways and Means Health Committee, where potential chairmen include Lloyd Doggett, the leading proponent of compulsory licensing, and Mike Thompson, who has a more moderate approach on pharmaceutical issues.

    • There is also a significant Oversight and Investigations component of the drug pricing debate, which impacts the legislative agenda as well.

    • In the Senate, Finance Committee Chairman Orrin Hatch, the bio-pharma industry’s staunchest defender, has retired.  He is likely to be replaced by Charles Grassley — transparency champion, seasoned investigator and sponsor of the CREATES Act.  Expect more oversight and legislative challenges for industry under his watch.

  • Bottom line — stakeholders in the drug pricing sphere should buckle up for a wild ride.  We don’t know yet how the politics here will play out. What we do know is that this topic will be a hot one — if not the hottest — and industry innovators will be on the hot-seat more than ever before.

© 2018 Covington & Burling LLP

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About this Author

Gary Heimberg, Covington Burling, Regulatory and public policy lawyer
Of Counsel

Gary Heimberg’s practice focuses on public policy and government affairs matters for pharmaceutical, medical device and consumer health care clients. He has substantive knowledge of the current legislative and policy issues facing the Life Sciences industry, including in the areas of intellectual property, pricing, oversight & investigations, OTC medicines, vaccines, biodefense, and FDA reform. Mr. Heimberg has also facilitated the implementation of internal corporate policies and procedures to adhere to federal compliance requirements.

Mr. Heimberg’s...

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Joan Kutcher, pharmaceuticals attorney, Covington
Of Counsel

Joan Kutcher has more than 30 years of experience providing strategic advice to stakeholders in a broad range of industries, with a particular expertise in federal and state health care-related programs.  Over the years, she has helped states, pharmaceutical companies, government contractors, insurance companies and trade associations successfully navigate the Congress and regulatory agencies.

Drawing on decades of experience, Ms. Kutcher successfully advises clients on both proactive legislative campaigns and defensive strategies to advance their legislative and regulatory goals.  She played a key role in the development of the Long-Term Care Insurance program for federal employees.  Ms. Kutcher is a senior member of Covington’s Public Policy Practice Group, and has served on the firm’s Retirement Committee for five years.

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