Infrastructure Gang Targets Pharma to Pay for Roads, Bridges (1)

  • Senators considering changes to drug policy, Medicare
  • Hunt for funding intensifies as lawmakers finalize package

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Senators negotiating a bipartisan infrastructure deal are looking to pay for some of their package by curbing unpopular practices by pharmaceutical middlemen and drugmakers, putting industry groups on high alert.

A bipartisan group of senators is finalizing details of a $579 billion package that would upgrade highways, bridges, and water systems, among other provisions.

To offset some of the cost, the lawmakers are considering proposals to raise money from drugmakers and pharmacy benefit managers, which are third-party administrators that help employers and states oversee their pharmacy benefits, according to two health-care lobbyists and a Republican congressional aide familiar with the discussions.

The bipartisan group has also floated rescinding some unspent Covid-19 relief funds, including money meant to help struggling hospitals and health-care providers.

That proposal upset Sen. Ron Wyden (D-Ore.), chairman of the Senate Finance Committee, who Tuesday demanded the group explain more explicitly which offsets they want to use.

“At a time when the virus in some places is coming back very hard, I don’t think that’s sound policy,” Wyden said of using the provider relief funds.

The focus on health policy show how drug pricing changes have become a go-to source of offsets for Congress’s major domestic policy goals.

Infrastructure Talks Hit Multiple Snags as Deadlines Slip

Photo: Doug Barrett/Bloomberg via Getty Images
A pharmacists speaks on the phone at Graves Drug pharmacy in Arkansas City, Kan., on March 5, 2021.

Specifically, the lawmakers want to demand refunds from drugmakers for some kinds of physician-administered single-use medicines, which the Congressional Budget Office estimates could lower Medicare spending by $9 billion over a decade.

They also want to ban spread pricing, when a pharmaceutical benefit manager charges an employer or Medicaid program more for a drug than they reimburse pharmacies for administering it. PBMs say that practice helps them avoid fluctuations in pharmacy costs. It wasn’t immediately clear how much money such a ban would save.

Lawmakers haven’t settled on a final package, Senate aides caution, leaving some of its details unclear. Republican and Democratic negotiators remain optimistic they’ll reach a deal, but are split on funding for transit and water projects, and on how much unspent Covid-19 stimulus money to repurpose, among other issues.

Drug Pricing Will Make or Break Democrats’ Health Care Agenda

‘Just a Pigggybank’

“A lot of this stuff is just a piggybank at this point: it’s more about the dollar signs versus the actual policy,” said Joel White, who lobbies on behalf of the Pharmaceutical Research and Manufacturers of America industry group and several drug companies as president of Horizon Government Affairs.

Just the specter of a ban on spread pricing has benefit managers concerned.

“It’s the wrong way to go, having Congress intervene between private actors,” said JC Scott, president and CEO of the Pharmaceutical Care Management Association, an industry group for benefit managers.

Scott said his group is opposed to ending spread pricing in the commercial market but is open to the idea for Medicaid, where it’s already banned in states such as New Jersey and Texas.

Single-Use Leftovers

Senators are eyeing a delay of a Trump-era regulation to end some pharmaceutical rebates, a change that could reap billions in savings, lawmakers announced last week.

Senate Infrastructure Deal in Sight After Medicare Agreement

Infrastructure negotiators are also considering pulling one provision from a bipartisan drug pricing deal that failed to become law last Congress: a new requirement in Medicare for drugmakers to repay the government the value of any unusable drugs left over from single-use packages.

This change, for drugs administered by doctors, is meant to discourage drugmakers from packing single-use containers with more than the recommended amount of a medicine.

Health-care industry groups such as the American Hospital Association, in addition to Wyden, are raising red flags about the possibility the bipartisan group could claw back some of the estimated $43.7 billion in unallocated Covid-19 relief funds earmarked for hospitals and doctors.

These groups are also warning lawmakers not to extend the Medicare sequester—or planned cuts to hospital and doctor reimbursements set to run from fiscal 2022 to 2030. These cuts were originally slated to run from fiscal 2013 to 2021 but have repeatedly been delayed and extended.

In an early draft of possible infrastructure pay-fors, senators mentioned extending the sequester into 2031, which could save the government more than $35 billion, according to CBO estimates.

To contact the reporter on this story: Alex Ruoff in Washington at aruoff@bgov.com

To contact the editors responsible for this story: Sarah Babbage at sbabbage@bgov.com; Anna Yukhananov at ayukhananov@bloombergindustry.com

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