PhRMA Tries to Use Opioid Bill to Shift Part D Costs to Medicare

The pharmaceutical lobby hopes the fast-moving bill to fight the opioid epidemic will be its opportunity to undo part of this year’s budget deal, which shifted $4 billion in Medicare drug costs to the industry.

The February government spending bill required drug makers to provide a 70% drug discount for branded drugs in Part D starting in 2019, which would allow Medicare to fix the coverage gap or "donut hole" that forces seniors to pay large out-of-pocket costs once they reach a certain threshold. That amount has been coming down, but Congress has been determined to eliminate it. An agreement in February's budget agreement shifted more costs onto industry to close the gap by next year.

Because the discount doesn't kick in until 2019, the Pharmaceutical Research and Manufacturers of America, or PhRMA, has been trying to undo the provision since it passed. Now, the group has latched on to a multi-part bill to fight the opioid epidemic—which advocates say the industry created in the place—to roll back the discount to 63%.

Multiple sources reached by The American Journal of Managed Care^® (AJMC^®) confirmed reports that PhRMA was trying to undo the February budget language, and a spokesman for the Senate Energy and Commerce Committee acknowledged as much, saying that a previous plan to reconcile Senate and House versions of the bill on Friday “seems unlikely.”

In a statement sent to AJMC^®, PhRMA spokesperson Nicole Longo said that after the budget deal was reached, a technical error by the Congressional Budget Office was recognized that will have the net effect of requiring seniors to pay more for drugs than health plans. Longo said in an email the changes sought do not "reverse the entire policy." A CBO document outlines the different estimates that created the $4 billion difference.

But not everyone agrees the budget language should change. AARP executive vice president and chief advocacy and engagement officer Nancy LeaMond said the organization that represents the interests of people over age 50 opposed PhRMA’s actions. “AARP strongly opposes PhRMA’s attempts to cut a backroom deal with Congress and reverse the Medicare Part D donut hole improvements enacted earlier this year that put drug makers on the hook for a higher share of Medicare drug costs.”

Listen to our podcast on the bill to address the opioid crisis.

The Senate opioid package accelerates research into nonaddictive painkillers, takes steps to block shipments of fentanyl from China, and allows the FDA to require opioids to be shipped in blister packs. But some say the measures don’t focus enough on prevention and treatment, by adding beds or training for staff.

PhRMA is also seeking to put off by 2 years a $1200 increase in out-of-pocket spending for beneficiaries in Medicare Part D. Known as the “Part D cliff,” this was set to take effect in 2020. Industry lobbyists sought the delay to bring Democrats on board with the deal, but multiple reports suggest the minority members are not inclined to take the offer.

Generics and biosimilars. Another source confirmed to AJMC^® that PhRMA had also reached into the CREATES Act, (Creating and Restoring Equal Access to Equivalent Samples) which seeks to make it easier for manufacturers of generic and biosimilar therapies to do business and promote price competition to benefit consumers. POLITICO reports that under the revised version of the CREATES Act, generic companies would not sue for damages; instead, that would be left to the Federal Trade Commission, which would have to pick its fights.

History of the coverage gap. AARP and other consumer advocates have been working to end the coverage gap or “donut hole” since Medicare Part D was created in 2006. In 2018, the threshold for hitting the gap is $3750 of drug costs; then, a person must pay 35% of the cost for brand-name drugs or 44% of the cost for generics until they spend $5000. At that point, they enter catastrophic coverage and pay no more than 5% of drug costs per year.

“At a time when seniors are struggling to afford high drug prices, we need to be doing more, not less, to help lower their drug costs and we certainly should not roll back the progress that has been made,” LeaMond said.