Health Policy Report – May 16, 2023

Congressional Scrutiny over Drug Pricing and the Pharmaceutical Supply Chain Continues

Committees in both the Senate and the House are continuing to hold hearings and consider legislation to address high drug costs. On May 11, the Senate Health, Education, Labor and Pensions (HELP) Committee convened to hold a highly anticipated continuation of a markup on drug pricing issues. The markup originally began a week before but was derailed and ultimately sent into recess amid accusations by Republicans that Democrats changed positions on the details of various bills. On May 11, the HELP committee passed three bills aimed at speeding generic drug competition and one intended to rein in PBMs’ use of spread pricing but failed to pass a popular amendment introduced by Senator Roger Marshall (R-KS) that would ban PBMs from charging administrative fees based on a percentage of a drug’s list price. The PBM reform bill passed by a vote of 18 to 3, with Sens. Mitt Romney (R-UT), Rand Paul (R-KY) and Tommy Tuberville (R-AL) voting against it.

The HELP committee markup followed a hearing on May 10 on insulin prices featuring witnesses from the PBM industry and insulin manufacturers. Senators on both sides of the aisle asked questions about PBMs’ role in the market.  In his opening remarks, Paul Hudson, CEO of Sanofi, noted, “This vertical integration gives these corporations near total control over the products the patients can access and the price they have to pay,” said Hudson. For their part, PBMs insisted that they pass over 90% of savings back to their clients.

Meanwhile, the Senate Energy and Commerce Health Subcommittee held a hearing entitled “Examining the Root Causes of Drug Shortages: Challenges in Pharmaceutical Drug Supply Chains,” on May 11. In the hearing, lawmakers highlighted inefficiencies within the pharmaceutical supply chain, including the role of active pharmaceutical ingredients (APIs), reliance on foreign drug manufacturers, and models that may improve the supply chain. Witnesses included Alex Oshmyansky, MD, PhD of Mark Cuban Cost Plus Drug Company, Anthony Sardella of API Innovation Center, Laura Bray of Angels for Change, and Fernancdo Muzzio, PhD, of Rutgers University. 

Finally, the health subcommittee of the House Ways and Means Committee held a hearing to examine federal policies on drug innovation, pricing and access. During the hearing, lawmakers heard testimony from five advocates and doctors, including Ted Okon of the Community Oncology Alliance. In addition to expressing concerns about PBMs, the 340B drug pricing program, and the rising cost of cancer drugs, Okon discussed how the Inflation Reduction Act and Accelerating Clinical Evidence Model put providers in the middle of negotiations between the government and drug companies, adversely impacting cancer care.  

To watch the Senate HELP Committee’s markup, CLICK HERE.

To watch the House Energy and Commerce Health Subcommittee’s hearing on drug shortages, CLICK HERE.

To watch the House Ways and Means Committee Health Subcommittee’s hearing on innovation and patient access, CLICK HERE.

New Report Shows 340B Eligibility Linked to Lower Biosimilar Use

According to a new report published in Health Affairs, participation in the 340B drug pricing program was associated with reduced biosimilar use and more biologic administrations.

While 340B hospitals receive discounts for purchasing drugs, the administration of the drugs is reimbursed by Medicare at the same rate as non-340B providers, which may incentivize hospitals to administer more expensive drugs rather than lower the cost of biosimilars for Medicare. This means that 340B hospitals may receive higher profits for administering certain discounted medications.

The study looked at outpatient claims data from 2017 – 2019 at 593 general acute hospitals with DSH percentages within 10 percent of the 340B eligibility threshold for two biologics, filgrastim and infliximab, and their biosimilars, filgrastim-sndz and filgrastim-aafi. Biosimilar use was about 23% lower in 340B hospitals compared with non-340B hospitals, indicating that the 340B program could be a factor that has reduced overall biosimilar use in the U.S. The researchers wrote that their findings add to the evidence supporting calls to reform the 340B program.

To read the full study, CLICK HERE.

To learn more, CLICK HERE.