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Senators' bipartisan plan targets drug costs, surprise medical bills

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Senators' bipartisan plan targets drug costs, surprise medical bills

The Republican and Democratic heads of the Senate Health, Education, Labor and Pensions Committee unveiled a sweeping plan to lower the costs of prescription medicines and to take action against surprise medical bills.

The draft measure from Sens. Lamar Alexander, R-Tenn., the chairman of the committee, and Patty Murray, D-Wash., the ranking member, also seeks to provide greater transparency into healthcare costs overall, strengthen U.S. public health through new vaccine and other initiatives and improve electronic health information.

Alexander and Murray have worked on healthcare bills together before — some successful and others that have stalled.

The new legislative package, which includes nearly three dozen bipartisan provisions, follows a number of separate measures that have been introduced on Capitol Hill with similar goals, though none of those others are as comprehensive as the Alexander-Murray proposal.

Some of the drug pricing proposals have already been adopted by the House or are expected to soon move to that chamber's floor.

The senators want to have their committee complete its work on their legislation by sometime in June so that it can go to the Senate floor in July, Alexander said in a May 23 statement.

Earlier this month, the Tennessee senator vowed to get legislation to the White House by July that would ensure Americans are not caught off guard by large medical bills from hospitals, doctors and other providers not covered in a person's health plan, or out of network.

Alexander, however, did not disclose at that time that he and Murray also planned to include drug pricing provisions and other measures in their package.

PBMs a particular target

The legislation takes particular aim at pharmacy benefit managers — often called middlemen — barring them from engaging in spread pricing, a practice where they pocket the difference between what drug plans pay for a prescription medicine and the amount the pharmacy is reimbursed for it.

PBMs could no longer charge anyone a higher amount for a drug than what it paid to acquire it.

Three of the five PBM executives who testified at an April 9 Senate Finance Committee hearing said they would support a measure banning spread pricing, while the other two would not commit.

Under the Alexander-Murray plan, PBMs also must pass on to the drug plan sponsors 100% of any rebates or discounts they negotiate with biopharmaceutical manufacturers.

In addition, the middlemen companies would be mandated to report information to their clients about costs, fees and rebates.

But unlike a proposal from the Trump administration, Alexander and Murray do not seek to end the safe harbor protections that allow PBMs to negotiate rebates with drugmakers.

Generics and biosimilars

In their draft legislation, the two senators go after brand-name biopharmaceutical makers that abuse the U.S. Food and Drug Administration's citizen petition process to delay approvals of lower-cost competitors.

The bill would give the FDA more flexibility to deny those petitions. It also would require Health and Human Services to establish procedures for referring a company to the Federal Trade Commission if it is clear the petition was submitted with the primary purpose of delaying a competitor.

The senators also take aim at generic companies that try to delay the market entrance of their products beyond the 180-day exclusivity period they were granted by the FDA in an effort to slow down other generic competitors.

The House adopted similar legislation last week as part of a five-bill package, which also included the CREATES Act — a measure that would make it easier and faster for generic drug companies to sue brand-name biopharmaceutical makers when those manufacturers withhold samples of their medicines needed by their competitors to conduct required studies for U.S. approval.

Alexander and Murray, however, did not include the CREATES Act in their package, despite the measure waiting for a vote in the Senate.

Included in their proposal were measures affecting biosimilars — drugs intended to be lower-cost versions of biologic therapies, which are complex molecules derived from living cells.

Among the biosimilar provisions is a measure that would ensure that when certain products, like insulins, transition in March 2020 to the FDA pathway used to approve biologics, that those therapies do not end up with any unduly additional marketing exclusivity that would delay lower-cost versions.

A similar measure has been introduced in the House.

The bills are intended to codify FDA guidelines issued in December 2018.

The Alexander-Murray draft bill also includes some measures similar to those overwhelmingly adopted earlier this month by the House that are intended to make it easier for makers of generics and biosimilars to track patents held by brand-name drugmakers in two FDA databases — the Orange Book and the Purple Book, respectively.

Surprise medical bills

A number of the provisions in the two senators' package address surprise medical billsmany of them similar to other proposals.

Last week, Sens. Bill Cassidy, R-La., and Maggie Hassan led a group of senators in introducing their own surprise medical bill package.

Some similar measures have also been introduced in the House, including one from the Democratic and Republican heads of the House Energy and Commerce Committee.

Like the other proposals, the Alexander-Murray draft plan calls for patients to only be responsible for paying the cost-sharing amount in emergency situations, including for all ancillary practitioners and diagnostic services, that they would normally be responsible for at their in-network facilities, whether the provider or service was covered in the person's health plan.

Unlike the Cassidy-Hassan bill, Alexander and Murray are not committing up front to an arbitration process for resolving payment disputes, but instead included it among three options for consideration.

Loren Adler, associate director of the University of Southern California and Brookings Institution's Schaeffer Initiative for Health Policy, said the most attractive of those three options was the in-network facility guarantee, in which every practitioner at a facility would be considered in-network.

In-network guarantee, also called network matching, "is the first in Congress that would fully address the underlying market failure and hopefully bring costs down to more normal market levels," Adler tweeted.

Adler laid out a more detailed argument in favor of the network matching idea in a May 23 article in the public policy journal Health Affairs.