You are here

Big Pharma's bid to slip US$4b windfall into Opioid bill sparks outcry

Proposal will hike prescription drug costs for seniors while handing billions to drug industry, says opposing lobby

Washington

DRUG companies usually get what they want in public-policy battles on Capitol Hill, but a move by the pharmaceutical industry to grab US$4 billion from the federal Treasury in a bill that is supposed to address the nation's deadly opioid epidemic is meeting fierce resistance.

At issue is a small measure the Pharmaceutical Research and Manufacturers of America (PhRMA) has deemed a "technical correction" to a bipartisan budget law signed by President Donald Trump in February.

The law required drug manufacturers to provide deeper discounts to Medicare beneficiaries whose spending on prescription drugs falls within a range called the coverage gap, or "doughnut hole". The discount, now 50 per cent on brand-name drugs, is set to rise next year to 70 per cent.

sentifi.com

Market voices on:

The change sought by the drug industry has nothing to do with the scourge of opioids, but such provisions are often tucked quietly into popular, swiftly moving bills, then discovered months later. In a sign of the times, members of Congress and consumer advocates quickly mobilised opposition.

"Big Pharma is trying to hijack the bill and turn it into a giant pharmaceutical company bailout," Senator Tina Smith of Minnesota said in a Twitter post.

The proposal "will increase prescription drug costs for older Americans while providing a windfall of billions of dollars to the drug industry", said AARP, the lobby for 38 million Americans aged 50 and older.

Opponents said on Monday that they were confident they could block the relief sought by drug companies, at least for now.

The Congressional Budget Office had initially estimated that the requirement for drug companies to provide larger discounts would reduce federal spending on Medicare's drug benefit by a total of US$7.7 billion through 2027. Shortly after the law was enacted, the budget office discovered additional information and raised its estimate of the savings to US11.8 billion.

Drugmakers argue that Congress intended to save just US$7.7 billion and should now give back the US$4 billion difference. Medicare beneficiaries could still receive discounts of 63 per cent, the industry says.

The Trump administration has not publicly engaged in this particular fight, but has stoked scepticism of the industry. Mr Trump has repeatedly said that drugmakers are "getting away with murder".

Pharmaceutical companies see the opioids bill as an attractive vehicle because swift passage is a political priority for members of both parties this election year. Lawmakers are urgently trying to work out differences between the versions passed by votes of 396-14 in the House and 99-1 in the Senate.

Medicare's outpatient drug benefit, known as Part D, is delivered entirely by private companies like UnitedHealth, Humana and CVS Health.

Prescription drug plans pay some of the drug costs incurred by people in the coverage gap. In the Bipartisan Budget Act in February, Congress reduced the insurers' share to 5 per cent; it would otherwise have been 20 per cent next year.

In a classic spat between two powerful industries, drug companies say insurers should pay more, so drugmakers can pay less. Insurers will do a better job managing the cost of Medicare's drug benefit if they bear more financial risk, drug companies say, and many health economists agree.

America's Health Insurance Plans, the chief lobby for insurers, opposes any changes that would increase their share of drug costs in the coverage gap. NYTIMES