On November 20, the Department of Health and Human Services (HHS) released an interim final rule that would set reimbursement for 50 Part B drugs and biologics based on the international pricing data using so-called Most Favored Nation (MFN) pricing. 

The rule will test the use of MFN pricing in a demonstration that will run for seven years, beginning on January 1, 2021. MFN pricing will extend to the top 50 Part B drugs.

A recent analysis shows that the USA’s absence of price controls leads to more and newer medicines available sooner to Americans. Of the 74 cancer drugs launched between 2011-2018, 95% are available in the United States, compared with 74% in the UK, 49% in Japan, and 8% in Greece. 

And it will stifle investment in new cures. The administration’s economic advisors analyzing similar proposals found that foreign price controls would result in American patients missing out on as many as 100 new drugs over the next decade. 

iBIO member companies are working around the clock to fight COVID-19 and continue to provide patients access to innovative new therapies. Foreign price controls will make it harder for our member companies to bring these very few innovative medicines to market and chill investment into new cures and treatments. 

On behalf of the nearly 88,000 life sciences employees in Illinois, iBIO will work with our sister organizations to support policy solutions that protect innovation while addressing the price patients pay at the pharmacy counter.

Illinois is home to over 45,000 researchers, doctors, lawyers and business women and men in the biopharma industry who have an unwavering commitment to improving patient lives.

iBIO’s members are committed to expanding the boundaries of science by discovering, developing, and delivering innovative and needed medications to patients. Our members believe that all patients who can benefit from medications and therapies should have access to them.

iBIO is very concerned with the provisions included in H.R.3 to establish price controls as a mechanism for lowering list prices for pharmaceuticals in the US.

Specifically H.R. 3 would:

• Require the Secretary of Health and Human Services (HHS) to directly negotiate the price of 25 to 250 brand-name drugs annually that lack a generic or biosimilar competitor and have the greatest cost to Medicare and the U.S. health system. H.R. 3 would establish an upper limit for the price reached in any negotiation as no more than 120 percent of the volume-weighted average of the price of six countries (Australia, Canada, France, Germany, Japan, and the United Kingdom). This price is known as the Average International Market (AIM) price. The articulated goal of this policy is for HHS to negotiate a price that is below the AIM, called the “maximum fair price”, which would be applied to Medicare. Medicare Advantage and Part D plans could use additional tools to negotiate even lower prices.
• Require a manufacturer to offer the maximum price set by HHS to the commercial market. If a manufacturer does not agree with the maximum price, they will be assessed a penalty starting at 65% of the annual gross sales and increasing 10% every quarter to a maximum of 95%. If the manufacturer agrees to the maximum price, but overcharges Medicare or fails to offer the price to other payers, they are subject to a civil monetary penalty of 10 times the difference between the price charged and the maximum price. The bill would also establish a new inflation rebate for the more than 8,000 drugs in Medicare Parts B and D, retroactive to 2016, and the drug company can either lower the price or rebate the entire amount above inflation to the Treasury.
• Create a $2,000 out-of-pocket limit on Medicare Part D beneficiary prescription drug costs, beginning in 2022, and redesigns the program to have an initial coverage period and then catastrophic phase, effectively eliminating the coverage gap. However, the bill lowers the government’s exposure in the catastrophic phase from 80% to 20%, increases the insurers exposure from 20% to 50%, and increases manufacturer exposure from zero to 30%. Manufacturers would also be required to pay 10% in the initial coverage period. (Notably, this is a significant increase from the bipartisan Senate Finance Committee proposal, which would eliminate the coverage gap and have manufacturers pay 20% in the catastrophic phase.)

iBIO is opposed to any provision to transform Medicare Part B from a market-based payment formula to one tied to imported price controls. Understanding how prices vary between nations requires a comprehensive understanding of the different market access systems that exist for prescription drugs. These plans do not take into consideration the impact on patients and their access to life saving therapeutics.

What is of more concern is the cooling effect H.R. 3 could have on venture investment for small and emerging companies. More than 90% of the Biopharmaceutical industry is made up of small and emerging companies. These companies are responsible for 70% of the global clinical pipeline. This part of the industry is not actively engaged in the sale of pharmaceuticals or setting drug prices, but the impact of H.R. 3 for these companies can be great.

iBIO will work with our national partners to oppose the provisions in H.R. 3.

ACT NOW!

More resources on this issue:

International Drug Pricing – HOUSE 9-25-19 FINAL

pelosi high level summary sept 19

• The Committee adopted an amendment introduced by Senator Tammy Baldwin (D-WI) and Mike Brain (R-IN) on drug pricing transparency. The language includes a concerning provision to require drug companies to report confidential business information; however, Chairman Lamar Alexander (R-TN) has committed to seek improvements before the bill reaches the floor.
• The bill bans PBM “spread pricing,” mandates a number of transparency measures for PBMs, and authorizes a public health campaign to educate Americans on vaccines.
• Several Committee members had been contemplating amendments regarding prescription drug importation, and other potentially harmful proposals, but ultimately no such amendments were offered.

What’s next: Further changes are expected on this bill as it advances through the legislative process.

https://www.congress.gov/bill/116th-congress/senate-bill/1895?q=%7B%22search%22%3A%5B%22S1895%22%5D%7D&s=1&r=1

• As originally drafted, the bill would have granted the Federal Trade Commission (FTC) the ability to bring an antitrust action against a drugmaker for filing lawful, valid patents on improvements to a product. This version would have greatly reduced the incentive for making any post-approval improvements to a product and exposed manufacturers to significant liability for doing so.
• Following interventions from key members on the Committee, the broad FTC anti-patent authority as originally proposed was struck from the bill and replaced with a change to the “patent dance” under the Biologics Price Competition and Innovation Act.
• The legislation now places a 20-limit cap – only on certain patents that are filed more than 4 years after approval of an innovative biologic drug – that a branded biologic maker can claim in litigation. In return, biosimilar applicants will have to follow all steps of the “patent dance”— something they currently don’t have to do. While far from perfect, this greatly mitigates the damage that would have been done by the original version of the bill.

What’s next: Further changes are expected as the bill advances through the legislative process.

Drug pricing continues to be one of the few areas of bipartisan agreement, and momentum is building around reforms that will significantly alter the drug cost and innovation ecosystem

President Trump’s administration outlined proposed changes to the Medicare Part B program that would dramatically affect most vulnerable seniors and patient communities that don’t yet have a single therapy for their disease.

Medicare Part B supports the sickest, most vulnerable Medicare patients and accounts for only a small fraction of all Medicare spending. iBIO’s member companies are working on some of the most complex and hardest biomedical innovations for cancer, Alzheimers and rheumatoid arthritis.

The Trump Administration through the Centers for Medicare & Medicaid Services (CMS) is proposing to move from a market-based payment formula for Part B drugs to one based on foreign prices.

• Imports foreign price controls on American innovation, putting America’s most vulnerable patients last and diminishing their hopes for a better future;
• Undermines a successful Medicare Part B program by introducing new middlemen between patients and the medicines they need; and
• Fails to properly consider patient benefit, quality of care, or the impact on all patients and health care providers.

On June 20^th, the White House’s Office of Management and Budget (OMB) formally received a proposed rule for review from HHS on the International Pricing Index (IPI) Model for Medicare Part B Drugs. Details of the new proposal have not been disclosed but it is anticipated that it will be narrower than the original version that was proposed by HHS last year.

Position: Opposed

Click here to read iBIO’s comments to the administration on IPI

This bill repeals the excise tax on the sale of a medical device by the manufacturer, producer, or importer. The medical device excise tax is a 2.3% excise tax on the sale of certain medical technology that was enacted as part of the Affordable Care Act.

Position

iBIO supports H.R.2207 and its companion bill S.692.