Life Science Compliance Update

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September 15, 2015

Sen. Bernie Sanders Announces "Prescription Drug Affordability Act of 2015"

Pushes for Lower Drug Prices Through Variety of Measures Including Drug Pricing Transparency; Allowing Part D Negotiations; Imports Of Cheaper Drugs from Canada; Increased Fraud Penalties

Bernie Sanders

Taking a break from campaigning for President, Sen. Bernie Sanders (I-VT) and House Oversight and Government Reform Committee Ranking Member Elijah Cummings (D-MD) introduced legislation to address high prescription drug prices called the “Prescription Drug Affordability Act of 2015.” Announcing the Act, Sandars said: “the American people pay, by far, the highest prices for prescription drugs in the entire world” and the “greed of the pharmaceutical industry…has got to stop.” The main provisions of the Act would allow Medicare to negotiate pharmaceutical prices, allow consumers to import cheaper drugs from Canada, ban pay-for-delay schemes, add additional penalties for companies who settle with the government, and require companies to disclose the costs related to particular products and prices they charge in other countries.

View Sanders’ Press Release here.

Sanders listed a number of grievances he had with the pharmaceutical industry. “It is unacceptable that the top three pharmaceutical companies made a combined $45 billion in profits last year and spent more on sales and marketing than they did on research and development,” he said. He also was critical of the fact that “total spending on medicine in the United States has gone up by more than 90 percent since 2002” and that “the monthly cost of cancer drugs has more than doubled over the last ten years to $9,900. “

The Prescription Drug Affordability Act seeks to address some of these over its six sections.

(1)  Medicare Part D Negotiation: The legislation would instruct the Secretary of HHS to negotiate drug prices under the Medicare Part D prescription drug program. President Obama made a similar proposal earlier this year (see Reuters).  For an interesting counter to allowing government negotiation in this area, read a recent article by Robert Moffit entitled “Why Government Price Controls Would Reduce Access to Drugs,” which notes that under the proposal, “seniors will not have the same access to the same broad range of drug therapies that they do today.”

(2)  Prescription Drug Reimportation from Canada: “This bill would allow individuals, pharmacists, and wholesalers to import prescription drugs from licensed Canadian pharmacies where drug prices are 40 percent lower per person than they are in the U.S,” explains Sanders, who added: “You’re looking at the first Member of Congress who took a busload of seniors to Canada to purchase prescription drugs in 1999.  I will never forget the tears in the eyes of women who were able to buy the breast cancer drug tamoxifen at a tenth of the price that they were paying in the U.S.”

He asks all “who tout the benefits of ‘free trade’ to support this concept,” adding that “[i]f we can import lettuce and tomatoes from Mexico, there is absolutely no reason why we cannot import safe and affordable prescription drugs from Canada.”

(3)  Medicare and Medicaid Rebates: The bill would restore the minimum rebate on drugs covered under Medicare Part D for low income Medicare beneficiaries, which was eliminated with the creation of Part D. The bill states that according to CBO, rebates would save $103 billion over 10 years. The legislation would also require generic drug manufacturers to pay an additional rebate to Medicaid if their drug prices rise faster than inflation, mirroring the current requirements for brand name drug makers. According to CBO, these rebates would save $1 billion over 10 years. The bill would also close the Medicare Part D donut hole for brand and generic drugs by 2017, three years earlier than under current law.

(4)  Prohibit Pay for Delay Deals: The bill would prohibit anti-competitive arrangements between brand and generic drug makers where the brand name drug manufacturers pays the generic manufacturer to delay bringing their generic alternative to market. According to the FTC, these anticompetitive deals cost consumers and taxpayers at least $3.5 billion in higher drug costs every year. 

Also last week, U.S. Senators Amy Klobuchar (D-MN) , and Chuck Grassley (R-Iowa) reintroduced the "Preserve Access to Affordable Generics Act," which likewise seeks to end pay-for-delay arrangements. 

(5)  Penalties for Fraud Convictions: The legislation has some fairly draconian measures for companies who either settle fraud charges or are convicted. It would terminate any remaining market exclusivity period on any product found in violation of criminal or civil law through a federal fraud conviction or settlement. Earlier this year, Senator Elizabeth Warren (D-Mass) proposed adding further monetary penalties against companies that enter into major settlements. Pushback to such legislation often centers on the fact that if companies are penalized when they settle, they may instead continue through expensive, time-consuming litigation in order to fight their case. 

(6)  Drug Pricing and Transparency: Finally, the bill includes a drug cost transparency provision, similar to state bills we have written about.  This would require pharmaceutical companies to publicly report information that affects drug pricing, according to the bill, which would include

  • (1) the total expenditures of the manufacturer on (A) research and development;  (B) clinical trials; (C) materials and manufacturing; (D) acquisition costs, including costs for the purchase of patents and licensing; and (E) marketing and advertising for the promotion of the drug to consumers and prescribers;
  • (2) the total profit to the manufacturer attributable to such drug;
  • (3) the total amount of financial assistance the manufacturer has provided through patient prescription assistance programs with respect to such drug, if any;
  • (4) any Federal benefits received by the manufacturer, including tax credits, grants from the National Institutes of Health, and other Federal benefits with respect to such drug; and
  • (5) any additional information the manufacturer chooses to provide related to drug pricing decisions, such as total expenditures on R&D or clinical trials on drugs that failed to receive approval by the FDA.

While most of these provisions are the same as state drug cost legislation transparency, this bill adds section (5), above, that  companies may choose to report total expenditures on R&D or clinical trials for drugs that did not make it to market. However, industry stakeholders have pointed out a number of issues with similar drug price transparency measures, including the fact that the breadth of reporting required could force companies to disclose otherwise protected trade secret or non-commercial information.

What is also unique about this provision from previous state measures is that it includes a section “Reporting on Foreign Sales” that requires reporting of “information about the price of the drug, and profits from and volume of sales of the drug, in each foreign country in which the drug is sold, as applicable.”

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Sanders concluded his speech by cautioning his audience that he "know[s] how hard it will be to pass this legislation [and] to defeat the prescription drug industry. In fact, to my knowledge the prescription drug industry has never lost a battle on Capitol Hill." However, he added that "at a time when a huge majority of the American people want us to take action, when 74 percent of Republicans and 93 percent of Democrats, want the federal government to negotiate with the drug companies top lower prices, the time has come to say enough is enough."

Click here for a link to the bill

Click here for Sanders' statements

 

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