Ten Charts on Proposals to Lower Medicare Prescription Drug Prices - PowerPoint Presentation

Ten Charts on Proposals to Lower Medicare Prescription Drug Prices A primer on Medicare prescription drug proposals introduced by House Democrats, the Senate Finance Committee, and the Trump Administration

Percent who say each of the following should be a top priority for Congress: SOURCE: KFF Health Tracking Poll (conducted September 3-8, 2019). See topline for full question wording and response options. Majorities Across Parties Say Lowering Costs for Health Care and Drugs Should Be Top Priorities for Congress DEMOCRATS REPUBLICANS INDEPENDENTS

Most Proposals For Lowering Prescription Drug Costs Are Popular Across Parties SOURCE: KFF Health Tracking Poll (conducted October 3-8, 2019). See topline for full question wording and response options. % who strongly/somewhat favor each of the following: Total Democrats Independents Republicans Allowing the government to negotiate with drug companies to get a lower price for people on Medicare 88% 92% 90% 85%Allowing the government to negotiate with drug companies to get a lower price for both Medicare and private insurance 85 94 84 84 Placing an annual limit on out-of-pocket costs for seniors enrolled in Medicare Part D plans 81 83 81 82 Allowing Americans to buy prescription drugs imported from licensed Canadian pharmacies 78 75 82 75 Allowing Medicare to place limits on how much drug companies can increase the price of drugs based on annual inflation rates 76 78 77 77 Increasing taxes on drug companies that refuse to negotiate the price of medications with the federal government 72 79 71 69 Lowering what Medicare pays for some drugs based on amounts in other countries where governments more closely control prices 62 73 62 52

SOURCE: KFF Health Tracking Poll (conducted October 3-8, 2019). See topline for full question wording and response options. Support For Government Negotiations With Drug Companies Can Shift With Arguments Would you favor or oppose allowing the federal government to negotiate with drug companies for lower prices if you heard…? Favor Oppose

HouseH.R.3: Lower Drug Costs Now Act of 2019 Introduced by Chairmen Pallone , Neal, & Scott September 19, 2019 Referred to the Committees of Jurisdiction Senate Finance Committee S.2543: Prescription Drug Pricing Reduction Act of 2019 Voted out of CommitteeJuly 25, 2019 19 Yays; 9 NaysTrump Administration International Price Index ANPRM Released October 30, 2018 Proposals in FY 2020 Budget Released March 11, 2019 Overview of Major Medicare Drug Pricing Proposals NOTE: These are drug pricing proposals related to Medicare specifically, rather than broader proposals that are not solely focused on Medicare, such as those related to drug importation, generic drug availability, patents, and price transparency.

House (H.R. 3) Senate Finance Trump Administration Medicare Part D benefit redesign with limit on out- of-pocket costs    Inflation-based limit on drug prices    HHS Secretary negotiates drug prices   X  X Other modifications in payments for Part B drugs X    High-Level Comparison of Medicare Drug Pricing Proposals

Current Law House (H.R. 3) Senate Finance Trump Administration Who pays how much in the catastrophic phase? Catastrophic threshold/cap $5,100 $2,000 OOP cap (in 2022) $3,100 OOP cap (in 2022) Not specified How Would Proposals Change the Medicare Part D Benefit? Enrollees Medicare Plan sponsors Manufacturers Enrollees 0% Enrollees 0% Enrollees 0% Enrollees

Secretary negotiates prices for at least 25 and up to 250 drugs without market competition Based on 125 drugs with the highest Medicare Part D spending,125 drugs with the highest net spending in the commercial market, and insulin (in year 1 ) Maximum fair price not to exceed 120% of average price in up to 6 countries: Australia, Canada, France, Germany, Japan, & UK If no international price is available, maximum fair price not to exceed 85% of average manufacturer price Maximum fair price applies to both Medicare & private payers (group and individual)Drug companies subject to excise tax for not negotiating with the Secretary -- 65% up to 95% of the previous year’s gross sales for a given drug Civil monetary penalty on drug companies for not offering agreed-upon maximum fair price to private payers = 10x difference between price charged & negotiated priceCBO preliminary and partial estimate: $345 billion in Medicare savings (2023-2029)*Based on H.R.3 prior to any changes made by committees of jurisdiction. How Would the Secretary Negotiate Drug Prices Under H.R. 3?*

House Senate Finance Trump Administration Applies to Part B/Part D Both Both Part B only Applies to all drugs (brands/generics) Part B: brands, biologics, and biosimilars Part D: All drugs Brands and biologics only Not specified Require rebate for drug price increases faster than inflation   Not applicable* Penalty if rebate not paid within 30 days Rebate + 25% Rebate + 25% Not applicable* Price used in comparing against inflation for Part D drugs Average Manufacturer Price Wholesale Acquisition Cost Not applicable Base year for determining inflation-adjusted price 2016 2019 2018 How Would Proposals Use Inflation Rate to Limit Drug Price Increases? *Under the proposal, CMS would not pay more for a Part B drug than the inflation-adjusted price, so rebates would not be needed.

How Would Drug Proposals Use International Reference Pricing? Trump Administration International prices used to test new models to pay for Part B drugs Would apply to geographic areas that comprise 50% of all drug spending Target prices derived from an international price index (IPI), phased in over 5 years, or ASP, whichever is lower Medicare Part B drug payments set at 126% of average price paid by up to 16 countries House International prices used as part of drug negotiations between HHS Secretary and manufacturers to establish an upper limit on negotiated prices Maximum price would be set at 120% of the average price paid in up to 6 countries Senate Finance No international reference pricing provisions

What is the Status of Trump Administration Drug Proposals? International Price Index (IPI) for Medicare Part B drugs Advanced Notice of Proposed Rule Making: Released October 2018 Modify Medicare Part D benefit design, including adding an out-of-pocket limit Proposed in Administration’s FY 2020 Budget Modify methodology for Part B drug payments (e.g., limiting drug prices to rate of inflation) Proposed in Administration’s FY 2020 Budget Prohibit rebates by removing “safe harbors” that protect rebate payments made by drug manufacturers to pharmacy benefit managers (PBMs) Withdrawn in July 2019 (CBO estimated rule would increase federal spending by $177 billion) Require pharmaceutical companies to include list prices in TV ads Blocked by federal court in July 2019