US House passage of healthcare reform heralds difficulties ahead

The US House of Representatives has passed a landmark healthcare reform bill that would, among other things, mandate the US government to negotiate Medicare Part D prescription drug prices, introduce a regulatory pathway for biosimilars and prohibit “pay-for-delay” deals between brand name and generic drug companies¹.

The Affordable Health Care for America Act, which was passed narrowly in a 220-215 vote, was first introduced in late October. It combines and updates the three versions of previous bills passed by the House committees of jurisdiction earlier this year and is said to embody President Barack Obama’s key goals for healthcare reform (ie reducing healthcare costs, protecting and increasing consumers’ choices, and guaranteeing access to quality, affordable health care for all Americans²). Indeed, in a statement following the bill’s passage, the president commended the House and urged the Senate to follow suit so that he could sign the legislation into law by the end of the year³.

Among other things, the legislation would⁴:

• create a government public health insurance plan, under which the Department of Health and Human Services would negotiate payment rates for healthcare services and items, including prescription medicines. The public plan would compete with private insurers;
• require HHS to negotiate Medicare Part D prescription drug prices and require manufacturers to provide rebates for individuals dually eligible for both Medicare and Medicaid. The statutory Medicaid rebate for innovator drugs would increase from 15.1% to 23.1%, although the generic drug rebate would not increase;
• oblige manufacturers to provide a 50% discount on the price of branded drugs when a Medicare Part D beneficiary reaches the coverage gap, known as the “doughnut hole”;
• create a biosimilars approval pathway, providing 12 years of exclusivity for innovative biologicals, plus an extra six months for paediatric studies. Provisions to resolve patent disputes are also included;
• introduce “physician payment sunshine provisions” requiring drug, biologics and device manufacturers, from 2011, to file reports on any payments or transfers of value they made during the prior year to “covered recipients” such as physicians, pharmacists and hospitals. If enacted, the bill would not pre-empt state requirements to report information not required to be reported under the bill;
• prohibit deals between brand-name and generic drug manufacturers in order to resolve or settle a patent infringement claim where the generic applicant receives anything of value from the brand-name company and agrees not to research, develop, manufacture, market or sell the generic drug that is the subject of the patent infringement claim; and
• establish a new Center for Comparative Research within HHS to carry out comparative effectiveness research on healthcare items, services and systems, including drugs and devices.

The Senate is considering its own healthcare reform legislation⁵ and the two chambers of Congress now have to find a way to reach agreement if any reform is to be enacted. According to the White House, “the level of agreement between the House and Senate versions of reform is remarkable”⁶. However, the reality is that more and more lawmakers are refusing to back any bill that gives the government too much control over healthcare. There are also rumours of a planned filibuster in the Senate that would block the legislation.

Industry reaction

The drug industry will look to the Senate for a more pharma-friendly bill. The trade group PhRMA continues to endorse a measure passed by the Senate Finance Committee in mid-October⁷, which reflects the association’s $80 billion, ten-year commitment to reduce healthcare costs and lacks either a public insurance plan or any provision allowing the HHS to negotiate Part D drug prices or requiring new rebates for dual-eligibles.

PhRMA strongly criticised the House-passed bill⁸, saying that, while it was well intentioned, “the bill – as passed – would have the unintended consequences of killing tens of thousands of jobs in our industry at a time when the American economy is struggling and unemployment has soared above 10%”.

Describing House passage as the first act of a three-act play, PhRMA added: “We are still hopeful that before the curtain comes down on healthcare reform the Senate will seriously consider the impact any final legislation will have on US jobs and innovation.”

References

1. HR 3962, Affordable Health Care for America Act, passed by House of Representatives on 7 November 2009, http://thomas.loc.gov/cgi-bin/query/z?c111:H.R.3962:

2. House Speaker Nancy Pelosi, Affordable Health Care for America Act, www.speaker.gov/newsroom/legislation?id=0327

3. White House press statement, 7 November 2009, www.whitehouse.gov/the-press-office/statement-president-barack-obama-house-passage-affordable-health-care-america-act

4. FDA Law Blog, Hymen, Phelps and McNamara, 1 November 2009, www.fdalawblog.net/fda_law_blog_hyman_phelps/2009/11/hpm-posts-summary-of-hr-3962-provisions-directly-affecting-drug-and-device-manufacturers-.html

5. The Regulatory Affairs Journal – Pharma, 2009, 20(10), 695

6. The White House Blog: Health Care, 9 November 2009, www.whitehouse.gov/blog/issues/Health-Care

7. S 1796, America’s Healthy Future Act, passed by Senate Finance Committee on 19 October 2009, http://thomas.loc.gov/cgi-bin/query/z?c111:S.1796:

8. PhRMA press release, 7 November 2009, www.phrma.org/news_room/press_releases/phrma_statement_on_house_passage_of_health_care_reform_bill/