Part D Coverage Gap Discount Relief Misses Ride On Opioids Bill

Biopharma will continue to seek ways to pass legislation reducing the 70% discount in Medicare Part D coverage gap but it looks like industry's next chance will be after the November elections.

Biopharma lobbying efforts to attach a provision reducing the required 70% manufacturer discount on branded drugs provided to Medicare Part D beneficiaries in the coverage gap to legislation addressing the opioid epidemic have fallen short.

The opioids bill passed the House Sept. 28 without the Part D change and is expected to clear the Senate next week. (Also see "Opioid Approvals: Congress Wants US FDA Guidance On Abuse Potential" - Pink Sheet, 30 Sep, 2018.)

The discount was increased from 50% to 70%, effective in 2019, in a budget continuing resolution that passed in February and biopharma has been scrambling to reduce the new discount level ever since. An effort to attach a provision reducing the discount to spending legislation in March was also unsuccessful. (Also see "No Deal: Omnibus Spending Bill Moves Without Part D Discount Relief" - Pink Sheet, 22 Mar, 2018.)

The Pharmaceutical Research and Manufacturers of America points to an error in the Congressional Budget Office’s original score for the discount legislation as justification for its arguments that the discount should be lowered to 63%.

The reduced discount would provide $4bn less in savings over 10 years than a 70% discount would. But that is the level of savings originally intended by Congress in fashioning the bill, the trade group maintains.

At this point, it’s too late to change the 70% discount for 2019 because Part D plan bids incorporating the higher discount were submitted to the Centers for Medicare and Medicaid Services last spring.

PhRMA is now working on lowering the discount for the 2020 benefit year, which means the reduction needs to be in place by June 2019. Government appropriations bills scheduled to move through Congress in early December are potential vehicles. The stakes are high for PhRMA because the 70% discount could mean billions in added price concessions by manufacturers.

Coverage Gap ‘Cliff’ And CREATES Act

Meanwhile, PhRMA will continue to work on moving legislation that would correct, or at least delay, an upcoming surge in out-of-pocket spending requirements for seniors in the coverage gap. Known as the coverage gap “cliff,” the increase is schedule to begin in 2020.

The Affordable Care Act changed the way that the Part D out-of-pocket spending threshold had originally been indexed in order to slow its trajectory. But that was a temporary fix that expires at the end of 2019.

The increase could mean seniors will be responsible for paying an extra $1,250 out-of-pocket before they emerge from the gap and move into the catastrophic coverage phase of the benefit, according to the PhRMA. The fix would benefit seniors but would substantially add to Medicare costs; CBO estimates a fix could cost $3bn to $4bn over 10 years.

PhRMA has reportedly been willing to consider withdrawing its opposition to the Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act if it accompanies the Part D provisions as a financial offset. (Also see "Will CBO Score CREATE Momentum For Generic Bill's Passage?" - Pink Sheet, 19 Sep, 2018.)

The CREATES Act is meant to address abuses of the Risk Evaluation and Mitigation Strategy program to deter generic competition.  It would allow generic companies to sue their brand counterparts if they are being unfairly denied access to samples for testing. The bill also would remove requirements that generic companies use a shared REMS with applicable products.