CCAGW Urges Senators to Oppose PDRPA | Council For Citizens Against Government Waste

CCAGW Urges Senators to Oppose PDRPA

Letters to Officials

July 23, 2019

Senate Finance Committee
219 Dirksen Senate Office Building
Washington, D.C. 20510

Dear Senator,

Today, Senate Finance Committee Chairman Chuck Grassley (R-Iowa) and Ranking Member Ron Wyden (D-Ore.) released a draft bill, The Prescription Drug Pricing Reduction Act (PDPRA). The bill makes fundamental changes to the structure of the Medicare Part B, Medicare Part D, and Medicaid drug benefits. On behalf of the more than 1 million members and supporters of the Council for Citizens Against Government Waste (CCAGW), I ask that you oppose this legislation at the scheduled markup this Thursday so that serious and careful thought and debate can be given in committee hearings as to the benefits or harm this legislation will have on beneficiaries and taxpayers.

While CCAGW likes the market-based approach in the Medicare Part D redesign that puts more negotiating power within the private sector in the coverage gap and catastrophic phases, more study and consideration need to be undertaken to assess and quantify the potential savings for both beneficiaries and taxpayers and whether improvements can be made in the legislation.

Unfortunately, most of the rest of PDPRA takes the opposite approach and utilizes the heavy hand of government price controls and regulatory hammers that will stifle pharmaceutical innovation and drive up healthcare costs.

For example, the Medicare Part B and Medicare Part D inflationary rebates tied to the urbane consumer price index, or CPI-U, are price controls. A Town Hall July 22 opinion piece correctly pointed out that price flexibility during the first few years of a drug’s entry is very important to recoup development costs. Pharmaceutical companies also need flexibility to address other issues, like shortages of an important ingredient or another unexpected event, to keep a medication available.

Some of the so-called transparency requirements will also be harmful. Revealing aggregate price concessions among pharmacy benefit managers, druggists, and insurers will interfere with the robust negotiations that have kept Part D premiums low and beneficiary satisfaction high. Requiring drug manufacturers to justify a Wholesale Acquisition Cost (WAC) increase based on some arbitrary figure set by the Secretary of Health and Human Services will do nothing to lower drug costs.

The WAC is a list price and does not represent what most patients pay after discounts and rebates. Much of the information required to be released would be proprietary or may be difficult to determine, such as the amount spent for research on a drug. Some drugs are investigated, put aside and then researched again, while other drugs fail in clinical trials, but their scientists must still be paid.

This legislation is too complicated, overreaching, and important to be “reviewed” and voted on in two days. It is not concomitant with the cautious and deliberate proceedings of the Senate or the Finance Committee. Again, CCAGW urges you to vote no on the Prescription Drug Pricing Reduction Act.


Tom Schatz
President, CCAGW

cc: U.S. Senate

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