February 13,2019

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Taylor Harvey (202) 224-4515

Wyden Releases Drug Proposals on Transparency and Consumer Protection

Top Finance Democrat Reintroduces Legislation to Address Broken Drug Supply Chain

Washington, D.C. – Senate Finance Committee Ranking Member Ron Wyden, D-Ore., today introduced three bills that will help bring transparency to the opaque, broken drug pricing system and bolster consumer protections for seniors with high drug costs.

“Drug companies and their middlemen operate in the dark as they extract profits from taxpayers and working families that are struggling to afford medicine,” Wyden said. “These bills represent the bare minimum of what’s required to pull back the curtain, put drug pricing on a sustainable course, and provide relief to seniors getting crushed by high costs. I am eager to move forward in the coming months on these and other reforms that fix the broken drug pricing system.”

The three bill Wyden introduced are the SPIKE Act, the C-THRU Act and the RxCAP Act. SPIKE addresses drug makers that continue to take large price increases with no justification, C-THRU reveals how pharmacy benefit managers (PBMs) make use of drug rebates and how much actually goes to lowering consumer costs, and RxCAP places an out-of-pocket limit on what seniors in Medicare Part D pay for drugs.

The Stopping the Pharmaceutical Industry from Keeping Drugs Expensive (SPIKE) Act would require the Health and Human Services Department (HHS) to notify drug manufacturers when their drug’s price has increased passed certain benchmarks. One benchmark seeks to address modestly-priced drugs whose prices are unreasonable increased, targeting actors such as Turing Pharmaceuticals, which increased the price of Daraprim by 5,000%. The other benchmark seeks to address drug price increases that Medicare and Medicaid spend the most, even if the increases are less dramatic. Additional information on the SPIKE Act can be found here, and the legislative text can be found here.

The Creating Transparency to Have Drug Rebates Unlocked (C-THRU) Act, would take several steps to improve transparency and ensure people in Medicare receive a fair share of rebate savings. It would require PBMs to publically disclose the aggregate amount of rebates they receive from pharmaceutical companies, and what proportion of those rebates go to Medicare beneficiaries. After two years of public reporting, the legislation would then require a minimum percentage of rebates and discount to be passed from a PBM to a health plan, which will lower premiums or other cost-sharing amounts paid by patients. The bill would require cost-sharing for Part D enrollees to be based off the negotiated price of the drug as agreed to by the drug manufacturer and PBM so that Part D enrollees fully benefit from discounts and rebates provided by drug manufactures. Additional information on the C-THRU Act can be found here, and the legislative text can be found here.

The Reducing Existing Costs Associated with Pharmaceuticals for Seniors (RxCAP) Act would eliminate all cost-sharing for Medicare beneficiaries once they reach the catastrophic phase. Next year, a senior in Part D who takes exclusively brand name drugs would hit this out-of-pocket limit after spending roughly $2,650 during the calendar year. Under Wyden’s bill, seniors would not pay anything above that amount. Because of the Affordable Care Act, which Wyden helped author, an out-of-pocket cap already exists for many commercial health insurance plans. In 2015, over a million seniors paid more than $3,000 in Part D, and 100,000 seniors paid more than $5,200. The legislative text of the RxCAP Act can be found here.