Today, the President and Health and Human Services (HHS) Secretary Alex Azar unveiled a 44-page Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs, designed to bring “soaring drug prices back down to earth.” The President touted the Blueprint as the “most sweeping action in history to lower the price of prescription drugs to the American people.” While the impact on pricing remains to be seen, and actions such as Medicare price negotiation were not mentioned, the Blueprint contains more than 50 actions HHS has planned or are under consideration. As we noted in this blog post, many of the Blueprint’s proposals were first laid out in the President’s Fiscal Year 2019 Budget.

The Blueprint has four categories for drug pricing reform, further described below:

  • Improved competition
  • Better negotiation
  • Incentives for lower list prices
  • Lowering out-of-pocket costs

Further, the Blueprint has two “phases” for implementation of reforms. First are actions HHS may take “immediately.” Second are those HHS is “actively considering, on which feedback is being solicited.” While many of these actions can be implemented with existing regulatory authority, some of the “Further Opportunities” will require legislation granting HHS the necessary authority.

Improved competition

Immediate actions

  • Steps to prevent manufacturer gaming of regulatory processes, such as Risk Evaluation and Management Strategies (REMS)
  • Measures to promote innovation and competition for biologics
  • Developing proposals to stop Medicaid and Affordable Care Act programs from raising prices in the private market

Further Opportunities

  • Considering how to encourage sharing of samples needed for generic drug development
  • Additional efforts to promote the use of biosimilars

Better negotiation

Immediate Actions

  • Experimenting with value-based purchasing in federal programs
  • Allowing more substitution in Medicare Part D to address price increases for single source generics
  • Reforming Medicare Part D to give plan sponsors significantly more power when negotiating with manufacturers
  • Sending a report to the President on whether lower prices on some Medicare Part B drugs could be negotiated for by Part D plans
  • Leveraging the Competitive Acquisition Program in Part B
  • Working across the Administration to assess the problem of foreign free-riding

Further Opportunities

  • Considering further use of value-based purchasing in federal programs, including indication-based pricing and long-term financing
  • Removing government impediments to value-based purchasing by private payers
  • Requiring site neutrality in payment
  • Evaluating the accuracy and usefulness of current national drug spending data
  • Investigating tools to address foreign government threats of compulsory licensing or IP theft that may be harming innovation and development, driving up U.S. drug prices

Incentives for Lower List Prices

Immediate Actions

  • FDA evaluation of requiring manufacturers to include list prices in advertising
  • Updating Medicare’s drug-pricing dashboard to make price increases and generic competition more transparent

Further Opportunities

  • Measures to restrict the use of rebates, including revisiting the safe harbor under the Anti-Kickback statute for drug rebates
  • Additional reforms to the rebating system
  • Using incentives to discourage manufacturer price increases for drugs used in Part B and Part D
  • Considering fiduciary status for Pharmacy Benefit Managers (PBMs)
  • Reforms to the Medicaid Drug Rebate Program
  • Reforms to the 340B Drug Discount Program
  • Considering changes to HHS regulations regarding drug copay discount cards

Lowering Out-of-Pocket Costs

Immediate Actions

  • Prohibiting Part D contracts from preventing pharmacists’ telling patients when they could pay less out-of-pocket by not using insurance
  • Improving the usefulness of the Part D Explanation of Benefits (EOB) statement by including information about drug price increases and lower cost alternatives

Further Opportunities

  • More measures to inform Medicare Part B and D beneficiaries about lower cost alternatives
  • Providing better annual, or more frequent, information on costs to Part D beneficiaries

The actions classified as “Further Opportunities” form the basis for a Request for Information (RFI) which begins on page 26 of the Blueprint. The RFI process is the opportunity for HHS to take public comment. Interestingly, there were no timelines announced regarding when HHS would begin to implement or complete the Immediate Actions.

In his remarks, Secretary Azar said reform “is not a one-and-done deal—it is a comprehensive process.” We’ll be monitoring and posting as events develop!