TRP’s McCarthy Offers Insight on Congressional Drug Pricing Debate For IHP Article

Thorn Run Partners’ Senior Vice President Shea McCarthy provided an overview of the Congress’s work to balance competing drug pricing priorities in a recent article for Inside Drug Pricing. As Congressional lawmakers walk this policy tightrope, McCarthy acutely pointed out that there’s an overarching desire among stakeholders to help consumers at the pharmacy counter while mitigating potential disruptions to research and development. “It makes sense that there appears to be growing interest in reforms that would remove some burden from patients without posing a threat to innovation,” McCarthy stated.   

The article in its entirety can be read below. 

Insurers Oppose Spreading Patient Costs In Medicare Part D Over Time

By Rachel Cohrs

October 10, 2019 at 2:27 PM

Drug makers are lobbying the Senate Finance Committee to allow patients to pay out-of-pocket costs over time in the Finance Committee’s Part D redesign, but insurers oppose the idea because they would have to pay up-front costs, according to several sources familiar with the lobbying efforts.

Under the Senate Finance drug pricing proposal, beneficiaries’ out-of-pocket costs would be capped at $3,100 starting in 2022. Drug makers want to add a provision to the bill that would allow beneficiaries to spread out their out-of-pocket costs throughout the year instead of frontloading the cost. The idea has been dubbed by some as “smoothing” beneficiary costs.

The change is designed to protect beneficiaries with such high drug costs that they hit the catastrophic cap early in the year, and sources say it has bipartisan support. Drug makers across the board support the policy, a source familiar with the lobbying efforts said, but it would be particularly attractive to manufacturers of specialty drugs used to treat rheumatoid arthritis, autoimmune disease and hepatitis C and oral cancer drugs.

Insurers, however, have taken the position that they are not in the business of providing interest-free loans to beneficiaries.

A source close to the insurance industry said fixes like smoothing distract from the issue of high list prices.

“Big Pharma supports long-term financing ideas, like ‘smoothing,’ as a way to reduce scrutiny on the impact of their prices. They feel spreading out the impact of their price-gouging over a longer period of time will lessen the sticker shock on sky-high drug prices and reduce the urgency for action to hold them accountable,” the source said.

America’s Health Insurance Plans did not comment specifically on smoothing but said the root problem of high beneficiary costs is list prices.

“In order to truly bring down drug prices we need to start at the list price. Lower prices will deliver lower costs for patients, consumers, employers, and taxpayers,” said AHIP spokesperson Cathryn Donaldson.

But from drug makers’ perspective, the fix could provide relief for beneficiaries without hurting manufacturers’ budgets.

Thorn Run Partners Vice President Shea McCarthy said Congress has struggled to balance directly helping consumers at the pharmacy counter with the potential for disrupting incentives for drug manufacturers to research new medicines.

“It makes sense that there appears to be growing interest in reforms that would remove some burden from patients without posing a threat to innovation,” McCarthy said. — Rachel Cohrs (