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Statement for the Record: The Prescription Drug Pricing Reduction Act (PDPRA) of 2019

Full Senate Committee on Finance

July 25, 2019

ASHP (American Society of Health-System Pharmacists) respectfully submits the following statement for the record to the Senate Committee on Finance markup of "The Prescription Drug Pricing Reduction Act (PDPRA) of 2019."

ASHP represents pharmacists who serve as patient care providers in acute and ambulatory settings. The organization's nearly 50,000 members include pharmacists, student pharmacists, and pharmacy technicians. For more than 75 years, ASHP has been at the forefront of efforts to improve medication use and enhance patient safety.

We applaud the Committee's efforts to address drug pricing. ASHP's vision is that medication use will be optimal, safe, and effective for all people all of the time. A primary tenet of that vision includes access to affordable medications needed to save or sustain lives. Addressing the issue of skyrocketing drug prices, including excessive price increases on commonly used generic medications, is one of ASHP's highest and longstanding public policy priorities.

Poor access to medications can lead to increased morbidity and mortality and can cause healthcare costs to increase. According to a recent Kaiser Health Tracking Poll, 29 percent of adults report that they are not taking their medications as prescribed due to increased cost. Eight percent of those individuals noted that their condition worsened because of poor medication adherence.

ASHP has been proactively addressing challenges related to the rapid increase of prescription drug prices on several fronts, including working with like-minded stakeholders and educating members of Congress about the unsustainable burdens faced by patients, healthcare providers, and the entire healthcare system.

ASHP was pleased to see the number of transparency-related provisions in the bill. The current lack of transparency in the system, from drug manufacturer price setting to pharmacy benefit manager (PBM) rebates, complicates efforts to address the issue. ASHP respects the need to protect trade secrets, but we also believe the system can benefit from transparency related to costs. We applaud the Committee for including this in the bill.

ASHP supports the following sections addressing rising drug prices:

  • Section 101. Improving Manufacturers' Reporting of Average Sales Prices to Set Accurate Payment Rates
    ASHP supports requiring additional manufacturers to report Average Sales Price (ASP) as a positive transparency measure.
  • Section 102. Inclusion of Value of Coupons in Determination of Average Sales Price for Drugs, biologicals, and biosimilars under Medicare Part B
    When ASP does not include the value of patient coupons, ASP results in higher coinsurance burdens for Part B patients. ASHP supports the inclusion of the value of these coupons in calculation of ASP.
  • Section 108. Requiring Manufacturers of Certain Single-dose Vial Drugs Payable under Part B of the Medicare Program to Provide Refunds with Respect to Discarded Amounts of Such Drugs
    ASHP supports requiring pharmaceutical manufacturers to provide drug products in vial sizes that reduce drug waste. In addition, we believe that regulators, manufacturers, and healthcare providers should cooperate to develop and implement best practices for drug vial optimization.
  • Section 121. Medicare Part D Benefit Redesign
    ASHP supports the establishment of a maximum out-of-pocket threshold for Part D patients.
  • Section 125. Increasing Use of Real-Time Benefit Tools to Lower Beneficiary Costs
    ASHP supports the use of real-time benefit tools that allow providers to proactively identify and address potential coverage and affordability issues at the point of prescribing. Patients benefit from fewer treatment delays and advance knowledge of out-of-pocket costs before presenting their prescriptions to the pharmacy.
  • Section 126. Improvements to Provision of Parts A and B Claims Data to Drug Plans
    Allowing insurers to apply Part A and B claims data for coverage determinations should reduce incidence of "B vs D" prior authorizations that are burdensome to providers and act as a barrier to medication access for patients.
  • Section 127. Permanently Authorize a Successful Pilot on Retroactive Part D Coverage for Low-Income Beneficiaries
    ASHP supports the permanent authorization of the Limited Income Newly Eligible Transition (LI NET) Program. LI NET provides vital access to prescription coverage for patients who qualify for low-income subsidies but are not yet covered by a Part D plan.
  • Section 128. Medicare Part D Rebate by Manufacturers for Certain Drugs with Prices Increasing Faster than Inflation
    ASHP supports measures that empower the Secretary of Health and Human Services to deter disproportionate inflation of drug prices.
  • Section 141. Drug Manufacturer Price Transparency
    ASHP supports requiring drug manufacturers to justify large price increases.

ASHP is concerned the following could have a negative impact on patient care:

  • Section 106. Improvements to Medicare Site-of-Service Transparency
    An effective consumer transparency tool should account for all relevant clinical considerations. The tool described in this section would not account for several key factors that are beyond the scope of pure payment comparisons, including but not limited to:
    • Additional subsidies applied at the state or facility level to assist low income patients which would reduce actual patient cost of care but would not be reflected in the tool
    • High-risk services that standard practice dictates be administered in hospital settings out of concern for patient safety
    • Services that physician offices may provide but choose not to for various practice-specific reasons.
  • Section 110. Establishment of a Maximum Add-on Payment for Drugs, Biologicals, and Biosimilars
    ASHP supports efforts to rein in drug pricing inflation. However, we are concerned that the proposed $1000 cap would reduce standard payments to providers to support treatment, but would have no direct effect on manufacturer revenues. Therapies subject to the proposed cap are often highly complex and often require additional specialized equipment for preparation and administration, in addition to requiring prolonged infusion times and extensive patient monitoring.
  • Section 111. Treatment of Drug Administration Services Furnished by an Off-Campus Outpatient Department to a Provider
    We are concerned this provision will have a negative impact on overall continuity and availability of patient care. Off-campus facilities afford patients access to high quality integrated care within their local communities. Reducing payment to off-campus facilities could shift resources away from local communities and create barriers to providing care to residents of rural communities.

ASHP believes the following sections should be strengthened:

  • Section 123. Public Disclosure of Drug Discounts and other PBM Provisions
  • Section 124. Public Disclosure of Direct and Indirect Remuneration Review and Audit Results

We are pleased that Sections 123 and 124 of the Chairman's Mark impose new transparency requirements on pharmaceutical benefit managers. We believe the provisions should directly address direct and indirect remuneration. Direct and Indirect Remuneration Fees (DIR Fees), which are negotiated by PBMs, make it difficult to determine the actual cost of a drug. DIR fees are a growing nationwide concern among pharmacies that dispense medications in a community pharmacy or outpatient clinic setting. Created under the Medicare Part D Program, DIR fees were originally intended as a way for the Centers for Medicare & Medicaid Services (CMS) to account for the true cost of the drug dispensed, including any manufacturer rebates.

Often DIR fees are unknown until the drug is dispensed and the claim adjudicated. Moreover, the fees themselves, which are often arbitrary in nature, have mushroomed over the past decade, to the point that pharmacies regularly see annual DIR totals in the tens of thousands to hundreds of thousands of dollars.

In addition, PBMs are now inappropriately applying their own plan performance measures as a way to assess fees on pharmacies. This is problematic for the following reasons:

  • It is an arbitrary and unintended application of quality measures meant for total plan performance as opposed to pharmacy-level metrics.
  • The quality measures applied tend to be based on maintenance medications such as blood pressure medications or medications used to treat diabetes. These measures were never intended to be applied to specialty medications or to other specialized disease states such as oncology, yet PBMs assess DIR fees against the gross reimbursement for all prescriptions received by pharmacy providers, not just maintenance medications.

These backdoor fees penalize pharmacy providers without any requirement that PBMs define, justify, or explain these charges to providers and to CMS. Due to the fee structure, DIR fees assessed on pharmacies providing specialty medications have been especially problematic. Fees range from a flat rate of per dollar per claim or a percentage (typically 3‒9 percent) of the total reimbursement per claim. Additionally, these fees are assessed retroactively, sometimes months after the claim has been adjudicated, providing no recourse for the pharmacy impacted by the assessment.

DIR fees increase cost-sharing responsibilities for Medicare beneficiaries. As a result, more beneficiaries enter the Part D donut hole where the patient is solely responsible for the cost of the drug. Along with the higher costs absorbed by patients, adherence rates tend to be lower among Medicare beneficiaries who are in the donut hole and may not have the financial resources to pay for their medications. This stands in stark contrast to passing on savings to patients —the very reason DIR fees targeting manufacturer rebates were created.

While we find permanent solutions to the DIR issue, we ask that you consider supporting the bipartisan Phair Pricing Act (H.R. 1034/S.640), which would direct all pharmacy DIR fees to be included at the point of sale and all savings be passed along to the beneficiaries, helping reduce their out of pocket costs. Adopting this approach would allow more time to develop policy solutions that would speak to the ongoing problem of DIR fees, ultimately impacting patient care. We urge that you consider solutions such as this as you continue to draft drug pricing legislation.

ASHP is committed to continuing to advance policy and other solutions that will improve transparency in drug pricing and promote competition in the marketplace. We are pleased that Congress has taken steps over the past few months to address the issue of rising drug costs in the country and appreciate the opportunity to work with you and your colleagues on this issue.


ASHP thanks the Committee on Finance for holding this important markup. ASHP remains committed to working with Congress and industry stakeholders to ensure that patients have affordable access to lifesaving and life-sustaining medications.