Amid an ongoing outcry against rising drug costs, the Trump administration recently introduced two importation pathways to reduce what U.S. residents pay for drugs, AIS Health reported.

Amid an ongoing outcry against rising drug costs, the Trump administration recently introduced two importation pathways to reduce what U.S. residents pay for drugs, AIS Health reported.

Under the Safe Importation Action Plan, the first pathway would allow states, wholesalers and pharmacists to propose to HHS demonstration projects for importing certain drugs from Canada. Under the second pathway, drug manufacturers could import non-U.S. countries’ versions of their drugs into the United States.

What do health plan executives need to worry about with these two pathways? Not much, at least not in the next couple of years, according to Jigar Thakkar, Pharm.D., a managing director at FTI Consulting.

“There are so many hurdles that this isn’t something that’s going to happen tomorrow or in the next year or two,” Thakkar says. The hurdles include passage of legislation to allow biologics such as insulin to be imported and the ability of drugs imported from other countries to be tracked via FDA-TRACK, the FDA’s agency-wide performance system that monitors drugs during their journey from manufacturer to distributors to pharmacies.

Another significant hurdle is pushback from interest groups in Canada. Bloomberg News reported that the Canadian Medical Association and 14 other groups sent a letter to Canada Health Minister Ginette Petitpas Taylor protesting the Trump administration’s moves.

Deb Devereaux, senior vice president of pharmacy at Gorman Health Group, isn’t optimistic about the success of the first pathway where drugs would be imported to the United States from Canada. “The bottom line is the Canadian drug supply would be exhausted in 16 months with all the U.S. states trying to avail themselves of Canadian drugs,” she says.

While there is certainly no shortage of proposals on drug pricing from the administration, a proposed Senate bill is taking a multipronged approach to the issue. The Prescription Drug Pricing Reduction Act (PDPRA) of 2019, introduced by Sens. Chuck Grassley (R-Iowa) and Ron Wyden (D-Ore.), proposes multiple changes to Medicare Part B and Part D, as well as Medicaid. According to a preliminary estimate by the Congressional Budget Office (CBO), 10-year savings to the federal government would total more than $100 billion, AIS Health reported.

While there is certainly no shortage of proposals on drug pricing from the administration, a proposed Senate bill is taking a multipronged approach to the issue. The Prescription Drug Pricing Reduction Act (PDPRA) of 2019, introduced by Sens. Chuck Grassley (R-Iowa) and Ron Wyden (D-Ore.), proposes multiple changes to Medicare Part B and Part D, as well as Medicaid. According to a preliminary estimate by the Congressional Budget Office (CBO), 10-year savings to the federal government would total more than $100 billion, AIS Health reported.

Proposals within the bill include caps on drug price increases in both Part B and Part D, as well as caps on out-of-pocket (OOP) spend for beneficiaries via a complete restructuring of Part D. It also proposes including patient coupons within the average sales price calculation, boosting the add-on payment for a Part B biosimilar from 6% of the reference drug’s ASP to 8% for a five-year period and banning spread pricing in Medicaid.

The CBO’s preliminary estimate shows 10-year savings of $85 billion in Medicare and $15 billion in Medicaid, as well as $32 billion in beneficiary savings.

“Rebates seem to drive a significant amount of savings,” notes Lisa Kennedy, Ph.D., chief economist at Innopiphany, LLC, “but it is hard to see from the CBO analysis if that is from overall price reductions or from the actual rebates that pharmaceutical manufacturers would have to pay.”

“I think what is interesting is the bill managed to capture many of the issues that have been contentious in the public debate recently,” says Jeremy Schafer,

Pharm.D., senior vice president, director, access experience team at Precision for Value. “If you look across the health care marketplace, it seems as though almost everyone is affected in one way or another.”

“The bill presents a huge push towards incentivizing biosimilars in a lot of different ways,” observes Kennedy. She also contends that the OOP cap on Medicare expenditures “is an important patient-centered change.”

Another aspect of the proposal would require PBMs “to become more transparent and share information on the HHS website regarding aggregate discounts,” notes Schafer. “As transparency requirements grow, the PBM business model will be challenged and need to adapt.”

Now that the Trump administration has abandoned its bid to overhaul the Medicare Part D drug rebate system, all eyes are on what Congress will do to address the ever-vexing problem of high drug prices, AIS Health reported.

Now that the Trump administration has abandoned its bid to overhaul the Medicare Part D drug rebate system, all eyes are on what Congress will do to address the ever-vexing problem of high drug prices, AIS Health reported.

While some ideas lawmakers are considering could be very problematic for PBMs, industry analysts are dubious about their prospects. Other less-drastic changes, though, could make it into law.

“The bottom line is [that] the most hurtful, the most damaging proposals, at least looking at it from a PBM perspective, we do not think that they will pass,” says Ji Liu, an analyst for the credit rating firm Standard & Poor’s (S&P). Liu and his colleagues recently released a report that analyzes how a handful of health care reform proposals might affect PBMs’ creditworthiness.

One proposal discussed in the report that has since become a more concrete possibility is a package of drug-pricing reforms from the Senate Finance Committee, which includes provisions that put inflation caps on Medicare Part D and Part B prices.

“Depending on how the maximum allowable inflation limit is set, we could see some modest pressure for PBMs,” which generally benefit from higher branded drug inflation because part of their revenue is tied to the list price, S&P’s report says.

In addition to the inflation caps and a slew of other provisions, the Senate Finance Committee’s drug-pricing bill would implement an out-of-pocket spending cap in Part D.

Alex Shekhdar, founder of Sycamore Creek Healthcare Advisors, says it makes sense for Congress to enact a policy that directly affects consumers’ out-of-pocket drug costs.

“Whatever policy comes to pass will focus on changing the price point that the consumer experiences,” he says, adding, “it’s a simpler lift that gets a lot of political gain.”