After pharma suffered an unexpected loss in this year's budget deal, the industry sees an opportunity to get some relief. It might trade concessions on a bill favoring generics makers in return for a policy tweak elsewhere, Sen. Charles Grassley, R-Iowa, said Monday.
Speaking with reporters, the Senate Judiciary Committee chairman said he's been in talks about a deal in which the drug industry would pull its opposition to the Creates Act, which would crack down when branded drugmakers use FDA regulations to keep drug samples out of generics makers' hands, according to The Hill.
That capitulation would come in exchange for a separate policy tweak favoring the industry, according to the lawmaker—potentially relief on the "donut hole" change that put the industry on the hook for bigger Medicare discounts.
The donut hole gap hits after Medicare patients reach $3,750 in drug spending for the year and lasts until their total spending reaches about $8,400, or $5,000 in out-of-pocket costs for patients. To help bridge that gap, drug companies previously had to offer a 50% discount on drugs; lawmakers have increased the amount to 70% starting in 2019.
Industry resisted the change, but ended up suffering a rare loss in Washington. PhRMA President Stephen Ubl said at the time that the change "provides a massive bailout for insurance companies and undermines their incentive to reduce Part D costs" instead of working to lower patient out-of-pocket costs.
On the other side of a potential deal, the Creates Act aims to stifle regulatory abuses that stave off generics competition. Generics drugmakers have said branded drug companies use the FDA's Risk Evaluation and Mitigation Strategies regulations to limit their ability to get drug samples and test generic equivalency. If they can't test for equivalency, they're not able to bring cheaper generics to market.
Cracking down on such abuses has had some bipartisan support for years, but it hasn't gotten anywhere in Congress
Meanwhile, the Trump Administration is pushing back against REMS abuses independent of Congress. Last week, the FDA published a list of drugmakers that have received complaints on the issue, including Celgene, Johnson & Johnson, Gilead Sciences, Novartis and Pfizer. Industry lobby group PhRMA responded that the list "lacks proper context and conflates a number of divergent scenarios."
While Grassley's remarks don't directly link the "donut hole" budget change to the Creates concessions, it's been a priority for the industry because of its potential to cost leading drugmakers billions of dollars. The boost in "donut hole" responsibility could mean a "multibillion-dollar impact on some large companies," healthcare consultancy Avalere Health concluded after the change.
Grassley's remarks come shortly after House of Representatives speaker Paul Ryan said House committees are working on a compromise to pass Creates Act legislation, The Hill reported last week.