President’s Working Proposal for Health Care Summit Contains Familiar Drug and Device Provisions

By Alan Kirschenbaum —

In an effort to salvage health care reform, the Obama Administration will hold a bipartisan health care reform meeting this Thursday, February 25.  Invited are the Congressional leadership of both parties and the Chairmen and ranking membership of committees involved in health care reform.  Today the White House released a health care reform outline described as a “proposal to work off of at the meeting.”  The outline can be found here and additional detail is posted on the White House web site.  The drug and device-related points of the outline draw on many of the provisions that appear in the House and Senate bills, which we’ve described in previous posts.  (You’ll find our report on the House bill here and the Senate bill here.)  Among the familiar provisions appearing in the President’s outline are the following:

•  Medicare Part D Donut Hole:  Like the House bill, the proposal would phase out the Part D coverage gap over the next ten years.  In 2010, a $250 rebate would be provided to Part D beneficiaries who enter the donut hole.  Though the outline provides no detail, this rebate would presumably be funded by pharmaceutical manufacturers.

•  Medicaid rebates:  Like both the House and Senate bills, the proposal would increase the minimum Medicaid rebate for innovator drugs to 23.1 percent of AMP, impose an additional rebate for new formulations of an innovator drug, and require new rebates on drugs dispensed to Medicaid managed care enrollees.  The proposal does not mention an increase in the minimum rebate for generics, which was included in the Senate bill.

•  Industry fees and excise taxes:  The annual fee on the drug industry, which is $23 billion over 10 years in the Senate bill, is increased to $33 billion but delayed until 2011.  Instead of a fee on the device industry as contained in the Senate bill, the President has opted for the House bill’s excise tax on device sales beginning in 2013.  The outline doesn’t indicate whether the excise tax is 2.5 percent of the wholesale price, as under the House bill.

•  Physician payment sunshine:  Like both the House and Senate bills, the President’s proposal includes physician payment reporting requirements.
 
•  Ending pay-for-delay arrangements:  The President’s proposal adopts House provisions prohibiting brand name drug manufacturers from paying generic manufacturers to forego manufacturing or marketing of generic drugs.

•  Biosimilar approval:  The President’s proposal adopts from both bills a new approval pathway for biosimilars.
 
•  340B program expansion:  A cryptic reference to extending drug discounts to “hospitals and communities that serve low-income patients” indicates that the President’s proposal includes the 340B drug discount program expansion provisions included in both the House and Senate bills, though the extent of the expansion (which differs between the two bills) is uncertain. 

It is far from certain whether Thursday’s meeting will break the partisan logjam on health care reform.  However, if it does, the drug and device provisions outlined in the President’s proposal are likely to be included in any surviving bill.