The post-election period — from the lame duck congressional session to the first 100 days and beyond of a new Administration and Congress — is expected to be a time of extraordinary, if not unprecedented, public policy debate on issues that impact pharmaceutical/life sciences companies and interest groups. These issues present both significant threats and possible opportunities to all stakeholders.
On the positive side, the 114th Congress has unfinished business in the form of the House’s 21st Century Cures Act and the Senate’s companion package of Medical Innovation bills, provisions of which are intended to streamline FDA review and approval processes as well as authorize key programs such as the Precision Medicine Initiative. And Prescription Drug User Fee (PDUFA) reauthorization is also right around the corner. These positive developments could come at a cost to the life sciences industry, however, with growing indications that a proverbial perfect storm is brewing in the U.S. on issues surrounding pharmaceutical pricing. The presidential candidates, who find little else on which to agree, have criticized drug prices and espoused strong support for proposals — including ones that would allow HHS to directly negotiate with manufacturers and the importation of lower-priced drugs from Canada and elsewhere — that are anathema to industry. As shown in the pending Medicare Part B national demonstration project, presidential administrations, in addition to the bully pulpit, have used their perceived regulatory authority to elevate the executive branch role in the drug pricing debate in the absence of congressional action, and we would expect that to continue in the next Administration.
Furthermore, recent developments suggest that whoever the next president is might find willing partners in both parties on Capitol Hill on pharmaceutical pricing-related issues, regardless of the outcome of the general election in Congress. As evidenced in recent high profile oversight and investigations hearings, criticism of the pharmaceutical industry has become bipartisan fodder. Members on both sides of the aisle have to answer a growing chorus from their constituents who seek relief from high drug prices. While Republicans historically provided some level of firewall for efforts to fend off price controls and other adverse policy prescriptions, the reservoir of political capital with the GOP is arguably less deep post enactment of the Affordable Care Act. At the same time, there are fewer moderate Democrats who in the past helped defend the industry.
Growing public opinion and ongoing critical publicity around drug prices contribute to a political environment that is more likely to result in active consideration of a variety of unfavorable legislative proposals in the drug pricing space. To date, there has been a veritable menu of bipartisan options offered, which include, among many others, requiring greater transparency by manufacturers who raise prices above a certain percentage, allowing the government to directly negotiate prices with manufacturers, importation of lower priced drugs, reduction of the data exclusivity for biologics, policy changes to encourage even greater utilization of generics, reform of patient assistance programs, and curtailing of certain practices in patent settlement agreements and REMS programs.
Momentum for any or all of these proposals might further increase if Congress and the Administration pursue a deficit reducing budgetary deal or other policy priorities that must be paid for with policy changes affecting the Medicare program. The prospect for action on anti-industry proposals is further enhanced by the reality that congressional authorization of the industry supported PDUFA will be on tap in 2017. Because PDUFA is considered “must-pass” legislation, it is recognized as a prime moving vehicle to which any number of healthcare-related proposals might be attached. It remains uncertain whether pharmaceutical pricing and access will continue to be more of a rhetorical subject or if the rhetoric translates into significant changes in federal policy. What is virtually certain is that this debate will rage on in the months ahead and that the outcome could have major ramifications for industry — whether or not new laws are ultimately enacted.
Against this backdrop, it is imperative that stakeholders follow the anticipated fast-moving developments, understand the substantive implications and political prospects for various proposals, and, where appropriate, engage in informed advocacy on Capitol Hill with the Administration and the public.
© 2016 Covington & Burling LLP
