The Need for Generic Drug Pricing in Medicare Part D

Floor Speech

Mr. COLLINS of Georgia. Madam Speaker, it is an honor to always come to this floor and especially talk about needs, and I think this Republican majority speaks to the needs of our families, our moms and dads, and the struggles that they go through every day.

One of those areas that I have been concerned about since coming to Congress and finding out about it deals with our independent pharmacies, deals with the contracts, and deals with the pharmacy benefit managers.

These are things that need to be fixed because they are destroying some of the very fabric of our communities, and these community pharmacists are just asking for a chance, and right now, they seem to be on the outside looking in, when it comes to dealing with these.

Tonight, I am pleased to be joined by not only my good friend who I served with not only in Georgia, but up here in Washington as well, Congressman Austin Scott, who is a cochair of the Congressional Pharmacy Caucus; and I would love to have him be a part of this tonight.

Mr. AUSTIN SCOTT of Georgia. Well, thank you, Mr. Collins. As you know, you and I served together and had a great relationship there in Georgia, where Democrats and Republicans worked together to balance the budget and solve the problems, and I sure wish we could get to that up here.

Tonight, we are here to talk about an issue that affects us all as well, and that is transparency in pharmacy pricing and highlighting the need for our rural pharmacist, our community pharmacist, and the challenges that they face with Medicare Part D programs.

Just recently, I met with a pharmacist from my district, Mr. Daryl Reynolds; and like many other pharmacists from the Eighth District, he runs a small store and has been hurt by the lack of transparency and pricing. Ultimately, that hurts his patients because it makes it hard for him to stay in business.

While the big pharmacy chains want to operate in the metropolitan areas--and that is wonderful--we in the rural parts of the country need our rural and community pharmacists, and pharmacists like Daryl are a vital component of our national health care system, for those of us who live great distances from the metropolitan areas.

They know us by name. They know our drug interactions. They are able to work with us and our physicians. They make sure that we are taken care of and that we are taking the right medications for the problems that we may have.

In order to continue these relationships, we need to make sure that the Medicare Part D plans that they work through to help our seniors have the pricing transparency with pharmacy benefit managers.

In many cases, our community pharmacists--because of the way the pharmacy benefit managers operate--are reimbursed at less than what the drug actually costs the small community pharmacy. These contracts are nonnegotiable. They are vague and opaque, and most of the time, it puts a small community independent businessman up against a multibillion dollar company.

These PBMs and their maximum allowable cost prices, they don't update them when the prices go up, and that leaves the pharmacist paying more, again, for the drug than they actually get reimbursed for the drug, and these are the pricing practices that need to be fixed for our community pharmacists.

I am here tonight with my colleague from Georgia

(Mr. Collins) to bring light to this issue. CMS recently proposed rules that would take an important step in addressing this need for generic drug pricing transparency.

How can transparency be a bad thing for Medicare Part D? The rule simply requires that Medicare Part D sponsors should agree in, their contracts with CMS, to update the prices in a timely manner to reflect the current market price.

In rural districts like mine, access to a community pharmacist is critical for people to receive the medications they need. It is imperative for the health and wellness of our rural communities.

I want to commend you, Mr. Collins, for your legislation. I look forward to working with you to pass that and thank you for being here tonight on behalf of community pharmacists.

Mr. COLLINS of Georgia. I appreciate that, to my good friend from south Georgia.

You know, it is amazing. In those communities that you just spoke of, they need the help--not that they are asking for a handout. They are just asking for fairness, and I think that is what we miss so often today in our debates here on this floor, and they should be on this floor.

We talk about one group against the other, and really, Madam Speaker, this is about fairness. This is a simple issue of fairness and saying we in the government need to be in our proper constitutional role and to look at it in the framework of not tilting the scale one way or another, but saying what are we doing that helps the American people and also looking ahead to--especially in an area such as health care in which we can find common ground; and I believe we will as we go forward here.

So when we are talking about Medicare Part D and some of the proposed changes of CMS to Part D, it is really the need for generic drug reimbursement limits, known as maximum allowable costs, or MACs.

Generic drugs account for nearly 80 percent of prescriptions, but a community pharmacist is kept in the dark as to how pharmacy benefit managers determine MAC rates for these medications.

You see, Congress and CMS must step in to give pharmacists more transparency into this process, so they are empowered to evaluate if specific contracts would help them better serve our neighborhoods and families.

I am a big believer, Madam Speaker, that transparency is important, that one of the reasons in the basic underlying trust today, when you look out among the country and you see the unfortunateness of the low esteem that Congress is held in, I believe it goes back to a matter of trust.

It goes back to a matter of trust, of believing that what goes on here does not have their best interests at heart, and I think this is sort of what we are talking about tonight with our pharmacists.

Pharmacists, no matter where they work, are wonderful individuals who truly, I believe, have the best interest of the folks who come to see them at heart.

The problem is in the system, especially when it deals with pharmacy benefit managers and the inherent falseness and the inherent problems that are faced with the pharmacy benefit managers and our independent pharmacists.

Pharmacists need an appeals process when disputes over MACs arise and timely adjustments of MAC lists by PBMs to reflect rising drug costs and ensure consumers have the information they need regarding copays.

The status quo cannot continue because, right now, an amount a pharmacy is paid in the morning for a particular medication can change to a different rate for the same medication in the same afternoon.

For those who may be watching tonight or who will be watching: Can you believe this? We are not talking the price of OPEC here. This is not an oil commodity. This is a drug cost, and yet they can't get the help that they need just for simple transparency.

The uncertainty is devastating to pharmacies and the patients they serve. This process is further complicated by the fact that PBMs frequently maintain multiple MAC lists for the same health plan, one for the health plan and one for the pharmacy; one behind the mirror, one in front of the mirror; one outside, one inside.

Where is this going to stop? I have come to this floor many times, and it just still boggles the mind for me. How can you do this?

You know, I am concerned that this provides PBMs with the power to obtain significant revenues through deceptive practices without consumers being any the wiser.

My independent community pharmacies and chain pharmacies in northeast Georgia work long hours each and every day to provide care and advice to our families and our seniors, but they are frustrated and tired by the lack of transparency in generic drug pricing.

PBMs have a track record of refusing to divulge the method they use to determine generic prescription drug price reimbursements in the take-it-or-leave-it contracts pharmacists must sign to assist patients.

In addition, PBMs often fail to update MAC prices in a timely fashion. Conveniently, this often occurs when there is a price spike, wouldn't you guess. Oops, we forgot to update it, and by the way, the price went up.

When you consider that generic prescription drugs make up approximately 80 percent of all dispensed drugs, you can understand why pharmacies of all sizes and affiliations are frustrated.

I was pleased when CMS released its proposed rule for Part D on January 7 of this year because it included several positive provisions. Even though I did not support the rule in its entirety, I did support key provisions that would give independent community pharmacists the ability to try to compete in preferred pharmacy networks; provide important generic drug pricing transparency reforms, although they were not as strong as I would have liked to have seen them.

The proposed rule also contained measures documenting problems with mail order delivery delays and the difficulties beneficiaries have when trying to change their prescriptions over an automated telephone hotline.

Unfortunately, on March 10, CMS announced that it would be holding off on finalizing certain provisions in the rule, one of those provisions being the any willing clarification regarding preferred pharmacy networks.

This was a devastating blow to northeast Georgia pharmacies and the families that rely on them and, to be frank, to anyone listening, not just northeast Georgia, Madam Speaker. It is all over the country, and this is something that is disturbing to me and many others.

I continue to remain hopeful that the provisions on generic drug pricing transparency will be finalized when the rule is published. However, I don't believe simply hoping is enough. In this country, I think we have found out, over the past few years, that hope is not a plan and hope is not something I am going to sit by and watch when we look at this issue.

So this evening, along with my colleague from Iowa (Mr. Loebsack), I introduced H.R. 4437, the Generic Drug Pricing Fairness Act. This legislation will provide much-needed, although reasonable transparency, by doing a few things. Let me list those.

It will provide clarity to plan sponsors and pharmacies regarding how MAC pricing is determined. It will establish an appeals process in which a dispensing provider can contest a listed MAC price. It provides standardization for how products are selected for inclusion on MAC list, and it compels PBM disclosures about the use of multiple MAC lists and whether or not MAC pricing is utilized for mail order products.

More than 80 percent of the prescriptions that community pharmacists dispense that we talked about are generic, and that is good for both beneficiaries and for the solvency of the Part D program.

Pharmacies deserve to know what they will be reimbursed for when providing a service. When market factors cause the price of generics to change, pharmacies should also be informed of that change in a timely and efficient fashion.

Again, I started this conversation with my dear friend from Georgia about fairness, about simple fairness; and when there is a system set up in which a problem exists in which basically the system is picking winners and losers, the system is causing these unhealthy problems for our independent pharmacies, then that is when we need to act.

That is the government's role, is to remove the impediments toward a free market and be able to compete, and those pharmacists need to know that Washington cares.

When you understand what people are looking for, then you can begin to act as I think we were all elected to do, Madam Speaker, and that is to listen to our communities, that is to listen to our folks and understand that many times these kinds of situations affect the everyday lives of people getting up and just trying to make a living, just trying to get the drugs and the necessities that they need.

What they are not understanding is why their independent pharmacists are struggling to stay afloat, for one, and also struggling every day just to be able to provide basic care to them because they are under a system in which transparency is just not there.

You see, the additional topic that I would like to talk about not only concerns the transparency issues and the MAC pricing; it is what I hear from pharmacists back home, and that is the readiness of the Centers for Medicare and Medicaid Services, CMS, to finalize the Medicaid drug reimbursement changes in July 2014 immediately upon implementing average manufacturer price-based, Federal upper limits for Medicaid drugs, as required under the act.

CMS expects States to view Medicaid reimbursement as a two-part formula where the movement toward cost-based drug reimbursement should also correspond with changes to dispensing fees based on pharmacy costs. I believe that these dual goals are overly ambitious for July 2014.

A side note here, I think the entire ACA, or ObamaCare, is not only too optimistic but wrong for America, but that is another Special Order for another night.

When we look at this, the thing that I want to look at is that most States must take several time-consuming steps before implementation and corresponding dispensing fee changes.

First, many States require legislative or regulatory changes to implement the new Federal upper limits. For States that require legislative changes, there simply is not enough time to pass the necessary legislation. Moreover, in most States, budgets will be finalized before these Federal upper limits are scheduled to be published.

In November 2013, CMS stated that if States shift their Medicaid reimbursement methodologies, they either should or must conduct cost-of-dispensing fee surveys to determine fair and equitable total Medicaid drug reimbursement rates.

Finally, most States will need to file a State Plan Amendment with CMS prior to implementing the Medicaid reimbursement methodology changes. And again, this just adds extra and additional time to the process.

At the end of the day, it seems clear that most States will be unable to meet CMS' expectations by the July 2014 deadline. Accordingly, I joined with several of my colleagues here in the House to write a letter encouraging CMS to give States a 1-year transition period for implementation. States need to have more time to effectively transition to these new rates. As my colleagues and I wrote in the letter:

This change will likely represent immediate and significant cuts to Federal matching funds to the States for Medicaid drug product reimbursement and/or cuts to pharmacy Medicaid drug reimbursement.

Ultimately, such an instantaneous change could result in an unnecessary strain on State Medicaid budgets and Medicaid drug access problems for low-income Americans. Fair reimbursement for pharmacies is critical to ensuring that Medicaid beneficiaries and others maintain access to prescription drugs and pharmacy services.

Now, I want to take that for just a second, and as my friend from Georgia talked about when we actually had to pass a balanced budget in Georgia--what a unique concept. Most families do it every year. Governments ought to have to do that as well. In the State of Georgia, we just couldn't go out and print more money or borrow more money from foreign governments or anywhere else we are borrowing it from these days. We actually had to do an actual budget. We had to do actual spending plans that actually balanced. And for most States, this is an issue that often goes untalked about because no one wants to talk about the perceived costs and the changes in the costs when State governments, who have to balance their budget--Madam Speaker, I know in many other States they have to do this as well. You have to plan for this. You actually have to put money in the budget to do this. And we are not going to simply have time here, and to do so on States is just inherently, again--here is this word again--it is unfair. Fairness for all.

I am often struck--before I continue here, I look at this, and I talk to many of my independent pharmacists who went to pharmacy school, and they had opportunities to do a lot of things. Many of them went back to smaller communities to open up their local pharmacy, little, small pharmacies or medium-size pharmacies they may have taken over for a family member, or they bought a pharmacy out and they love the small town atmosphere, they love the rural atmosphere. They could have gone anywhere and done a lot of things, but they chose to serve these communities in medium cities and small cities all across the Ninth District and all across the country. And when they do so, I think they were living up to our Founders' belief when it was stated that we come here in this country for life, liberty, and the pursuit of happiness.

The pursuit of happiness is what we have to look at. Pursuit of happiness actually is not the guaranty of happiness. There are some in this Chamber who believe that the government ought to guaranty happiness. That is not what the Founders asked for. They said the pursuit of happiness. Life and liberty comes from that pursuit of happiness. And we have to provide those independent pharmacies and all who live in this arena fair and equitable transparency in reimbursement and time. It is about the pursuit of happiness that we look for.

But also there is another important issue that I look forward to hearing back from CMS on. At this point, we are waiting patiently to hear from CMS.

I also recently sent a letter to Secretary of Health

and Human Services Kathleen Sebelius concerning the Medicare Part D rule proposed in January. As CMS makes their final decision as to the contents in the rule, we reiterated our support for the provisions of the rule that would make prescription drugs more affordable and preserve beneficiary access to Medicare Part D.

Specifically, our letter supported the proposal to: maintain pharmacy access by allowing any willing pharmacy to participate in plan networks and utilize preferred cost sharing; expand access to and eligibility for medication therapy management, leading to improved patient health outcomes and decreased health care spending; ensure prescription drug pricing transparency by providing pricing updates on a regular basis, allowing pharmacies to plan their business operations more efficiently.

As our letter stated:

Patients should be free to select a health plan that best fits their personal health needs and allows them to utilize accessible pharmacies.

At the same time, pharmacists deserve the clarity necessary to plan their business operations more efficiently to help achieve a more effective Part D program for beneficiaries.

It is my hope that CMS will adopt these proposals in their final rule. However, again, I don't live on hope. I do not believe hope is a plan. So if they do not, I believe Congress needs to act, and we will continue to look for solutions there.

I believe that, further, these changes that I have talked about will further strengthen the Medicare Part D program and make it even more successful than it is today. There are cost issues among everything. Medicare Part D is no exception. But we have got to make it in a way in which our local independent pharmacies and the health care system in general is helped by these pharmacists who simply want to help the people who walk in their door.

They want to be able to give them treatment. They want to be able to help in the eligibility and access to the medication therapy management programs. They want to be able to talk to their patients and be able to help them get the best pricing and the best plans for them. And they don't want to be locked out from a system in which pharmacy benefit managers are basically keeping them out.

As I have shared from this floor before, if we don't make changes and we don't start looking to our independent pharmacies all across this country, the sad part is one of the independent pharmacies told me, if we can't get some help, if we can't be allowed to participate in the program, then we are looking forward to a time in which independent pharmacies may disappear from the business landscape and the medical community landscape.

For me, as I look and as I think about those who serve me and my family, I can't think of a place in the Ninth District of Georgia or Hall County and the places that I serve or really anywhere else, Madam Speaker, in which our communities would be better off without these local men and women who run businesses, who get up every morning because they want to serve and they want to help.

When we look at that, is that not what America is about? Is that not what we were founded on, that pursuit of happiness, that getting up and doing something that fulfills us and that gives us the knowledge that we can go and do something that makes a difference? But, unfortunately, the position of our government in some of these programs right now is telling the independent pharmacist: you are not valued.

I will tell you this. This Member of Congress values them, and I believe there are a lot of other Members of this Congress that value them as well, and we are going to continue to fight hard for the changes that I spoke to tonight. As we look back on what we talked about, I do appreciate my friend from Georgia coming, and I do ask that all of our Members look at H.R. 4437, the Generic Drug Pricing Fairness Act, and I would encourage them to be original cosponsors and be a part of the bill that has just been dropped. We want them to be a part of this because this is a conversation that both sides of the aisle can have when it comes to dealing with our folks back home and all across this country.

Fairness is what it is all about.

With that, Madam Speaker, I yield back the balance of my time

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