Q&A: A conversation on drug pricing reform and practice advocacy

By Brad Tallamy

What changes may lie ahead for specialty physician practices?
Medical staff talking in exam room

We sat down with Brad Tallamy, Senior Director, Government Affairs, to discuss what practices can expect on drug pricing reform, the value of practice advocacy, and our role in fighting health disparities.

Q: What policy topics do community practices need be tracking closely?

Brad Tallamy: The most important issue for practices is the extent to which drug pricing reforms are taken up by Congress this year, possibly included in President Biden’s comprehensive infrastructure bill or another legislative vehicle. It’s an incredibly fluid situation. When President Biden released his initial infrastructure proposal earlier this year earlier this year, many Democrats were upset it didn’t include drug pricing reforms, a Biden campaign promise and a key federal revenue generator. Specifically, Democrats’ top drug pricing policy is to enable HHS to directly negotiate drug prices with manufacturers.

House Democrats have re-introduced H.R. 3, a very aggressive drug pricing bill which includes international reference pricing, price negotiation, inflation penalties and other policies.  However, not all House Democrats are on board, as ten members sent a letter to House Speaker Rep. Nancy Pelosi essentially saying drug pricing reform is so important, it shouldn’t be a partisan exercise. The 10 moderate Democrats who signed the letter argued moving H.R. 3 forward could decimate pharmaceutical innovation. They went on to argue that during COVID we’ve seen the value of innovation via life-saving treatments and vaccines. Bottom line; let's rally around more pragmatic drug pricing reforms. 

This was a big deal since House margins are so tight. Speaker Pelosi couldn’t afford to lose that many Democrat votes on H.R. 3, or any other bill for that matter. We still expect a drug pricing bill later this year, but it will be difficult to pass a 50-50 Senate, even if it does pass the House. If Congress fails to act, it is possible the Biden Administration will put forward drug pricing demonstration program and will use their regulatory tools to try to address rising drug costs. 

Personally, I think it was smart of the President to exclude drug pricing reforms in the infrastructure proposal, because with the 50/50 split in the Senate and the inclusion of corporate tax increases (eliminating any GOP support), it’s going to be hard enough to pass the bill under these circumstances. President Biden’s political calculus appears to be that he wasn’t going to include anything that the pharmaceutical industries and their allies could try to block.

Q: So, what does that mean to our practices from a financial standpoint?

Brad Tallamy: One of the easiest ways for the government to save money in healthcare is to lower the amount they reimburse providers. Many of our physician practices are reimbursed through Medicare Part B and that’s always the biggest target. If drug pricing reforms are included in this infrastructure package, providers are at risk because that could translate to reimbursement cuts.

If Democrats are committed to paying for the infrastructure bills, it puts community practices at risk because of the potential for reimbursement cuts. Now, if I were advising President Biden, I would recommend he just try to pass the multi-trillion dollar bill without paying for it. This would avoid inclusion of controversial proposals like  drug pricing reforms and major tax increases which could ultimately doom the whole proposal, denying the President a big political win before the 2022 midterm elections. This is his chance to do something big. It has to pass this year.

Q: Beyond the infrastructure bills are there any other proposed or predicted legislation that practices should be on the lookout for?

Brad Tallamy: Anytime there's legislation that must pass, there's always a risk a policy could be included which would affect our practices. But the biggest legislative “vehicle” by far is the infrastructure bill because I think it's going to take months for the policy and politics to get sorted. It could bleed in all the way into the fall and it's the biggest risk.

As indicated above, my prediction is the Biden administration will try to do something on drug pricing administratively if Congress fails to act and to appease more progressive Democrats who are going to be angry if infrastructure passes without drug pricing reform. If that happens, our practices will need to be on alert, because any administration proposals could likely involve Medicare Part B reforms.

The other legislation I would highlight is the “Medicare Extenders” annual legislation that includes a dozen plus expiring Medicare and Medicaid provisions that must be reauthorized before the end of the year. Often, this must pass legislation combined with the year-end appropriations bills,  becomes an engine that can pull related policies like extending telehealth flexibilities and reimbursement past the COVID pandemic. 

Q: Ultimately, where do you see this issue of drug pricing reform headed? And how is that going to potentially impact our physician practices?

Brad Tallamy: It may never really go away, especially if Congress does not address increasing patient out of pocket costs which drive most of the anger towards drug pricing. Part B drug pricing issues were prominent in the late 1990s and ultimately ended up in the 2003 Medicare Modernization Act. Many of the arguments against Part B we continue to hear today – doctors prescribe higher cost drugs to earn greater reimbursement – are hangovers from the discussions 20 years ago. 

And public opinion on drug pricing is clear. Nearly eight out of ten Americans, both Democrats and Republicans think drug prices are unreasonable. President Biden campaigned on lowering drug prices. It’s a political winner of an issue.

But again, when people talk about drug pricing reform, it so often really means cutting our practices’ reimbursement. It’s a bipartisan angle. Presidents Obama and Trump both tried to go after high drug prices by focusing on manufacturers. Yet as policymakers try such tactics, ultimately it’s physician practices who would be hurt.

On the positive side, there is the potential that pro-active, bipartisan policies could be attached to drug pricing legislation, including DIR reform and policies incentivizing biosimilar utilization or capping patient out-of-pocket costs. Granted, it’s a long shot, but it’s still possible.  

Q: How can practices advocate for their success?

Brad Tallamy: We’ve already seen the success of our practices’ advocacy in another issue—the threat of looming Medicare sequestration reimbursement cuts. The Community Counts “Take Action" campaign on social media and digital channels encouraged practices to reach out to their legislators. 

We met with dozens of congressional offices to educate them about this issue and the first question we asked was, “Have you been hearing from your constituents about this?” The replies were, “Oh my gosh, I'm getting hundreds of calls from physicians, from nurses, from everybody saying how critical this issue is.”

In all, 457 providers sent nearly 1500 letters to 271 legislators. And on March 25, the Senate passed the Medicare Part B sequestration moratorium for the remainder of 2021.  President Biden signed the bill shortly thereafter.

This is a blueprint for success. It’s not just Community Counts. It’s providers contacting their representatives directly and sharing compelling stories about the challenges they face. 

For example, if legislators decide to do something on international reference pricing for Medicare Part B, that could mean substantial reimbursement cuts, a devastating existential threat. Rest assured, we would mobilize Community Counts to its greatest extent.

"Public opinion on drug pricing is clear. Nearly eight out of ten Americans, both Democrats and Republicans think drug prices are unreasonable. President Biden campaigned on lowering drug prices. It’s a political winner of an issue."

Brad Tallamy

Q: How have our practices been affected by what’s been happening on the state level?

Brad Tallamy: There have been state efforts on PBM reform. Due to federal inaction, states are taking matters into their own hands and passing bills that restrict certain PBM practices that are harmful to our practices.

We saw recent success with the Texas state legislature. AmerisourceBergen’s Specialty Physician Services (SPS) worked together with Good Neighbor Pharmacy (GNP) and the Elevate Provider Network (Elevate) to advocate for three bills that would prohibit PBM tactics like steering practices that would limit patient choice; restrictions on patient choice of pharmacy; retroactive recoupment practices; and more. 

Texas-based specialty physician customers and GNP pharmacists were asked to call their state representatives and senators to urge their support for several PBM reform bills. Additionally, SPS, GNP, and Elevate sent letters to the entire Texas House of Representatives, as well as members of the Senate Health and Human Services and Business and Commerce Committees, urging members to support the legislation.

Our hands-on advocacy efforts yielded positive results. Specifically, HB 1763 was signed into law by Governor Abbott (R-TX), and HB 1919 has passed the Texas House and Senate. These important bills to curtail some of the most harmful PBM practices and will improve the practice environment for Texas-based independent, specialty physicians and pharmacists. 

We will continue to encourage our practices in Texas and other states to advocate for legislation that protects independent and community healthcare providers. It's a reminder that grassroots advocacy is not just critical on the federal side; it's critical on the state side. PBM reform bills are passing, which is great for our practices.

Q: Speaking of the importance of advocacy, what role can our practices play in eliminating health disparities? 

Brad Tallamy: Community practices can be a major part of the conversation around health disparities. The real question is, what do we need to do to help policymakers think outside-the-box? 

Vaccines are a perfect example. There continues to be a discrepancy in COVID-19 vaccine rollouts based on race and ethnicity. At the same time, across all populations, people cite their doctor as their most trusted resource for information about the vaccine. Our specialty practice customers are in the position to help if they can. We need to capitalize on that trust. 

As of late May, the CDC reports 40 percent of Americans are fully vaccinated. Independent community pharmacies have been a key driver in reaching that threshold; but more points of access are needed as we try to reach patients who need more support. 

We don’t know how the future of COVID vaccines will look. Will we need recurring boosters?  Decision makers should consider alternate sites of care, like specially physician practices set up to deliver vaccines. Patients need access to the vaccine at places that are most convenient to them and from the providers who they trust. 

Going forward, policymakers must realize that our independent specialty physician customers treat immunocompromised patients, of all backgrounds, every single day. Therefore, they are perfectly suited to administer COVID vaccines and potential COVID boosters to those people at highest risk of complications. They just need the access. 

Your patients trust you. Policymakers should take advantage of that trust. And just by encouraging policymakers to think broader about vaccine administration, we could help address a huge a health disparity problem of trust about vaccines. 


 

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About the Author

Brad Tallamy

Senior Director, Government Affairs
AmerisourceBergen
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