The votes are in – so what’s ahead for 2019?
By Jon Bigelow • Executive Director of the Coalition for Healthcare Communication
Is split power in Congress good for pharma or for healthcare communications? My advice is, don’t bet on it! Concern on two key issues – drug prices and data privacy – is bipartisan. Expect to see regulatory and legislative action on both in 2019.
The tone in Washington
The midterms represented a blue wave: Democrats won the House of Representatives decisively in the highest turnout for a midterm election since 1914; they also won the total popular votes nationally and made major inroads at the state level. Republicans held the Senate, but with only a small majority. Of course, Republicans also hold the White House.
The real winner in this election cycle may have been “divisiveness”. The tone was highly negative, the result was split power in Congress, and both parties are already staking out positions for a bruising 2020 presidential campaign. This is a difficult environment for rational discussion of issues as complex as the drivers of healthcare costs.
Healthcare was the number 1 concern determining voters’ choices in the midterms, according to the Gallup Midterm Election Benchmark poll – ahead of the economy, immigration, taxes, trade wars, and all the rest. For many voters, general concern over rising health costs translates to anger over the most visible portion, the price of drugs. Many consider pharma the enemy.
President Trump and Democratic and Republican members of Congress are pushing populist ideas on drug prices as a high priority. Many candidates ran against “big pharma” and now they want to show results.
Drug prices
Health and Human Services Secretary Alex Azar will continue to push the Trump administration’s “blueprint” for lowering drug prices. Two proposals the administration is emphasizing:
• Including the wholesale acquisition cost (WAC) of drugs in television advertisements. This raises legal concerns, as it would appear to involve a form of compelled speech that violates the First Amendment. There also are important practical concerns, because the WAC often is far higher than the amount a typical patient pays (based on their insurance plan, PBM rebates, copays, deductibles, coupons, and patient assistance programs); this attempt at “transparency” actually introduces a very misleading statistic into the advertisement, and may frighten away patients who should be having conversations with their healthcare providers. However flawed the idea, there is strong public support for putting drug prices in advertisements. Secretary Azar believes he can do this without legislation – and if there are questions, Congress may pass legislation to codify the rulemaking.
• Developing an “international pricing index” for drugs under Medicare part B, and then limiting what Medicare pays to 126% of the index price. President Trump is angry that drugs often cost less overseas. As a proposed solution, the international pricing index (based on prices charged in a group of developed countries) is to be initiated as a “pilot project” – yet the administration’s plan is to include fully half of all Medicare providers, making this not just a pilot but a significant overhaul.
The Democratic side is also proposing aggressive steps intended to lower drug prices. One, with 100 co-sponsors in the last Congress, would allow Medicare part D to negotiate with manufacturers over drug prices, with the threat that if negotiations broke down, “licenses” that curtail patent rights would be issued. A plan from Sen. Bernie Sanders (I-VT) and Rep. Ro Khanna (D-CA) goes further; it would not be limited to Medicare and would strip patent rights from drugs that the HHS Secretary determines are “excessively” priced. Other proposals would allow importation of prescription drugs from Canada, prohibit “pay for delay” deals that impede generics, lower the cap on rebates manufacturers may offer on drugs for Medicaid patients, or restrict DTC advertising for three years after approval (on the assumption that advertising raises prices).
Another challenge: The House Oversight and Government Reform Committee, soon to be chaired by Rep. Elijah Cummings (D-MD), is likely to call pharma CEOs to hearings on drug prices. Exemplifying the mood, committee member Rep. Peter Welch (D-VT) reportedly promised “we’ll have an opportunity to see exactly how the rip-off is being maneuvered.”
Data privacy and data security
The Federal government has seemed reticent to regulate search engine and social media companies, but 2018 may have been a watershed year. With continuing reports of data breaches, misuse of personal data for political purposes, worries about fake news, unconvincing Congressional testimony by tech leaders, and growing public concern over data privacy, Congress is frustrated and angry.
What’s more, two developments outside Washington have added to the pressure. The European Union’s Good Data Practices Regulation (GDPR) took effect May 25 and already affects many American companies. The California Consumer Privacy Act (CCPA) was passed in June to be effective January 1, 2020 (although data will be reported on a 12-month trailing basis going back to January 1, 2019).
Both measures impose stiffer obligations on companies that collect personal data. The GDPR expands the definition of personal data and requires that consumers opt-in, rather than simply being given the opportunity to opt-out. The CCPA grants the right to know what is being collected, the source of the information, what data is being sold or disclosed, and to whom. Consumers can say “no” to disclosure of their data and take legal action for privacy violations and data breaches.
Facing the specter of different rules in each of the 50 states, industry may prefer regulation at the Federal level. The CCPA effectively imposes a deadline for developing those regulations in 2019.
Be prepared
Of course, in this year more than most, outside issues could derail the focus on healthcare in Washington – confirmation battles, the Mueller inquiry, House investigations of the Trump administration, budget showdowns, any slowdown in the economy, and the ever-present risk of an unanticipated international crisis.
With that caveat, watch for efforts in Washington to address high drug prices (whether effectively or not) and to strengthen the rules on data privacy and data security. These developments are likely to affect the way healthcare information is communicated and the volume of spending on pharma marketing.
