Employers Call on Congress to Take Action on Drug Prices as the Cost of Providing Coverage Grows

The high cost of healthcare is putting a strain on employers who provide health insurance coverage to their employees, and prescription drug prices are now front and center in the push to make coverage more affordable to provide to American workers.

According to The Commonwealth Fund, about half of Americans are employed by small businesses, and as a result of rising insurance costs that are putting added pressure on these small employers’ budgets, more than 19% of these employees lack health coverage altogether, and one-fourth of small business owners say that the cost of prescription drugs is the biggest hurdle they face in providing coverage to their employees.

A number of policy proposals have been advanced in Congress with an eye toward bringing down drug costs, most notably HR 3, the Lower Drug Costs Now Act put forward by House Speaker Nancy Pelosi, D-California.

While the bill, which notably gives HHS the ability to negotiate drug prices, may not be likely to pass given a lack of Republican support (and the president has signaled that he will instead support bipartisan legislation in the form of the Prescription Drug Pricing Reduction Act, or S 2543), it does have some features that have appealed to parties on both sides of the aisle. Among the provisions shared by HR 3 and S 2543 are limits on out-of-pocket spending for Medicare beneficiaries in Part D, reduced federal reinsurance for some drugs in Part D, and mandatory rebates to Medicare when drug makers raise prices above the rate of inflation. Most of these provisions target Medicare, not the commercial market, but the hope is that the commercial marketplace will follow CMS’ lead.

Amid the ongoing debate over these policy proposals, the Employers’ Prescription for Affordable Drugs, a group comprising The Pacific Business Group on Health, the ERISA Industry Committee, and the National Alliance of Healthcare Purchaser Coalitions, said in a statement that “Our current system is unsustainable at all levels, and Congressional action is necessary to help address this pressing problem. Policymakers across the political spectrum want to lower drug costs, so the time to act is now.”

According to the group, where markets fail, government intervention is warranted, and HR 3 puts forward several proposals that would help balance the marketplace. The group says that targeted policies to allow for meaningful negotiations with drug makers and the ability of payers and purchasers to take advantage of negotiated prices are promising, but, with both HR 3 and S 2543, Congress should include “robust safeguards” to keep costs from shifting to consumers.

The group also called on law makers to adopt measures put forward by the Senate Health, Education, Labor and Pensions; Finance; and Judiciary Committees, as well as the House Ways and Means and Energy and Commerce Committees, including eliminating patent evergreening, prohibiting spread pricing, requiring drug makers to report and justify price hikes, curbing the abuse of citizen petitions, allowing generic and biosimilar developers to counteract wrongful delays of their products, and other proposals.