December 11, 2019

United States Senate
The Capitol
Washington, D.C. 20510

Dear Senator,

A multi-page continuing resolution or omnibus appropriation can hide increased spending or supposed offsets to counter Congress’s prolific extravagance. It is especially onerous when Congress wants to “fix” problems in healthcare, like pharmaceutical pricing and delivery, which usually has been caused by government interference in the first place.

The Council for Citizens Against Government Waste (CCAGW) has previously expressed its opposition to the two provisions below that are currently in S. 1895, the Lower Health Care Costs Act, and are concerned they may be considered before the end of the year. On behalf of the more than one million members and supporters of the Council for Citizens Against Government Waste (CCAGW), I ask that you oppose any attempt to add the following provisions to an omnibus appropriation, continuing resolution, or other must-pass bill.

·         Section 205 – This section would allow the Food and Drug Administration (FDA) to trigger the first applicant’s 180-day exclusivity if it has not received final approval within 33 months of submitting its application, and a subsequent applicant could get final approval but not for the 180-day exclusivity. This may provide a short-term surge in generic drug approvals and help the agency’s performance goals, but in the long term, the provisions of Section 205 would discourage Paragraph IV certifications and reduce the number of new generic drugs.

It is already risky and expensive to litigate under the Hatch-Waxman provisions in the Food, Drug, and Cosmetic Act and passage of Section 205, or similar legislation like The BLOCKING Act, would make it riskier. The FDA already has the authority to conclude that if “a first applicant is not actively pursuing approval of its ANDA, FDA may immediately approve an ANDA(s) of a subsequent applicant(s) if the ANDA(s) is otherwise eligible for approval.”

·         Section 306 – This section interferes with the ability of employers to contract with pharmacy benefit managers (PBMs) and design a plan that fits their company’s needs. It contains price controls because it requires pass-throughs of all rebates, discounts and other tools PBMs use to stabilize the plans and keep prices low. Because drug prices can fluctuate, particularly generics, PBMs need the ability spread the financial risk. Furthermore, forcing insurers or PBMs to disclose the negotiated discounted prices with drug manufacturers, wholesalers, and provide a myriad of other information like the amount of enrollee’s total out-of-pocket spending, drugs dispensed within a certain period, and the number of enrollees who got a specific drug will not help to lower costs. It is nothing more than a fishing expedition and if anything, will raise costs due to administrative burdens and competitors gaining access to the information.

The Federal Trade Commission wrote in a July 2, 2015 report, “Price Transparency or TMI?,” that “transparency is not universally good. When it goes too far, it can actually harm competition and consumers. Some types of information are not particularly useful to consumers but are of great interest to competitors. We are especially concerned when information disclosures allow competitors to figure out what their rivals are charging, which dampens each competitor’s incentive to offer a low price or increases the likelihood that they can coordinate on higher prices.”

Generic drugs and PBMs are what help to bring drug prices down. These two sections of S. 1895 would harm their important purposes. Again, I urge you to oppose the addition of these provisions to any omnibus appropriation, continuing resolution or other must-pass bill.

Any votes concerning these provisions will be among those considered for CCAGW’s 2019 Congressional Ratings.

Sincerely,

Tom Schatz
President, CCAGW

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