By Alyson Parker, NRLN Executive Director
The Trump Administration recently announced that Medicare will base prices that Medicare pays for prescription drugs under Part B on what other industrialized nations pay. The Administration plans to use the Center for Medicare and Medicaid Innovation to carry out the program and create an international pricing index. The drug industry lobbyists are already lobbying against the program claiming the program will limit innovative medicine. NRLN has lobbied for this and will continue to advocate that this provision be extended to Part D.
It is highly likely that during the lame duck session, which is the period after an election, but before the next term begins in January 2019, the Congress will bring the Retirement Enhancement and Savings Act (RESA) up for a vote. This bill enjoys bipartisan support and will make it easier for small companies to provide pension plans and includes other incentives for small companies to start a new retirement plan.
Senators Rob Portman (OH) and Ben Cardin (MD) have teamed up to work on comprehensive pension legislation to increase retirement savings, preservation of income, reforming of plan rules and other pension issues. Many industry experts feel like the time is right for a comprehensive pension bill to address many outstanding pension issues. The NRLN is working to ensure that NRLN initiatives are included in this package.
The elections this week may bring a lot of change to the Committees that have jurisdiction over issues that are important to the NRLN. It is predicted by a number of polls that the Democrats will take control of the House and the Republicans will maintain their majority in the Senate. Assuming the Senate stays under Republican control, it is predicted that Senator Chuck Grassley (IA) will take over as Chairman of the Senate Finance Committee. It is also predicted that Senator Lindsey Graham (SC) will take over as Chairman of Judiciary. If the Democrats are successful in taking back the House, Congressman Bobby Scott (VA-03) will take over as Chairman of Education and the Workforce Committee, Congressman Frank Pallone (NJ-06) will take over as Chairman of the Energy and Commerce Committee, which has jurisdiction of the prescription drug issue, and Congressman Richard Neal (MA-01) will take over as Chairman of the Ways and Means Committee.
By Alyson Parker, NRLN Executive Director
July was a busy month in the fight to reduce the cost of prescription drugs. After talking about the issue for years, some progress is being made.
The Administration just announced that it is exploring how to safely import prescription drugs from other countries when there is a sharp price increase for a drug produced by one manufacturer and not protected by a patent. Health and Human Services Secretary Alex Azar directed FDA Commissioner to establish a working group to explore how this would work. The NRLN, who has sent numerous letters to the HHS Secretary and the President on this issue, is happy to see this option finally being explored.
The HHS Secretary also announced that he would like to use his agencies power to create more open markets for prescription drugs by giving consumers more power to negotiate with drug companies. Secretary Azar, however, did not give specifics in how this would be accomplished.
The House Energy and Commerce Committee Chairman, Greg Walden, and Reps. Gregg Harper (MS-03) and Michael Burgess (TX-26) sent a letter to the Federal Trade Commission requesting them to review mergers of pharmacy benefit managers (PBMs). They are concerned with the lack of transparency in setting prices and that PBMs may use increased market power to increase their profits.
The Senate Health, Education, Labor and Pensions Committee also approved a bill to prevent “gag clauses” from being included in contracts between pharmacies and insurers or pharmacy benefit managers. Gag clauses prevent pharmacists from informing customers that they can save money by not using their insurance and paying cash for the prescription.
With all the attention by the Hill and the Administration on the prescription drug issue, most of the major drug companies have announced that they will “pause” decisions to raise drug prices.
The Joint Select Committee on Solvency of Multiemployer Pension Plans held two hearings in July as their November deadline to come up with a solution is rapidly approaching. On July 13th, the Committee held a field hearing in Ohio to consider “What’s at Stake for Current Workers and Retirees.” On July 25th, the committee held a hearing in DC on “How the Multiemployer Pension System Affects Stakeholders.” As the committee continues to examine testimony and possible solutions four more multiemployer pensions applied to the Department of Treasury to reduce pension benefits in order to avoid insolvency.
Prescription Drug Prices
The Senate Finance Committee held a hearing on President’s blueprint to reduce prescription drug prices. Alex Azar, Secretary of Health and Human Services (HHS) was the sole witness. Senators on both sides of the aisle called for stronger tactics to reduce drug prices than those outlined by the Administration. Democrats on the committee focused on Trump’s promise to allow for Medicare to negotiate prices.
Senator Sanders asked why the Administration would not support importation from Canada. Azar claims that Canada will not cooperate with the U.S. to ensure that the drugs would be safe. Senator Cassidy (R-LA) advocated for reference pricing which would use the average prices of drugs charged in developed counties as a baseline to determine US prices. Lawmakers on both sides of the aisle pushed for price controls and negotiations.
It was also announced this month that representatives from HHS are meeting with pharmaceutical companies asking them to voluntarily reduce their prices. As of today, no companies have announced reductions in their prices.
The CREATES Act was voted out of the Senate Judiciary Committee on June 14th and has been placed on the Senate Legislative calendar. House Speaker Paul Ryan has also indicated that he expects movement on the CREATES Act. I expect this bill will be voted on soon so each party will have something to point to during the fall elections.
Pensions and the PBGC
The Joint Select Committee on Solvency of Multiemployer Pension Plans held their fourth hearing this month. The hearing focused on Employer Perspectives on Multiemployer Pension Plans and had company representatives from UPS, the Egger Steel Industry, Chamber of Commerce and Schnuck Markets. The committee has until November to craft a solution.
President Trump announced he is nominating Gordon Hartogensis to head the Pension Benefit Guaranty Corp. (PBGC) ousting Director Tom Reeder. His announcement has received criticism because Mr. Hartogensis does not have a background with pensions and government and this is cutting Mr. Reeder’s appointment short by a few years. The NRLN has voiced its concern to members of the Senate especially since the PBGC has a major financial crisis with the multiemployer plans.
Ivanka Trump has partnered with Senators Rubio, Lee and Ernst on a family leave bill. One proposal under consideration is to deduct from Social Security benefits that would allow parents to borrow from their Social Security accounts to pay for leave. Critics are worried that this makes workers work even longer because they won’t have enough saved to retire. Additionally, some worry that this will threaten the financial stability of Social Security.
The Trump Administration finally released their blueprint to rein in the high cost of prescription drugs. There were not many new ideas set forth in the plan and details of how they will accomplish their initiatives were lacking. Many of these initiatives will need congressional action, which is not a good sign because of the proven inability of Congress to move legislation to lower the price of prescription drugs. Additionally, we are disappointed that the President did not embrace two policies advocated by the NRLN - importation from Canada and permitting Medicare to negotiate drug prices. One positive, however, is that the Administration is engaged on this issue, which puts pressure on Congress to act.
The President’s plan proposes:
Despite a push from senior members of Congress such as Senators Chuck Grassley (IA) and Pat Leahy (VT) and many outside coalitions such as the NRLN, the CREATES Act was not brought to the floor for a vote this spring as many expected. The CREATES Act intends to end practices employed by large drug makers to keep generic competitors out of the market. The legislation has garnered more supporters on both side of the aisle these last few months and Speaker Paul Ryan (WI-01) has said they are looking at the bill. Many believe that it may be considered early fall.
The Senate Health, Education, Labor and Pensions (HELP) committee will hold a hearing on June 12th at 10:00 a.m. on the President’s plan to lower prescription drug prices. Health and Human Services Secretary Alex Azar will be the sole witness.
The Joint Select Committee on Solvency of Multi-Employer Pension Plans continues to hold hearings in an effort to get as much information as possible before they prepare a report and make recommendations on the best way to solve this crisis. The last hearing was held May 17th and examined the state of the Pension Benefit Guaranty Corporation (PBGC) with Director Tom Reeder testifying. A report is due from this committee in November. In a recent conversation with Hill staff involved with this committee, I was told there is only a twenty-five percent chance anything would move this year on a multi-employer fix, especially in light of the upcoming mid-term elections where control of the House and Senate is in play.
The Subcommittee on Health, Employment, Labor and Pensions recently held a hearing on ways to update ERISA and giving workers and families tools to save for retirement. In a recent opinion piece by Subcommittee Chairman Rep. Tim Walberg (MI-07), he stated that “Every American should have access to tools that allow them to retire with dignity and peace of mind after years of hard work.” I met with Subcommittee staff last week about the NRLN’s proposed legislative solutions and we will continue to work with his committee to address protecting the retiree and their pension benefits.
The PBGC released their FY 2017 Projections Report on May 31st, which showed PBGC’s Multi Employer Program is likely to become insolvent by the end of FY 2025, and while there remain some risks, PBGC’s Single-Employer Program is likely to eliminate its’ deficit sooner than previously anticipated. I have attached a link to the full report: https://www.pbgc.gov/sites/default/files/fy-2017-projections-report.pdf
The Joint Select Committee on Solvency of Multi Employer Pension Plans is now up and running and they expect to have their first hearing in April. Outside coalitions and Democrats on the Hill are coalescing around the Butch Lewis Act, which is named after the former President of Teamster Local 100 and a major leader to save the Teamster pensions. The Butch Lewis Act proposal allows pension plans to borrow money to shore up their pension plans. Of course, the process is just beginning so there will be many different proposals considered. We are participating in Hill meetings with industry will ensure that our interests our protected.
House members on the Committee are: Virginia Foxx (R-NC), Phil Roe (R-TN), Vern Buchanan (R-FL), David Schweikert (R-AZ), Richard E. Neal (D-MA), Bobby Scott (D-VA), Donald Norcross (D-NJ), Debbie Dingell (D-MI). Senators on the Committee are: Lamar Alexander (R-TN), Michael Crapo (R-ID), Orrin Hatch (R-UT), Rob Portman (R-OH), Sherrod Brown (D-OH), Heidi Heitkamp (D-ND), Joe Manchin (D-WV), Tina Smith (D-MN).
Prescription drug prices continue to receive a lot of attention on the Hill. The NRLN has been advocating passage of the Creating and Restoring Equal Access to Equivalent Samples (“CREATES”) Act. Senator Grassley and Congressman Marino have been actively pushing for the CREATES Act to be attached to moving legislation. The CREATES Act aims to end the maneuvering used by brand name drug companies to keep generic drugs off the market. The CREATES Act enjoys bipartisan support by senior Senators and Representatives.
Additionally, on March 19 President Trump promised an announcement within a month setting forth a plan to bring down prescription drug prices. The FDA Commissioner also has promised speeding up new drug approvals which will bring down prescription drug prices. We continue to have meetings to advocate for more action on this issue. The steps set forth above will help, but we would still like to see legislation implementing importation from Canada and permitting Medicare to negotiate drug prices passed.
The Senate passed with bipartisan support H.R. 4547, the Strengthening Protections for Social Security Beneficiaries Act of 2018. This legislation strengthens the representative payee program to better protect those Social Security beneficiaries who are unable to manage their benefits on their own. The bill is now headed to the President for his signature.
The Senate Health, Education, Labor and Pensions (HELP) Committee held its third hearing regarding drug prices on December 12th. This hearing focused on the National Academy of Sciences report on drug prices, which just was released on November 30th. There were three witnesses:
All the solutions proposed by the three witnesses were not new and many are already part of legislation that has been introduced. Some of the proposals discussed included limiting out of pocket costs for Part D beneficiaries; ending pay for delay and other manipulations of the market; increased transparency in the pricing of prescription drugs, and allowing Medicare to negotiate lower drug prices. One interesting proposal was ending the tax breaks that pharmaceutical companies receive for their advertisements and commercials that make consumers feel that they have to use the name brand drug.
A positive that came out of the hearing is some of the Senators agreed that there is common ground that both Republicans and Democrats can agree on to get something done to alleviate high drug prices. You can watch the full hearing on the Senate HELP Committees’ website here.
The Pension Benefit Guaranty Corporation (PBGC) had an industry meeting at the beginning of December to review the status of the multi employer and single employer plans. No surprises - multis are in horrible shape and single plans are improving. The multis have $67 billion in liabilities and only $2 billion in assets; whereas, the deficit for the single plan was cut in half this year to $10 billion. The PBGC expects this to be erased within the next five years, but cautioned, however, that this could change because there is a lot of underfunding by companies right now. They attributed the cut in deficit to the raised premiums, low claims, no major plan termination and good returns.
There is a major push on the Hill currently to fix the multi plan deficit. Two bills, S. 2147, the Butch Lewis Act of 2017 introduced by Senator Sherrod Brown (OH), and H.R. 4444, the Rehabilitation for Multi Employer Pensions Act introduced by Representative Richard Neal (MA-01) have received a lot of attention by industry and some on the Hill. This legislation proposes the creation of a Pension Rehabilitation Trust Fund and a Pension Rehabilitation Administration within the Department of the Treasury and to make loans to multi employer defined benefit plans. The NRLN, the Pension Rights Center, AARP and several other advocate organizations have signed joint appeal letter (sent to members of Congress) in support of S.2017. If any pension legislation moves that addresses the multi-employer issue, this may be an opportunity to attach one of NRLN’s legislative proposals.
Between May 2 and June 5, 2016, there were 6,737 NRLN grassroots advocates who participated in all or parts of the 2016 NRLN Future Directions Survey. The data in the survey will help the NRLN and its retiree associations and chapters gain a better understanding of what is important to retirees and future retirees plus indicating whether the right priorities are set. The responses to questions where personal comments were given or personal contact information was provided are not included. Click here to view survey results.