Hatch Backs Off Drug Rebate Proposal After PhRMA Pressure

On Tuesday, Sen. Orrin Hatch (R-UT) told Inside Health Policy’s Sahil Kapur that the Democratically-backed idea of extending Medicaid drug rebates to beneficiaries in Medicare Part D was “a very important area,” and said he “expect[s] it to be under consideration” in the deficit reduction talks. “We’re going to have to try and go through it line by line, every part of that, and see what we can do with it on a bipartisan basis,” Hatch told Kapur.

But the morning after, drug lobbyists — who are the senator’s top campaign contributors — “were frantic,” Kapur’s sources claim, and, “Hatch’s office sent an email to IHP emphasizing the lawmaker’s opposition to Part D rebates and seeking a clarification in the article.” The senator’s staff even released a memo to journalists and lobbyists “saying the reporting of his comments ‘completely mischaracterizes’ the lawmaker’s position on the issue”:

In the meantime, industry sources said, Hatch’s office went into damage control efforts with the drug industry, which loathes the rebate proposal. In one email to the industry’s top lobbying group, the Pharmaceutical Research and Manufacturers of America (PhRMA), obtained by IHP, Hatch’s office insisted the notion that he supports changes to rebates “of course is false.” He promised them he is not asking the super committee to take up the policy and declared that the Part D program is “working so well.” PhRMA excerpted from the email in a note to its members. […]

In an email exchange with IHP Wednesday (Oct. 12) morning, Hatch spokeswoman Julia Lawless said the lawmaker meant that he would go through the proposal on a line-by-line basis to see how to prevent government price controls. “This can be done on a bipartisan basis, given that some Democrats are against government price controls as well,” is what Hatch intended to say, according to Lawless.

Indeed, extending Medicaid drug rebates to Medicare patients has long been a Democratic priority that is typically opposed by Republicans. Back in 2003, the GOP-backed Medicare Part D legislation moved the 6 million Americans who were eligible for both Medicare and Medicaid into the Medicare Part D program, creating a windfall for the industry. Whereas Medicaid delivered an average discount of about 34 percent from pharmaceutical companies that participated in the Medicaid program, “the average discount obtained by the Part D plans was 14 percent,” according to a report issued by Rep. Henry Waxman (D-CA). As he put it, “The drug companies are making the same drugs. They are being used by the same beneficiaries. Yet because the drugs are being bought through Medicare Part D instead of Medicaid, the prices paid by the taxpayers have ballooned by billions of dollars.” CBO estimates that if drug manufacturers provided the Medicare Part D program with the same prices that Medicaid receives, the government could save $112 billion over 10 years.

According to Open Secrets, pharmaceuticals is Hatch’s top career contributor, funneling some $1,705,597 to the senator since 1989.