Health-Care Groups Offer Ideas to Stem Rx Price Growth

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April 25 — Drugmakers should release information on the estimated price of a drug before the FDA approves the drug, a coalition of hospitals, doctors, insurers, senior citizens and others said April 25 in offering what it termed market-based proposals to curb spiraling drug costs.

The Campaign for Sustainable Rx Pricing also said at a briefing that the Food and Drug Administration needs more funding to act on generic drug applications, and new policies are needed to encourage market entry of biosimilar drugs. The campaign also called for more information on the effectiveness and value of drugs and expansion of value-based payment programs to include drugs in the Medicare program.

Pharmaceuticals comprise almost 20 percent of health-care costs and the price tag is poised to continue rising. This has led to calls for action to stem the rise in prices.

The Pharmaceutical Research and Manufacturers of America (PhRMA) criticized the proposals, saying in a statement that hospital charges, which are the largest drivers of health-care costs, would be exempt, and that out-of-pocket costs under health insurance plans are “soaring.”

Problem Affects Everyone

“This problem affects everyone,” said John Rother, president and chief executive officer of the National Coalition on Health Care and executive director of the CSRxP. Patients worry about being able to afford drugs they need, employers worry about having to reduce jobs or benefits because of rising health-care costs, and budgets for Medicare, Medicaid and other government health-care programs are strained, he said. Doctors and hospitals say that when patients can't afford their drugs and are readmitted to hospitals, providers are penalized financially or their quality scores are hurt.

Among the proposals put forward by the group is curbing “misuse” by branded drugmakers of FDA-required risk evaluation and mitigation strategies (REMS) to stifle the introduction of generic competition and lower-cost options. Of concern, the group said in their policy statement, “is when brand-name manufacturers use REMS strategies, under the guise of patient safety concerns, to block generic manufacturers from obtaining samples of brand drugs needed for bioequivalence testing and FDA approval.”

The group also wants increased oversight of “pay for delay” patent litigation settlements that result in a generic company agreeing to refrain from marketing its product in return for compensation, often undisclosed, from the brand-name drug company. The Federal Trade Commission has cited the arrangements as anticompetitive and estimates that they cost consumers and taxpayers $3.5 billion in higher drug costs every year, the group said in its policy statement.

Shorten Exclusivity for Biologics

The 12-year exclusivity period for biologics in federal law should be shortened, and policies should promote increased use of biosimilars, the group said. “Exclusivity protections should only be used for truly innovative products, not products that are billed as new that we know are essentially the same as those already on the market,” Rother said.

A biosimilar product is a biological product that is approved based on a showing that it is highly similar to an already approved biological product, known as a reference product, according to the FDA. So far, the agency has approved two biosimilars under a 2010 law.

Rother said that more information is needed about the cost of treatment, how the price of medications is decided and how new drugs perform compared with existing therapies. “Right now there is no credible information about how much it actually costs to bring a drug to market or factors supporting the listed price.”

Pharmaceutical pricing needs to reward value in the same way that the rest of the health-care industry is moving, Rother said. “We need to pay for what works, not so much for marginal benefits,” he said.

Examine Ads to Consumers

“We also need to examine how much is spent on marketing compared to research and whether the billions spent on direct-to-consumer ads truly serve the public interest,” Rother said.

Robert Doherty, senior vice president of the American College of Physicians, said, “Nothing being proposed today—nothing—in our view will stifle research and innovation to new and improved life-saving medications.” The issue shouldn't be defined as a choice between innovation and affordable drugs, he said. “We can and must do both.”

Rother told Bloomberg BNA in a separate telephone interview April 25 that CSRxP is talking to the presidential candidates about its proposals and attempting to get them on the record about their support. “That is a reflection of how strongly voters on both sides of the aisle care about this issue,” he said.

BIO Criticizes Insurers

Several other groups also weighed in on the proposals. The Biotechnology Innovation Organization issued a statement similar to PhRMA's, saying the proposals “would result in intrusive government intervention and regulation of the competitive market for prescription therapies.” The “real barriers” that patients face in accessing medicines are the “high cost sharing burdens and discriminatory formulary designs imposed by health insurance companies” for high-cost conditions such as HIV and hepatitis C, and there needs to be more transparency for consumers choosing health insurance plans, it said.

Net price growth for branded medicines in 2015 was just 2.8 percent due to increased discounts and rebates, BIO said.

Premier Inc., an alliance of hospitals and other health-care providers, commended CSRxP's “common sense ideas that could be used to help educate policy makers and the public alike about the cost of medicines and market competition for pharmaceuticals.”

To contact the reporter on this story: Sara Hansard in Washington at

To contact the editor responsible for this story: Janey Cohen at

For More Information

Information on the Campaign for Sustainable Rx Pricing proposals is available at