More Competition, Better Supply May Help Curb Rx Price Inflation

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By Lillianna Byington

Removing barriers to biosimilars and improving quality control could help slow the rate at which drug prices are increasing, analysts said at a July 24 briefing.

Competition is necessary to drive down prices, so promoting the development and use of biosimilars would help achieve that, Dan Kistner, senior vice president of pharmacy solutions at Vizient, said. This is urgent because total spending on medicine is expected to double from 2007 to 2021, he said.

A biosimilar is a highly similar and cheaper version of a Food and Drug Administration-approved biologic drug.

The rate of drug shortages will continue to increase if manufacturers don’t improve quality and increase drug transparency, said Erin Fox, senior director of the Drug Information Service at University of Utah Health Care. Fox and Kistner discussed how hospitals are managing and mitigating rising prescription drug prices at an event in a congressional office building in Washington. Vizient, a member-driven health-care performance improvement company, hosted the event.

Vizient on July 25 released the results of its “Drug Price Forecast,” which predicts the change in the cost of pharmaceuticals that Vizient Pharmacy Program participant organizations will purchase in 2018.

Solutions and strategies include having access to more generic drugs, getting more biosimilars on the market, and facilities avoiding drug shortages, the speakers said.

Looking to Competition

The report estimates that drug price inflation will be 7.15 percent for 2018 for noncontract drugs, which are mainly patented, branded pharmaceuticals, and the price change on contract drugs will be 0.46 percent. Price change predictions were calculated for products offered through Vizient contracts and for those not offered through Vizient contracts.

Vizient based the inflation estimates on past price change history, contract allowances, and marketplace factors, like expiring patents and anticipated new competition.

“The ever-increasing number and use of high-cost specialty medications has resulted in a significant increase in noncontract product purchases,” the report said.

More competition is needed to drive a decrease in prices for these pharmaceuticals, Kistner said, adding there are three biosimilars on the market so far and two in the pipeline.

About 35 percent of physician specialists still think biosimilars are less safe, he said. However, no data exists to support that, he said.

“Biosimilars drive competition where there hasn’t been any in the past,” Kistner said. “They are no different from the branded, biological products they are being substituted for.”

The report also includes a breakdown of drug price behavior over the next year. Disease-modifying drugs, like Humira and Remicade, which treat autoimmune disorders, are estimated to have a 14.78 percent price increase, while immunomodulatory drugs, like Tecfidera and Copaxone, are expected to increase by 9.06 percent.

Kistner told Bloomberg BNA on July 24 that it all comes down to competition because so many drugs have only one or two suppliers. He said that as more biosimilars are introduced into the marketplace, these drugs with increasing prices will “decrease greatly.”

Drug Shortages

Over the past two years, the number of new drug shortages affecting clinicians and patients has been declining, and the number of active and ongoing drug shortages has remained stable, but this “trend toward fewer drug shortages may be coming to an end,” according to the report.

Fox said there have been about 77 drug shortages this year, which is an average number, but Pfizer Inc. recently announced more drug shortages and she now expects that number to increase.

A spokeswoman for Pfizer said in a statement to Bloomberg BNA on July 25 that the number of drug shortages reported by Pfizer is comparable to years past, but a number of recent shortages on medically necessary products have occurred.

“We understand and regret the challenges this has posed to clinicians and patients,” the spokewoman said. “Pfizer has a dedicated team working to address drug shortages and has already taken several steps to expedite supply recovery of medications.”

Most drug shortages are of generic injectable drugs, like morphine, which can require more steps to make, Fox said. She said that the cause of these shortages is typically manufacturing problems and low quality issues.

“The drug industry is a business first, and there is no requirement to make any drug no matter how lifesaving it is,” Fox said. “There are also relatively few suppliers on some medications so you have that lack of competition.”

Fox said manufacturers have to improve their quality, add more suppliers to bolster competition and increase transparency about drug quality. She said patients are being prioritized because of the shortages.

“We simply don’t have enough,” Fox said. “So at the end of day, care is rationed.”

Hospital Efforts

Hospitals and health systems need to “proactively” prepare an action plan to comply with current and future compounding standards to help ensure quality, according to the report.

Randy Gerwitz, director of pharmacy at Erie County Medical Center in Buffalo, N.Y., said hospitals are attempting to address the shortages with several methods, including increasing inventory levels, looking to alternative presentations of drugs or alternative suppliers, and delaying therapy. But that isn’t always effective, he said.

“Individual hospitals often times do not have enough client power and clout and leverage to really bring pharmaceutical companies to the table,” Gerwitz said.

Gerwitz said group purchasing organizations (GPOs) can assist hospitals and mitigate the risk of shortages by sourcing products from companies that can provide drugs in volume to match patient need.

To contact the reporter on this story: Lillianna Byington in Washington at lbyington@bna.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com

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