Giving Consumers More Choices Called Key to Reducing Drug Costs

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By Sara Hansard

Increasing competition by getting more generic drugs and biosimilar therapies onto the market was the major theme at a Capitol Hill briefing on prescription drug affordability July 28.

Drug manufacturers and a group that represents insurers and other health-care stakeholders agreed that the Food and Drug Administration needs to act quickly to allow more generics, which would help reduce prices. Savings of at least $250 billion could be achieved over the next decade if there were discounted biosimilars for just 11 drugs, Steve Miller, chief medical officer for pharmacy benefits manager Express Scripts, said. A biosimilar is a biological product that is approved based on a showing that it is highly similar to an already-approved biological product.

High drug costs have been the focus of discussions on ways to control health-care costs. There is bipartisan agreement on the need for legislation that would stop brand-name pharmaceutical manufacturers from taking actions that prevent generic manufacturers from developing competing drugs, David Mitchell, president and founder of Patients For Affordable Drugs, said.

Bipartisan Legislation

The bipartisan Creating and Restoring Equal Access to Equivalent Samples Act of 2017 (CREATES Act, H.R. 2212), aims to ease some of the competition roadblocks, and companion legislation has been introduced in the Senate. The act would address situations where branded drug companies use FDA-required risk evaluation and mitigation strategies (REMS) to deny generic companies access to samples of branded drug products needed to conduct bioequivalence testing for generic approval. REMS are sometimes required to ensure the safety of marketed drugs.

Some drug manufacturers create or take advantage of monopolies, such as when there is no other manufacturer of the same or an equivalent drug, former House Energy and Commerce Committee Chairman Henry Waxman (D-Calif.) said. The FDA could “reach out and try to get a generic to come in and compete,” or “provide proactive government monitoring and oversight of the pharmaceutical markets to be aware of the fact that we’re getting into one single-source drug that will drive up the price,” said Waxman, the chairman of public policy communications firm Waxman Strategies.

Waxman was one of the authors of the Hatch-Waxman Act, or the Drug Price Competition and Patent Term Restoration Act, enacted in 1984, which provided an abbreviated process for generic drugs to be approved by the FDA. That “worked for many years, but things have changed since that law was adopted,” he said.

Since then, access to prescription drug coverage has greatly expanded through Medicaid, Medicare, and private insurance, Waxman said. At the same time, “the prices of drugs are dramatically higher,” and many people can’t afford the drugs they need, he said.

Reduce FDA Backlog

The FDA needs to reduce its backlog of about 4,000 generic drugs awaiting approval, and FDA Commissioner Scott Gottlieb is moving “aggressively” to accomplish that, Joel White, president of the Council for Affordable Health Coverage (CAHC), said. Pharmaceutical manufacturers, health insurers, employers, health-care providers, and patients are members of the CAHC.

As more brand-name and generic products have come into the market in recent years, there has been more opportunity for price negotiations between payers and drug companies, White said.

He cited as an example Sovaldi, a breakthrough hepatitis C drug produced by Gilead Sciences Inc., which was initially introduced at $90,000 for a 12-week course of treatment. As more products have been introduced that compete with Sovaldi, the price has come down by 46 percent, he said.

Drug prices also need to be more transparent to consumers, White said. “They need to know what drug is on the formulary and how much is their out-of-pocket spending” for a drug, White said.

The drug market needs to move toward value-based health care, said Robert Zirkelbach, executive vice president of public affairs for the Pharmaceutical Research and Manufacturers of America. Insurers have moved their payments with health-care providers toward value-based systems that reward treatments.

To contact the reporter on this story: Sara Hansard in Washington at shansard@bna.com

To contact the editor responsible for this story: Kendra Casey Plank at kcasey@bna.com

For More Information

Information on the Alliance for Health Policy's briefing Prescription Drug Affordability & Innovation: Policy Options & Stakeholder Views is at http://www.allhealthpolicy.org/prescription-drug-affordability-innovation-policy-options-stakeholder-views/.Information on the CREATES Act (H.R. 2212) is at https://www.congress.gov/115/bills/hr2212/BILLS-115hr2212ih.pdf.

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