12-10-2021 Comments (0)Print
Since Donald Trump’s 2018 “American Patients First” plan, and long before, drug pricing in the USA has been both a lightning rod for strong opinions and stubbornly resistant to reform.
In a new political cycle, with several years of political squabbling behind us, it may now seem a lifetime since Mr Trump promised that drug prices would “come rocketing down.”
Yet more faint is the memory of the assertion that pharma lobbyists were “getting away with murder” – a statement which rocked stocks in the sector, as Mr Trump called for “bidding procedures” in the industry.
In the end, it was much ado about nothing, with the former administration’s plan for lowering the prices of medicines stalling in a bitterly divided Congress.
While Mr Trump set out a mandate for more price negotiation and a requirement that Medicare pass on discounts from drug manufacturers to patients, no significant changes to the basic pricing landscape were implemented by lawmakers.
Nine months into the job, new American president Joe Biden has taken up the mantle of pricing hawk, with more tough talk on the subject and the appointment of a like-minded Health and Human Services (HHS) Secretary, Xavier Becerra.
But with the President’s political capital at risk on multiple fronts – including an unpopular withdrawal in Afghanistan, a drawn-out battle on the debt ceiling, and a gargantuan infrastructure bill – will there really be meaningful changes this time around?
“Prescription drug prices in the USA are more than 2.5 times the average price in other countries”
Prescription drug prices in the USA are more than 2.5 times the average price in countries with a comparably developed healthcare system, according to a report from the RAND Corporation.
The gap widens even farther when it comes to branded drugs, which can be about 3.5 times the price.
RAND senior health policy researcher Andrew Mulcahy described branded drugs as “the primary driver of the higher prescription drug prices in the United States.”
He added: “We found consistently high USA brand name prices regardless of our methodological decisions.”
Another way of understanding the difference is to look at overall spending on drugs, for a basket of developed nations. According to the RAND analysis, with overall spending of $795 billion across the group, 24% of sales by volume, but fully 58% of revenues, originated in the USA.
Those who see the relatively high price of drugs in the USA as a problem may look to the potential for generics and biosimilars as a way to relieve the pressure.
In fact, the USA gets a good deal when it comes to generics, paying around 16% less than other developed nations for this class of product.
However, while many of the most expensive products available are biologics, it is unclear whether there is enough competition from biosimilars to make a difference, with a relatively low level of investment in this area, arguably due to a less welcoming regulatory environment.
Looking to turn things around, the US regulator launched its Biosimilars Action Plan in 2018, with the goal of promoting a market for biosimilars which could create more competition for branded biologics, an area which represents 40% of spending.
Supporters of the action plan claimed it would facilitate the development and approval of biosimilars and expedite their availability in the marketplace.
While it is still too early to say whether the plan will have the desired effect, there has not been a precipitous turnaround, with the agency approving just three biosimilars in 2020.
Six months after coming to power in January 2021, US President Joe Biden issued a broad Executive Order taking aim at anti-competitive practices across American industries, including in the life sciences.
The order instructed the Department of Health and Human Services to set out a plan within 45 days that would help tackle the problem of price gouging, while boosting local pharmaceutical supply chains.
Mr Biden also voiced support for measures discussed by the previous administration, including the importation of some generic drugs from Canada, and allowing Medicare more power to negotiate drug prices.
This echoes comments made earlier in the year, where Mr Biden said Medicare could “save hundreds of billions of dollars by negotiating lower drug prescription prices,” measures which would help “lower prescription drug costs for everyone.”
Mr Biden wants to make the approval of biosimilars and generics “transparent, efficient, and predictable,” and the HHS has been charged with enlisting other government agencies to help address impediments to this.
In a sign that the new administration pins parts of the blame for the slow uptake of biosimilars on industry practices, the executive order also called on the Federal Trade Commission to help tackle the problem.
The FTC should identify and remediate “any efforts to impede generic drug and biosimilar competition,” the order stated, “including but not limited to false, misleading, or otherwise deceptive statements about generic drug and biosimilar products and their safety or effectiveness.”
Following the executive order, new HHS Secretary Xavier Becerra published his agency’s response in September, calling it “a comprehensive plan to lower drug prices.”
“Top of the list for the HHS is testing value-based models for Medicare Part D.”
The plan laid out a number of administrative actions the HHS intends to pursue, with the overall goal of making drug prices more affordable, improving and promoting competition in the prescription drug industry and fostering scientific innovation.
Top of the list for the HHS is testing value-based models for Medicare Part D, as well as cost-sharing support to promote uptake of biosimilars and generics by beneficiaries.
The HHS also wants to experiment with cost of care models in Medicare to determine whether they produce changes in the use of drugs, and to collect more information from insurers and Pharmacy Benefit Managers (PBMs) to improve transparency.
Commentators have rightly observed that the plan is likely to produce incremental changes, rather than usher in a radical overhaul of the system.
This is due to the fact that significant reform would require the introduction of new legislation, and the Congress – perhaps predictably – is deadlocked over the need for change.
In its report, the HHS did highlight “potential legislative policies Congress could pursue” which would produce real pricing reform, including allowing drug price negotiation in Medicare Parts B and D.
Other significant changes, should Congress be minded to introduce them, would include reform of Medicare Part D to allow a cap on catastrophic spending, and legislation to “slow price increases” on prescription drugs.
Also likely to make a major impact would be legislation to “speed the entry of biosimilar and generic drugs, including shortening the period of exclusivity,” and a block on “pay-for-delay” agreements.
In many respects, Mr Biden’s proposals are a softer approach to those taken by his predecessor, who sought to tackle an opaque rebate system run by Pharmacy Benefit Managers (PBM), which is arguably not in the interests of patients.
Supporters of the new White House will argue that it is better to enact modest but meaningful change than to offer a contentious blueprint which doesn’t get off the ground.
But with the balance in Congress so finely drawn, it remains to be seen whether even that can be achieved.
All therapy areasBiden administrationFDAFeatureFocus OnGovernment AffairsIn DepthPharmaceuticalPricing, reimbursement and accessRegulationThe White HouseTrump administrationUSA
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