by Joyce Frieden, Washington Editor, MedPage Today March 23, 2021
WASHINGTON — Senators on both sides of the aisle may agree that prescription drug prices are too high, but their solutions to the problem couldn’t be more different.
“All over this country, the American people are asking a simple question: How many people need to die before Congress is prepared to take on the greed of the pharmaceutical industry?” Sen. Bernie Sanders (I-Vt.), chairman of the Senate Health, Education, Labor & Pensions (HELP) Subcommittee on Primary Health and Retirement Security, said during a subcommittee hearing Tuesday on the high price of prescription drugs.
As to what Congress should legislate, Sanders had three ideas, embodied in bills he had introduced: Pegging U.S. drug prices to those of other industrialized countries; allowing for reimportation of prescription drugs from other countries; and allowing Medicare to negotiate drug prices. “Every other major country on earth … negotiates drug prices, and the time is long overdue for Medicare to do that as well,” he said.
But Sen. Roger Marshall, MD (R-Kan.) had other ideas. While he agreed that everyone wants drugs to be affordable for patients, “I really think it’s important we protect innovation” in the pharmaceutical industry, he said. “I think there’s this balance between encouraging innovation and not stifling it with government price controls versus not allowing innovation to occur.” He also said he supported “eliminating kickbacks” that occur during the drug rebate process. “All rebates should go to the patient.”
The senators heard a variety of proposed solutions from witnesses. Aaron Kesselheim, MD, JD, professor of medicine at Brigham and Women’s Hospital and Harvard Medical School in Boston, suggested that “the U.S. needs to establish a publicly funded body that would determine the price for a drug by its clinical benefit.” He noted that the German healthcare system uses such a group, and states including New York and Massachusetts have initiated similar processes for their Medicaid programs.
Limiting price increases also would be helpful, Kesselheim said. “In the U.S., Gleevec [imatinib] was introduced in 2001 for a list price of $26,000 a year, and increased to more than $120,000 by 2016,” he said. “By contrast, in other countries, agreements between the government or payers and manufacturers restrict price increases.” One idea in this area would be to extend the drug price inflation rebate penalty currently in place for Medicaid, he said.
Another idea is to “arrange for more efficient transition to a competitive market,” said Kesselheim. “Generic or biosimilar entry is often delayed in the U.S. because of patent thickets covering trivial attributes of a drug … We could leverage the Patent Trial and Appeal Board to weed out invalid patents before they get caught up in litigation, by reviewing patents listed by the FDA.”
On the other hand, Alex Brill, resident fellow at the American Enterprise Institute, pointed to “important opportunities to further foster competition” in the U.S. pharmaceutical market. “Biosimilars have already yielded roughly $37 billion in savings to the U.S. healthcare system, but more can be done,” said Brill. “One approach would be to align incentives of prescribers with payers and patients,” such as a demonstration project to test a payment rate of the average sales price plus 8% — higher than for brand-name drugs — for biosimilars administered under the Medicare Part B program, he said.
Second, Congress should recognize the importance of complex generic medications and their approval, Brill said. “The FDA should have the incentives and the resources to promptly review and approve complex generic applications,” he said. Seven such generics are not approved in the U.S. but are available in Canada or Europe; “bringing them to the United States could save $1.3 billion annually,” said Brill.
Witnesses also had starkly different views on how well the marketplace was doing. “In Canada, per-capita drug spending is $879 versus over $1,200 in the United States. Per-capita spending is about 40% higher in the United States largely because of the regulation of patented drug prices by the Canadian Patented Medicines Prices Review Board,” said Nav Persaud, MD, Canada Research Chair in Health Justice at the University of Toronto. “The Patented Medicines Prices Review Board is slated, in July, to drop the United States from its list of comparative countries used to set price ceilings because prices are shockingly high in the United States compared with other high-income countries, including the United Kingdom.”
Brill emphasized the brighter side, noting that although prescription drug spending in 2019 was $368 billion — nearly 10% of national health expenditures — “it’s important to note the drivers of these costs. Biologics are driving much of the increase in national drug spending. In inflation-adjusted per-capita terms, biologic drug spending increased from less than $300 to over $400 per capita from 2014-2018, while traditional small-molecule drugs fell … during the same time. Notably, out-of-pocket spending as a share of total drug spending has declined significantly over the past 2 decades, from roughly 28% in 2000 to roughly 15% in 2019.”
Sen. Lisa Murkowski (R-Alaska) asked how Americans can figure out whether drugmakers’ price increases are justified. “One way to do that is to conduct a clinical trial in which you test your new version against your old version and showed that one was superior,” said Kesselheim. “Most pharmaceutical companies don’t fund that kind of comparative effectiveness research; instead they just rely on marketing to promote the ‘new, improved’ product.” Murkowski noted that she and Sen. Tammy Baldwin (D-Wis.) have reintroduced legislation to require manufacturers to provide a justification for substantial increases in list prices of medications.
Kesselheim agreed that such a requirement would “incentivize companies to generate high-quality research information that could help guide physician and patient choices and help guide prescribing practices … Another thing such a measure could do is dissuade companies from increasing prices when they don’t have a justification or don’t want to provide insight into their marketing budgets.”
Joyce Frieden oversees MedPage Today’s Washington coverage, including stories about Congress, the White House, the Supreme Court, healthcare trade associations, and federal agencies. She has 35 years of experience covering health policy. Follow
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