The fate of pharmaceutical marketing under a reformed healthcare system hinges on political and legal developments in the coming months. Pharma backed Obamacare two years ago as a way to expand the market for prescription drugs. In return, industry agreed to pay hefty new fees, higher rebates on Medicaid drugs, and to subsidize the cost of drugs sold to seniors caught in the "donut hole" of the Medicare prescription drug program. Now manufacturers face a worst-case scenario: reform opponents kill the insurance exchanges and subsidies designed to expand enrollment, while retaining policies that cut pharma revenues and raise costs.
The 800-pound gorilla in the room is the looming Supreme Court decision on the constitutionality of the Obama health reform legislation. While the Justices ponder the weighty legal issues, HHS will continue to implement its multiple policies and programs, working with states to establish insurance exchanges and to expand IT systems and Medicaid programs. The administration's working assumption is that the Affordable Care Act (ACA)—or much of it—will remain in place.Just as big a concern is that limited public and private resources will undercut efforts to advance biomedical research and expand public health programs. FDA received a slight increase in its 2012 budget, but barely enough to keep pace with expanded demands. One response from pharma is to continue to look overseas for less costly R&D and manufacturing opportunities, as well as new markets.
The drive to cut healthcare spending will continue to shine the spotlight on pharmaceutical pricing, reimbursement, and access. New medicines will have to demonstrate value through marketer risk-sharing programs that skew prices to patient response to therapy. Tricky cost versus safety issues will arise, as with the debate over treatment of age-related macular degeneration with off-label use of inexpensive Avastin, instead of its more costly formulation Lucentis.
Pressure to cut costs will lead to an abbreviated pathway for bringing biosimilars to market. FDA guidance on the scope of preclinical and clinical testing needed to document product comparability and/or interchangeability will spur a land-grab rush in this field. Although several manufacturers have held meetings with FDA to discuss development strategies, biosimilar success will rest on decisions involving such thorny issues as product naming, coding, and the patent challenge process.
Biosimilars are a big issue because payers anticipate hefty savings from these look-alike therapies, as has been the case with small molecules over the past 25 years. Generic drugs now account for about 80 percent of prescriptions in the U.S., and the proportion will rise further as more blockbusters go off patent. However, Pfizer's move to retain a good portion of Lipitor sales by cutting its price and negotiating long-term deals with PBMs may have broad impact on the market and pharmacy programs—and keep the spotlight on brand/generic patent settlements that can delay when a generic comes to market.
The search for new pharma sources and new markets will further expand global drug production, with the relevant plusses and perils. The outcry over shortages of critical drugs is pressuring manufacturers to do more to secure supply chains. Proposed legislation could require added reporting to FDA on manufacturing problems, as well as tighter controls on drug imports, better track-and-trace systems, and stiffer penalties for counterfeiting and adulteration. FDA officials want pharma companies to police suppliers and distributors more closely and to establish back-up plans for dealing with production snafus.
Drug quality concerns will drive more frequent FDA inspections of manufacturing facilities and expanded FDA collaboration with regulatory counterparts in Europe and other regions to combine inspection resources and avoid redundant oversight. The agency also is looking to added user fees to support more inspections of foreign plants as a way to level the playing field between U.S. and foreign suppliers.
Pharma companies that violate manufacturing requirements, as well as policies against off-label marketing and illegal pricing, face intensified scrutiny from federal and state prosecutors. Many pharma companies have been hit with huge fines and onerous consent decrees for illegal activities, and things may get worse. Government officials keep threatening to penalize and jail individual corporate executives who fail to prevent violations, and some of the saber-rattling could escalate into real blows.