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Let the Drug Pricing Games Begin


Pharmaceutical Executive

Pharmaceutical ExecutivePharmaceutical Executive-02-01-2019
Volume 39
Issue 2

Drug importing, advertising, rebates, and industry practices are on the table as legislators zero in on pharma pricing strategies.

Congressional leaders are opening investigations and calling industry leaders to testify at hearings on drug costs and pricing strategies. Legislative proposals are emerging to permit greater drug importing, require price disclosure in TV commercials, limit pay-for-delay deals, and more. The Trump administration is devising new strategies to limit Medicare outlays for medicines. And hospitals are continuing to push for

Jill Wechsler

attractive 340b discounts.

And there’s more to come. Both the Trump administration and Congressional leaders agree on the importance of making prescription drugs more affordable and accessible, and all sides are lining up proposals to grab the spotlight. There is strong interest in measures that tie the prices of U.S. prescription drugs to median prices in other developed countries, and to allow Medicare to negotiate drug prices. 

In the House, Oversight and Reform Committee chair Elijah Cummings (D-Md) has requested pricing and cost information from a dozen leading biopharma companies as part of a broad investigation he has opened into strategies to reduce prescription drug prices. Both Cummings and Senate Finance Committee chair Chuck Grassley (R-Iowa) scheduled hearings in late January on a range of initiatives to lower costs for patients, as Grassley looks for support from Senate Republicans and Democrats for strategies to curb high drug prices.

A lead proposal is to make it easier for Americans to purchase less costly, but supposedly safe, drugs from Canada. Grassley backs a bill that permits such transactions from “certain approved pharmacies” in Canada, despite long-held concerns by FDA officials and others that there’s no way to assure the provenance and legitimacy of such products. Some Democrats have gone further, permitting drug imports from a range of countries. Meanwhile, FDA is responding to the clamor for relief by exploring strategies to safely import drugs in situations where there are dramatic price increases or serious shortages.

Another high-profile initiative is to require price disclosures in drug TV commercials, which was proposed last year by the White House and is popular on Capitol Hill. Researchers are busy examining whether such information would actually help consumers make better treatment choices, and industry is pressing for linking price disclosures to websites. Senate Democrats also are looking to revoke the federal tax deduction for prescription drug advertising, a perennial tactic that has fallen by the wayside in the past, but now may gain traction. 

Examining competition

Brand pharma companies also face continued pressure from generic drugmakers for legislation to limit apparent anti-competitive behavior. A main initiative aims to reduce barriers to obtaining needed drug supplies for conducting studies required to demonstrate that a follow-on product is bioequivalent to the brand. FDA backs such measures as a way to enhance competition in certain therapeutic areas, particularly for complex products and dosage forms. 

The role of drug rebates, discounts, and co-pay cards are on the table, as Sen. Susan Collins (R-Maine), who chairs the Senate Special Committee on Aging, focuses on links between rebates and prices. Collins is examining claims that pharma companies raise list prices in order to offset deep discounts demanded by payers and has asked the administration for data on the role of rebates, discounts, and coverage decisions in shaping what consumers pay and how insurers benefit from these arrangements. 

Policymakers also are examining rising prices for insulin, building on press reports about individuals with diabetes struggling to afford critical injections. While many diabetes therapies are covered routinely by health insurance and plans, people without adequate coverage have been hit hard. Certain long-established diabetes drugs have doubled in price in the last five years, according to recent analyses, despite ample supplies.

The attack on high drug costs has been a boon for the Institute for Clinical and Economic Review (ICER), which has emerged as an unofficial arbiter of justified drug pricing in the US. ICER’s main focus has been the validity and cost-effectiveness of new drug launch prices, as compared to similar therapies. Now the Institute plans to expand into evaluating whether price increases of “high-impact” marketed therapies are justified by clinical evidence. The idea is to indicate where price increases may be warranted when new evidence demonstrates improved outcomes or comparative gains that have clear value. At the same time, ICER would reject price hikes that don’t appear supported by clinical improvements or added benefits. 

Evidently, pharma companies are responding to the attack on industry pricing practices with a surge in lobbying activity in Washington. The Pharmaceutical Research and Manufacturers of America (PhRMA) spent a record $27.5 million in this area in 2018, according to public reports. Despite the outlays, industry failed to gain a reprieve from a surprise change a year ago in the Medicare prescription drug benefits program that increased the discounts manufacturers must provide Medicare beneficiaries with high outlays for medicines. The change is estimated to cost drugmakers nearly $2 billion in 2019. PhRMA worked hard to get it modified last year, but that fell short and further modification is unlikely in the current political climate.  


Jill Wechsler is Pharmaceutical Executive’s Washington Correspondent. She can be reached at jillwechsler7@gmail.com

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