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States will continue to press for price controls, while FDA will tackle opioids and promote innovation.
The pharmaceutical industry faces a tumultuous year in Washington, as policymakers continue to press for curbs on too-high drug prices, and tax and budget reforms may threaten resources and initiatives for the FDA, the National Institutes of Health, and public health programs. Inaction by Congress and the White House will prompt more states to propose price transparency and negotiating strategies (see sidebar below), measures that
industry fears will dampen investment in innovative research. Federal agencies will strive to rein in the deadly opioid epidemic, in the process generating more investigations and lawsuits citing manufacturers. These issues will shape the November mid-term Congressional elections, which already are heating up as Republicans seek to maintain control of the House and Senate amid continuing debate over government funding for healthcare and drug regulatory policies.
Efforts to scale back the Affordable Care Act (ACA) and state Medicaid and children’s health programs will further limit drug coverage and reimbursement. Pharma companies backed the ACA and agreed to pay millions in taxes to expand pharmacy benefits. Now higher out-of-pocket costs for consumers will squeeze drug utilization and ignite further efforts to rein in pharma prices. The Centers for Medicare and Medicaid Services (CMS) recently revised Medicare Part B drug reimbursement policies and has proposed measures to facilitate Medicare coverage of biosimilars and generic drugs. CMS also has floated a proposal for Part D drug plans to share with patients the rebates and
discounts negotiated with manufacturers and pharmacy benefit managers (PBMs). A battle over 340B drug discounts pits pharma against certain hospitals, while the push for more transparency in drug prices and discounts could erode revenues for PBMs and further escalate the finger-pointing by manufacturers, insurers, and PBMs over who’s most to blame for costly medicines.
These trends will heighten interest in value-based pricing strategies that link drug coverage to patient response to treatment. CMS and insurers also eye arrangements to spread reimbursement over several years for one-time breakthrough therapies. Sponsors will need credible data to convince the Institute for Clinical and Economic Review (ICER) and other third-party analysts that the benefits of a new medicine justify costs.
These financial and regulatory pressures will spur pharma companies to seek new partnership and investment arrangements to support the R&D needed to maintain robust development pipelines, particularly involving gene editing and other “disruptive” technologies. The proposed CVS Health purchase of Aetna signals major changes ahead for drug distribution, coverage, and industry organization.
US patent policy and market exclusivity provisions similarly are crucial for maintaining an inviting climate for biotech investment, but current protections face challenges from evidence of innovator firms using patents to block competition. Patent battles are keeping most new biosimilars from the market, and a move to extend protections by transferring patents to a Native American tribe has generated a strong backlash. These actions fuel questions about over-extended exclusivities for new therapies, as seen in Republican efforts to curb the orphan drug tax credit and challenges to FDA priority review vouchers. The Supreme Court will weigh related issues as it considers an important case this year that could revise the current US Patent Office process for reviewing patent challenges.
While FDA generally avoids involvement in pricing issues, Commissioner Scott Gottlieb looks to enhance consumer access to medicines through greater market competition. His main strategy is to speed the development and approval of biosimilars and generic drugs, particularly complex therapies and combination
products and drugs in classes dominated by one or two brands. Gottlieb also wants to prevent brands from
blocking generics makers from obtaining supplies needed for bioequivalence testing and other tactics to delay market entry.
More pharma competition also derives from more efficient new drug development and timely FDA review and approval of new medicines, especially promising gene and cellular cures. The agency will continue to implement the 21st Century Cures Act and reauthorized user fee programs to encourage more streamlined clinical research, wider use of digital technology, flexibility on evidence standards, and updated information systems.
Perhaps the top priority for the nation’s healthcare system is to halt the deadly opioid epidemic, which is taking thousands of lives and driving up costs on every level. The challenge for health authorities is to ensure access to treatment for patients suffering from pain, while also curbing excessive prescribing and distribution of drugs subject to abuse and misuse. Congress and the White House have rolled out policies and plans to limit opioid use, while looking to expand treatment for addicts and access to opioid overdose rescue drugs, but limited funding may undermine such efforts.
FDA has increased its direct involvement in tackling opioid abuse by encouraging research on new non-opioid pain therapies and more effective medicines to prevent and treat addiction. It also seeks to facilitate development of low-cost generic abuse deterrent formulations (ADFs) and overdose treatments and to devise more secure packaging and distribution strategies for pain medicines.
Meanwhile, federal and state prosecutors are ramping up criminal investigations and lawsuits against opioid producers for deceptive marketing and promotional practices alleged to spur inappropriate opioid prescribing. While settlements are likely for many of these suits, industry’s role in fomenting this deadly wave of drug abuse will undermine its stature for promoting public health through biomedical discovery.
On the international front, FDA is collaborating with other regulatory authorities to combat the import of falsified/substandard medicines, including dangerous pain remedies. The expansion of drug sourcing and production overseas and continued disease outbreaks around the world will raise a range of global regulatory issues. International harmonization of regulatory standards and mutual recognition agreements will advance as authorities look for efficiencies in ensuring drug quality, in managing product lifecycles, and in blocking illegal product trafficking. Brexit will bring further changes to drug oversight and marketing, as the European Medicines Agency moves to Amsterdam.
Jill Wechsler is Pharmaceutical Executive’s Washington Correspondent. She can be reached at firstname.lastname@example.org