Trump’s proposals on drug prices are right to focus on anti-competitive market practices
In his “American Patients First” plan, President Donald Trump made clear his intention to deliver on a campaign commitment to lower prescription drug costs for U.S. patients. The president and his administration have proposed an array of potential policy actions designed to increase competition, spur negotiation, create incentives for lower list prices and lower out-of-pocket expenditures.
There are proposals in the president’s plan that if implemented could ensure stronger competition from generic and biosimilar medicines in the prescription drug market and thereby increase access and provide financial relief for patients at the pharmacy counter.
The first strategic component of the blueprint calls for robust competition; such competition by generic versions of expensive brand-name medicines could significantly lower drug prices.
According to the Food and Drug Administration, generics are priced approximately 85% less than their brand-name equivalents. And the pharmaceutical sales tracker IQVIA recently found that 90% of all generic prescriptions are filled with a co-pay of less than $20, and average only $5.47 out-of-pocket for patients.
Last year, through his Drug Competition Action Plan, FDA Commissioner Dr. Scott Gottlieb committed to strengthening the level of generic competition in the market. In 2017, the FDA signed off on a record number of approvals for generic and biosimilar medicines. That’s good news.
But it is also important to point out that of those total approvals, a much smaller percentage actually made it to the market. That’s because the FDA approval process, while vitally important, is increasingly only the equivalent of getting to the 50-yard line in a football game. There are several reasons a company may not be able to go to market with a generic drug after receiving approval. Among them, wholesaler consolidation and the partnerships the remaining large-scale wholesalers have with the nation’s largest retail pharmacy chains have undeniably affected the opportunity for launches. With decreasing opportunities to secure contracts, an increasing number of generic approvals don’t go to market.
On another front, both Gottlieb and HHS Secretary Alex Azar have drawn attention to certain anti-competitive tactics, or “shenanigans,” that postpone or deny generic and biosimilar entry to the marketplace. For instance, certain brand-name companies have been refusing to sell samples of their medicines at fair-market value to generic-drug makers, who need samples to get their lower-cost treatments approved by the FDA. Shortly after the president’s speech, both administration leaders announced plans to have the FDA publicly disclose the companies withholding samples from generic-drug manufacturers.
While a positive step, the reality is the companies engaging in this type of behavior have been called out for years by the media, patient advocacy leaders, members of Congress and other health- care stakeholders, to no avail. Naming them alone won’t solve this problem. Real change will require congressional action, something the president acknowledged in his speech. A bipartisan group of congressional representatives and stakeholder groups support the Creates Act, which would require brandname companies to sell generic-drug companies the samples needed for the testing required for FDA approval.
Trump also pledged that “our patent system will reward innovation, but it will not be used as a shield to protect unfair monopolies.” To realize this aspect of his vision is going to take work. Some brand-name companies are increasingly abusing the patent system by creating non-innovative “patent thickets” ahead of a primary patent’s expiration.
It takes years to litigate these patents which are often found to be invalid, needlessly delaying competition by generics and biosimilars during that time period. One manufacturer even sought to shield itself from patent review at the Patent and Trademark Office by “renting” the sovereign immunity of a Native American tribe. While we can, and should, recognize and reward true innovation, we need to be more skeptical and less tolerant of innovative legal and commercial strategies designed to protect monopolies past their due dates.
Generic-drug and biosimilar manufacturers are committed to working with Congress and the Trump administration to fix the foundation of the U.S. market to reduce overall drug prices for the patients we serve.