Stemming the Escalating Cost of Prescription Drugs

Back in October, I wrote about escalating drug prices.  Last week, ACP President Nitin Damle was testifying before Congress about the CREATES Act (“Creating and Restoring Equal Access to Equivalent Samples Act of 2016”).  This bill, if it were to become law, would make it easier for generic drug manufacturers to get access to samples of the reference product in order to support bioequivalence testing required for an FDA application.

This was also one of the topics we discussed on Capitol Hill during Leadership Day last month.  We advocated for the development and introduction of legislation in both chambers that will include these elements:

1) Increased transparency in drug pricing by requiring pharmaceutical manufacturers to publically disclose production costs, including research and development investments for specific high‐cost drugs that the Secretary identifies through regulation. Unlike many other countries, the United States lacks regulatory authority to control the price of drugs or devices. As a result, pharmaceutical companies may price drugs at will and there is very little transparency or understanding of how companies arrive at the price of a drug.

2) Authorization to appropriate $2.74 billion in discretionary spending for the FDA to expedite, through fast-track approval, new drugs that address unmet medical need in the treatment of a serious or life threatening condition, as well as to address the back-log of pending generic drug applications. The median approval times for standard and priority review drugs in fiscal year 2013 dropped to 12 months and 7.9 months. Drugs can move through the regulatory approval process more rapidly if they qualify for fast track designation, accelerated approval, priority review, or breakthrough therapy designation. Although an FDA report showing the agency is approaching targets and commitments made by the agency to improve review times is encouraging, we continue to advocate for additional resources for the FDA so that progress can continue on clearing the backlog. ACP also supports robust oversight and enforcement of restrictions on product-hopping, evergreening, and pay-for-delay practices as a way to increase marketability and availability of competitor products. In these practices, companies prevent generic competition from entering the market by making small adjustments to a drug with no real therapeutic value that grant the company longer patent protection, or they remove the drug from market, forcing patients to switch to a reformulated version of the same drug.

3) Granting authority to the Secretary of HHS to negotiate prescription drug prices with manufacturers for high‐cost drugs and biologics covered under Part D of the Medicare program. Medicare Part D pays on average more than other federal health care programs: 73% more than Medicaid and 80% more than the Veteran’s Health Administration (VA). The VA operates as a closed system and provides care directly to veterans. They purchase drugs and other pharmaceuticals directly from manufacturers, and have a national formulary which does not exist in Medicare or Medicaid. The ACP has longstanding policy advocating for the ability of Medicare Part D to negotiate drug prices and rebates directly with pharmaceutical manufacturers as a way to keep costs to the system down. Although the Congressional Budget Office, in a 2007 letter to Senator Wyden, contended that the savings would be negligible, other recent estimates show Medicare Part D could save $15-16 billion a year if it were allowed to negotiate drug prices.

The CREATES Act could be one step in the right direction.

To read the ACP Position Paper, Stemming the Escalating Cost of Prescription Drugs, click here.

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