Health Policy Check Up News

Can the FDA Lower Drug Prices?

For some time now the PHARMA space has been witnessing an increased amount of scrutiny around the appropriateness of high drug prices. The argument that the Pharmaceutical Research and Manufacturers of America makes that improved science and outcomes equals premium pricing versus the payers philosophy of cost containment have left many questions for the rest of the supply chain-especially specialty providers and patients.

Although these two philosophies can be justified in their own ways, this argument has been aggravated by companies such as Turing Pharmaceuticals that have unjustifiably used extremely high drug prices to take advantage of a short term market opportunity. Not surprisingly, these developments have prompted varied responses from both industry and policymakers.

The question on many minds today is what can be done about high drug prices? To date, there has not been an effective response. Thus far we have witnessed Allergan’s new industry transforming social contract with its patients that promised to increase prices on branded drugs by single digits.

There have also been several hearings on Capitol Hill debating importation and Medicare negotiation, multiple state bills that target R&D transparency from brand manufacturers and a controversial new law in Maryland that allows the Attorney General to prosecute generic companies who raise prices to an unconscionable level. It remains to be seen whether any of these ideas will have a significant contribution to lowering drug prices to help increase patient access.

The most interesting development has come from a new approach outlined by the new FDA Administrator Scott Gottlieb, MD. In June 2017, Dr. Gottlieb announced the first two new steps commencing the Agency’s new Drug Competition Action Plan that is designed to lower drug pricing by increasing competition within the prescription drug marketplace and fostering the entry of lower priced alternative medicines.

The first step witnessed the Agency publishing a list of off-patent, off-exclusivity drugs without an approved generic. Part I of the list identifies those drug products for which the FDA could immediately accept an ANDA without prior discussion. Part II identifies drug products involving legal, regulatory, or scientific issues which should be addressed with the Agency prior to submission of an ANDA. The list shows active ingredients that lack generic competition.

The second step is outlined in the Agency’s Center for Drug Evaluation and Research’s Manual of Policies and Procedures, which describes how the review of abbreviated new drug applications (ANDAs), ANDA amendments, and ANDA supplements will be prioritized for review within the Office of Generic Drugs (OGD) and the Office of Pharmaceutical Quality (OPQ). This document is designed to expedite the review of generic drug applications until there are three approved generics for a given drug product.

“The agency is revising the policy based on data that indicate that consumers see significant price reductions when there are multiple FDA-approved generics available,” the FDA stated in a June 2017 press release.

These aforementioned policies dovetail into the public notice that FDA has announced titled “The Hatch-Waxman Amendments:Ensuring a Balance Between Innovation and Access.” According to the FDA, “this public meeting is intended to provide the public an opportunity to submit comments concerning administration of the Hatch-Waxman Amendments to the Federal Food, Drug, and Cosmetic Act (FD&C Act) to help ensure the intended balance between encouraging innovation in drug development and accelerating the availability to the public of lower cost alternatives to innovator drugs is maintained.”

It will be interesting to see what policies will be culminated from this blockbuster meeting. Will the FDA’s approach be the silver bullet to an issue that has yet to be tamed? It may be too early to tell. Thus far we have not seen a regulator take aggressive steps such as this to reign in price. However; while the FDA’s intentions may be good, it still cannot regulate drug prices because of our free market system.

Dr. Gottlieb’s deterrence policies may be a first step into creating a more consumer friendly environment for patient access to these much needed medications. For now it will be good for specialty to continue watching this situation in order to forecast how these market and government policies can help you better care for your patients.

For more insights like this contact us at True North Political Solutions.