Can the FDA Lower Drug Prices?
The pharmaceutical industry is facing increased scrutiny from lawmakers about the appropriateness of high drug prices.
FOR SOME TIME, THE PHARMA space has been witnessing increased scrutiny around the appropriateness of high drug prices. The argument of the Pharmaceutical Research and Manufacturers of America that improved science and outcomes equals premium pricing versus the payers’ philosophy of cost containment has left many questions for the rest of the supply chain—especially specialty providers and patients.
Although these 2 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 prompted responses from both industry and policy makers.
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, which promised to increase prices on branded drugs by single digits.
There have also been several hearings on Capitol Hill debating drug importation and Medicare negotiation, multiple state bills that target research and development transparency from brand manufacturers, and a controversial new law in Maryland that allows the state attorney general to prosecute generic companies that raise prices to an unconscionable level. It remains to be seen whether any of these ideas will have a significant contribution in lowering drug prices to help increase patient access.
The most interesting development has come from a novel approach outlined by new FDA Commissioner Scott Gottlieb, MD. In June 2017, Dr. Gottlieb announced the first 2 steps of the agency’s new Drug Competition Action Plan, which is designed to lower drug pricing by increasing competition and fostering the entry of lower-priced alternative medicines.
The first step witnessed the FDA publishing a list of off-patent, off-exclusivity drugs without an approved generic. Part I of the list identifies products for which the FDA could immediately accept Abbreviated New Drug Applications (ANDAs) without prior discussion. Part II identifies drug products with legal, regulatory, or scientific issues that should be addressed 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 ANDAs and their amendments and supplements will be prioritized for review within the Office of Generic Drugs and the Office of Pharmaceutical Quality. This document is designed to expedite the review of generic drug applications until there are 3 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 FDA’s public notice, 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 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 culminate 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 rein in prices. 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 in creating a more consumer-friendly environment for patient access to these much-needed medications. For now, it will be good for specialty pharmacy to continue watching this situation to forecast how these market and government policies can help you better care for your patients.