The oft-repeated industry adage that budget-busting list prices for drugs in the U.S. don't matter because no one pays that price doesn't bear out in the real world at least not anymore.
In an era of high deductibles and co-insurance, those list prices are having a real impact on commercially insured patients, according to a new analysis from Amundsen Consulting, a division of QuintilesIMS. Patients who haven't met their insurance deductible can be charged the full list price of a drug. And those with co-insurance are likely to have their out-of-pocket cost based on the list price rather than the discounted price their plan pays.
As a result, patient cost-sharing for nearly 20 percent of prescriptions for brand drugs and more than a third of specialty drugs are based on list price, according to the Amundsen analysis, which was supported by the Pharmaceutical Research and Manufacturers of America.
Citing runaway list prices, some lawmakers have been crying for pricing reforms for years. With escalating prices and more patients facing the consequences, those lawmakers are no longer a voice in the congressional wilderness. And the reforms they've been hawking are moving from fringe ideas to mainstream solutions.
The Improving Access to Affordable Prescription Drugs Act could be a case in point. Billed as an improvement to the Affordable Care Act, the legislative package introduced in both the House and Senate Wednesday pulls together a list of pricing reforms that have been suggested in the past but failed to get through Congress. The bill is sponsored by Democrats, who are seeking support from President Donald Trump and Republican colleagues who've indicated they're fed up with the broken drug pricing system.
Rep. Jim Jordan (R-Ohio), chairman of the House Oversight Health Subcommittee, gave Rep. Peter Welch (D-Vt.) a few minutes to discuss some of the provisions during last week's hearing on PDUFA VI. (See BioWorld Today, March 24, 2017.)
It's clear that the president gets this, Welch said, adding that Americans are paying more than they should be for drugs. While acknowledging that drug companies are doing a good job in developing innovative products, Welch said, "they can't kill us with the cost."
The legislation seeks to speed competition by reducing biologic exclusivity to seven years instead of the 12 granted under the Biologic Price Competition and Innovation Act. It also would reduce the five-year data exclusivity for new chemical entities (NCEs) to three years, but maintain the five-year marketing exclusivity for approved new drug applications. Reducing the NCE data exclusivity would allow competitors to begin developing generics earlier so they could launch as soon as the marketing exclusivity expires.
The bill also addresses "product hopping" an industry practice in which companies switch patients to a newer version of a product prior to patent expiration of the older version. The legislation would restrict exclusivities for next-generation products to supplements that show a significant clinical benefit over an applicant's existing therapies.
Other provisions in the package include:
Requiring drug manufacturers to disclose a variety of information, including R&D expenditures, marketing and advertising costs, acquisitions, profits, pricing information and executive compensation. Failure to do so could lead to civil penalties.
Requiring charities to disclose the total amount of assistance provided to patients prescribed drugs manufactured by any contributor to the charity. The Government Accountability Office would be instructed to study the impact of co-payment coupons and other patient-assistance programs on drug pricing and expenditures.
Allowing direct Medicare pricing negotiations for Part D prescription drugs. The president has suggested he would support such a measure. (See BioWorld Today, March 10, 2017.)
Imposing a tax on companies that raise a prescription drug price beyond the rate of medical inflation over a set period. Penalties would be based on a percentage of a drug's gross revenues. Brand drug companies already pay extra Medicaid rebates when price increases exceed inflation.
Accelerating the closing of the Part D coverage gap by two years. This would reduce the patient's burden next year while increasing the discounts drug companies would have to provide.
Capping prescription drug cost-sharing for patients with insurance. The caps initially would be set at $250 per month for individuals and $500 for families and then adjusted in subsequent years in accordance with the medical care component of the consumer price index.
Creating a $2 billion antibiotics prize fund.
Providing public funding for clinical trials through a new Center for Clinical Research at the NIH.
Prohibiting pay-for-delay patent settlements in which a company agrees to delay development or the launch of a generic in exchange for anything of value (a few exceptions would be allowed). Civil penalties could be up to three times the value the agreement gives to the responsible party. The generic company also could lose the 180-day exclusivity granted to first applicants.
Requiring the FDA to publish a complete list of generic drugs and related pertinent information to increase generic drug competition.
Disallowing tax deductions for expenses relating to direct-to-consumer advertising.
In addition, the bill would allow the importation of prescription drugs from FDA-inspected facilities of licensed Canadian companies. The program would be expanded to certain other countries after two years. Similar provisions were included in a separate bill Democrats introduced in the House and Senate last month. (See BioWorld Today, March 2, 2017.)
Congress passed a reimportation measure years ago under the Clinton administration, but the Health and Human Services (HHS) secretary at the time refused to implement it, citing safety concerns. Those who oppose reimportation today voice the same concerns, raising fears that disreputable firms would bring in questionable prescription drugs by routing them through Canada.
Just this week, three Canadian residents and their company, Quantum SRL, were charged with conspiring to distribute wholesale quantities of misbranded prescription drugs in the U.S. and money laundering, according to the Department of Justice. Quantum allegedly purchased the drugs from suppliers in Turkey, the U.K. and other countries. The company arranged for the drugs to be sent to re-shippers in the U.K. and the U.S. where they were put into smaller packages and re-labeled, before being sent to three pharmacists in Pennsylvania. The Justice Department is seeking forfeiture of $4.2 million from Quantum.
The potential for cheaper drug prices could outweigh the safety concerns about imported drugs. Speaking at a House hearing on the HHS budget Wednesday, Rep. Mark Pocan (D-Wis.) pushed for reimportation, noting that an arthritis drug that costs patients $1,156 in the U.S. sells for $257 in Canada. (See BioWorld Today, March 30, 2017.)
While noncommittal on reimportation, HHS Secretary Tom Price agreed that the government needs to get to the root cause of high drug prices in the U.S. He said he's working with the president to devise a strategy to address the issue.
When Pocan immediately volunteered to help with that strategy, Price acknowledged that there are a number of people on both sides of the political aisle who are interested in tackling drug prices.