The Trump administration plans to lower drug prices by pushing for greater use of generics and biosimilars and easing restrictions on bringing those drugs to the market.
As part of the administration's blueprint (PDF) released on Friday, the Food and Drug Administration will also back greater information sharing to encourage more providers to prescribe generics and biosimilars. In addition, the agency will issue guidelines that address ways the makers of brand-name drugs block generics from entering the market.
"We're also increasing competition and reducing regulatory burdens, so drugs can be gotten to the market quicker and cheaper," President Donald Trump said Friday.
|Immediate Action||Future Action|
|Increased competition||Steps to prevent drugmakers from gaming regulatory processes; Develop proposals to keep government programs from raising prices in the private market.||Consider sharing of samples needed for generic drug development; Promote the use of biosimilars.|
|Better negotiation||Allow more substitution in Medicare Part D to address price increases for single-source generics; Give Part D plan sponsors more power to negotiate with drugmakers.||Require site neutrality in payment; evaluate the accuracy of national drug spending data; investigate tools that address foreign government licensing or intellectual property theft.|
|Incentives for lower list prices||FDA evaluations of drugmakers should including list prices in advertising; update Medicare's drug-pricing dashboard to make price increases and generic competition more transparent.||Create measures to restrict the use of rebates; use incentives to discourage drugmakers increases for drugs used in Medicare Part B and Part D; Create fiduciary status for pharmacy benefit managers.|
|Lowering out-of-pocket costs||Prohibit Part D contracts from preventing pharmacists from telling patients when they could pay less out-of-pocket by not using insurance; improve the usefulness of the Part D Explanation of Benefits statement by including information about drug price increases and lower cost alternatives.||Create more measures to inform beneficiaries about lower-cost alternatives; Provide better annual information on costs to Part D beneficiaries.|
Drug company stocks soared after Trump's speech.
Chad Landmon, an attorney who chairs law firm Axinn, Veltrop & Harkrider's intellectual property and FDA practice groups, told FierceHealthcare that the pharmaceutical industry was holding its breath when talk of a drug pricing plan began. The blueprint includes many reforms that are favorable to these companies.
"A lot of what's being proposed are free market-based approaches which the industry is happy about," he said.
Price transparency an immediate focus
The Department of Health and Human Services has more than 50 actions in the works to address the drug pricing issue, said Secretary Alex Azar. For example, Azar said he has directed the FDA to investigate ways to improve price transparency around drugs, including listing the prices of brand-name medications in advertising.
"Think about all the time everybody spends watching drug company ads, and how much information companies are required to put in them," Azar said. "If we want to have a real market for drugs, why not have them disclose their prices in the ads, too?"
"Consumers would have much more balanced information, and companies would have a very different set of incentives for setting their prices," Azar added.
Landmon said that greater price transparency is a preferable outcome for drugmakers than other ideas that have been floated by Trump himself, such as price controls or allowing Medicaid to negotiate directly with drug companies.
"There are so many different things that impact the prices that payers ultimately pay," Landmon said. "It will be interesting to see, if we do get there, how you actually have to report that in advertising."
HHS is also looking at ending the pharmacy gag clause for patients enrolled in Medicare Part D plans, according to the blueprint. Pharmacists are prevented by law from informing patients of instances where they may save money on medication by not paying through their insurance.
HHS seeks feedback on biosimilars
The FDA is reviewing tools that can facilitate the development of more generics and biosimilars and is also exploring ways to distribute drugs and get more samples of biosimilars into providers' hands.
HHS is also asking providers to weigh-in on ways they can improve their education and outreach strategies. The agency is seeking more information on how to provide information in the most useful way to patients and providers and is also looking for feedback on ways to get state pharmacy practice acts involved.
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One trend to follow, he said, will be to see how the administration implements its talk of "ending abuses" by branded drug companies to maneuver to protect exclusivity longer than their original patents allowed. It's unclear how that would be addressed.
But, "it's a sentiment that a lot of people in the industry, and generic companies, in particular, agree with," Landmon said.