The Prescription Drug Price Relief Act of 2019 was recently introduced to lawmakers, aiming to allow generic drug companies to enter into competition with patent-holding drug manufacturers after a petitioned drug’s price is deemed excessive. With hearings on drug prices under way, all constituents are being heard, from doctors and patients to members of the pharmaceutical industry.
The bill would allow the Secretary of Health and Human Services to deem a petitioned drug excessively priced if its U.S. price is higher than that of its median price in the United Kingdom, Canada, Germany, France and Japan. However, if that stipulation is not met, the Secretary can still judge the price excessively high by taking into account factors such as the following:
• size of the affected patient population;
• value of the drug to patients;
• costs associated with development of the drug;
• whether the drug produces a significant improvement in health outcomes; and
• cumulative global revenues generated by the drug.
Once confirmed to be excessively high, the pharmaceutical company would have to lower the drug’s price. Otherwise, the government would allow a generic manufacturer to enter production by waiving or voiding any government-granted exclusivities. However, the generic manufacturer would pay a reasonable royalty to the company that holds the patent. This could be a percentage of sales or an amount that’s determined by the Secretary based on factors similar to those already listed.
According to Michael Repka, MD, the AAO Medical Director for Government Affairs, this kind of sweeping legislation doesn’t seem likely. While industry and doctors can somewhat agree that drug prices are too high, both parties highlight issues associated with the bill. “Setting our prices based upon what [drugs] cost in Europe or other parts of the world is an idea that doesn’t seem politically palatable to anyone,” Dr. Repka says. However, he acknowledges that relief is necessary. “As a physician-advocate for our patients, drug prices are high and many consumers can’t afford them.”
The Pharmaceutical Research and Manufacturers of America sees the bill as flawed. The organization says that patients won’t benefit from the legislation, and that it may affect America’s position as a pharmaceutical leader. “Circumventing patent and other intellectual property rights on medical innovation, and allowing foreign governments to set U.S. prices, would be disastrous for patients,” PhRMA said in a prepared statement. The organization is concerned that reduced investment in research and development may slow progress in creating tomorrow’s cures, and could result in Americans having access to fewer new medicines. PhRMA adds that there’s no evidence the bill would benefit patient access or affordability of the medicine. “Patients in countries whose governments set prices wait years for new medicines and have far fewer treatment options,” the organization’s statement added.
PhRMA also feels the bill could harm America’s competitive pharmaceutical status on the world stage. “No countries that are leaders in innovation have taken such drastic measures,” it remarked. “These policies would threaten America’s ability to remain competitive and instead, replicate flawed policies of countries where patient needs are brushed aside.”
Dr. Repka details several of the factors that will go into any legislation affecting drug prices. First, he notes that different nations bear different costs associated with pharmaceuticals. “Industry has research and development but they also have marketing and advertising and, in some countries, these costs may not exist at the same levels,” he says. “Choosing average overseas pricing as a vehicle to price medications in our own economy doesn’t seem consistent with a market-based economy.”
Feasibility of producing additional generic drugs is another potential issue. “Part of this bill seeks to move branded drugs to the generic space,” Dr. Repka says, “but we may not have the generic capacity to produce [them]. We have problems of shortages in the generic space, and ramping up production for a limited market can be very expensive.” He says that this could pose a risk to patients if medications aren’t sufficiently profitable. “We have to have a price that’s high enough that industry is willing to bring it to market, but also a price that the consumer can afford,” he adds.
When asked if patients who take medication for chronic conditions (i.e., patients with dry eye or glaucoma) may opt for medical treatment instead of surgical intervention if drug prices were to come down, Dr. Repka says it’s possible. “In general, pharmacotherapy is used before surgical therapy,” he notes, “but lower pricing could cause patients to be willing to continue long-term pharmacotherapy or a multidrug plan.”
On the question of whether drug prices are fair or if there’s an alternative solution, PhRMA notes that large rebates are often required for a medicine to be covered. “Forty percent of the list price of medicines is given as rebates or discounts to insurance companies, the government, Pharmacy Benefit Managers and other entities in the supply chain,” the organization says. PhRMA notes that these savings are often not shared with patients, whose out-of-pocket costs soar as rebates and discounts grow every year. “We need to ensure that more of the negotiated rebates and discounts are resulting in lower costs for patients at the pharmacy,” the industry group says. Dr. Repka acknowledges that rebates could be a subject to explore, noting, “They’re generally not transparent to the consumer.”
In terms of alternative solutions, Dr. Repka says improved transparency in drug-pricing reform is needed to protect patients. “Any drug-price legislation in the U.S. has to help the consumer understand where their payments go so that they buy the right plan,” he says. “Weakening patent protection or shortening the period it takes for generic companies to gain access to producing these medications is the only thing I could see happening. This bill does that, but with a very sharp knife. Changing the patent process or changing exclusivity terms seem to be very significant changes in how we go about protecting intellectual property. There would have to be enough protections for the manufacturer’s rights.” Dr. Repka concludes, “I think that everyone recognizes that prices are too high. We need [both] pricing and availability—so it’s a very difficult needle to thread.”
At press time, hearings had just begun on Capitol Hill to investigate why drug prices are rising and how this development affects Americans.
Witnesses at the hearing seek to understand research costs, inflation vs. drug prices, prescription percentage of patent-protected drugs vs. drug spending, and patent-policy regarding the length of time before generic manufacturers can enter into competition.
In testimony from Aaron S. Kesselheim, MD, an associate professor of medicine at Harvard Medical School, he says the pharmaceutical marketplace is fractured and inefficient.
“The solution to this problem involves intelligent legislation and regulation to ensure that U.S. patients and payers pay prices commensurate with the clinical value that the drugs provide,” Dr. Kesselheim says, “and to ensure that even expensive drugs face generic or biosimilar competition after a reasonable and fair time frame.”
In the January 2019 Cornea/Anterior Segment column about pterygium repair using amniotic membrane, an oversight led to the author’s financial disclosure being omitted from the article. To clarify, the author, Thomas John, MD, has a financial interest in Bio-Tissue and Tissue Tech. Review regrets the omission.