Policy Recommendations to Improve Competition and Reduce Costs

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Enhance private sector cost-cutting
tools in Medicare Part D, Medicaid, and
commercial markets

Eliminate the use of Risk Evaluation and Mitigation Strategies (REMS) to delay competition.

Some manufacturers have used REMS to prevent generic or biosimilar developers from getting sufficient quantities of a drug or biologic to develop a competitor to the innovator product. REMS were never intended for this purpose; this practice should be prohibited.

Allow for FDA accelerated approval of brand drugs that have the potential to create competition.

Accelerated review is granted to new drug applications that address “unmet need.” The economic need for competition to lower prices should be a criterion of unmet need.

Create a safe harbor from Medicaid Best Price for value-based drug price negotiations.

Today any drug manufacturer must offer state Medicaid programs the lowest price it offers any other payer. This provision is seen as a price floor and is inhibiting creative value-based pricing arrangements.

Expand drug coverage options for health savings account (HSA) eligible high deductible health plans (HDHP).

HDHPs associated with HSAs should have the option of covering prescription drugs with low or no cost-sharing prior to reaching the deductible, especially drugs that qualify for a preventive drug list. This policy can be achieved by expanding the current preventive drug list used by HDHPs.

Require substitutable biosimilars to bear identical labeling and naming.

Substitutable biosimilars should bear identical names and labels to their innovator analogs. Use of different names will confuse patients and providers and inhibit prescribing of biosimilars.

Reduce innovator biologic exclusivity to seven years.

Seven years of data exclusivity would still provide a sufficient return to manufacturers, while also speeding more affordable biosimilars to market.

Make biosimilars subject to the 50% Part D coverage gap discount.

The ACA did not apply to biosimilars the 50% Part D coverage gap discount. This could have the unintended consequence of encouraging prescribing of more expensive innovator biologics when lower cost biosimilars are available.

Remove Medicare Part D’s protected classes.

Designating “classes of clinical concern” where all or substantially all drugs in a class must be covered allows drug manufacturers to name their price. CMS already applies careful plan formulary coverage checks to assure proper coverage.

Encourage greater use of generics for Medicare Part D low income subsidy enrollees.

MedPAC recommended allowing the Secretary of HHS to lower cost-sharing on generics and raise it for brands that have generic competition. Increasing the differential between brands and generics and allowing plans to lower generic cost-sharing would save money for enrollees and Medicare.

Eliminate “pay-for-delay” agreements that keep generics off the market.

Patent settlements, or “pay-for delay” agreements that allow drug patent holders to pay off potential competitors who would otherwise produce a competing generic drug, should be prohibited.