POLICY SOLUTIONS

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Promoting competitive, market-based
policy solutions to lower the cost of
prescription drugs

Accelerate brand drug competition through earlier FDA reviews.

 

FDA should interpret the economic need for more competition as a qualifier for accelerating FDA review of new drug and abbreviated new drug applications (NDAs and ANDAs).

 

If FDA does not, Congress should require FDA to expedite reviews of brand drugs in existing classes lacking head-to-head competition.

Reduce biologic exclusivity to seven years.

Encourage physician use of biosimilars.

Congress should reduce the exclusivity period in statute for biosimilars.  To encourage physician use, FDA should make clear that biosimilars are therapeutically equivalent and when they are interchangeable with the biologic upon which they are based.

 

Medicare payment for biosimilars and biologics in physician-based settings and in Medicare Part D should be revised to not disadvantage the biosimilar. States should avoid requiring pharmacists to call doctors when substituting a biosimilar and should allow biosimilar substitution as they allow generic substitution.

ESTIMATED SAVINGS:

 

CBO estimates $3.7 billion in federal savings over the 2016-2026 period, according to its analysis of health care proposals in the President’s fiscal year 2017 budget.

 

Reference: Congressional Budget Office, 2016

Eliminate pay-for-delay deals between brand and generic manufacturers and the abuse of REMS programs and patents.

 

Pay-for-delay deals ultimately block the use of generics and biosimilars. 

 

Congress should enact legislation providing FDA the authority to quickly settle disputes and give generic drug makers whose market entry has been blocked by these tactics legal recourse.

 

Congress should act to prevent manufacturers from abusing the patent system for pharmaceuticals to gain additional exclusivity for modifications or new indications of more than two total years.

ESTIMATED SAVINGS:

 

CBO estimates $2.6 billion in federal savings over the 2016-2026 period, according to its analysis of health care proposals in the President’s fiscal year 2017 budget.

 

Reference: Congressional Budget Office, 2016

Continue private market negotiation, not government pricing interventions.

Retain prohibition on direct negotiation of drug prices by the Secretary in Medicare Part D, promote the use of generics, preferred pharmacies, 90-day home delivery, and other cost-savings tools.

ESTIMATED SAVINGS:

 

CBO estimates $0 in savings if Congress were to “allow the Secretary to negotiate prices for biologics and high cost prescription drugs,” according to its analysis of health care proposals in the President’s fiscal year 2017 budget. 

 

In addition, CBO previously commented that “By itself, giving the Secretary broad authority to negotiate drug prices would not provide the leverage necessary to generate lower prices than those obtained by PDPs and thus would have a negligible effect on Medicare drug spending.” 

 

References: Congressional Budget Office, 2016   

End requirements to cover all drugs in certain classes in Medicare.

Using existing authority, the Secretary should reassess the protected class regulations that manufacturers use to refuse price concessions for drugs in those classes.

ESTIMATED SAVINGS:

 

In an interim final rule, CMS estimated that the six protected classes policy would add $4.2 billion in costs to the Part D program over a ten-year period.

 

Reference: Centers for Medicare & Medicaid Services