Who Is The Best Minor League Player In The Drug Pricing Debate?
Executive Summary
Now that the Senate Finance Committee has unveiled its bill and House leadership has outlined its approach, less comprehensive drug pricing legislation is losing the limelight. But may of the the bills could still have a meaningful impact on pharma, and might even become law, if only because they would be an easier way for politicians to show they were doing something to address the issue.
How much money could the federal government save if the US Federal Trade Commission launched a campaign against brand-name drug makers seeking to delay generic competition through product-hopping? The Congressional Budget Office puts the figure at half a billion dollars over the next decade.
That seems like a big number, something pharma really needs to worry about – until you consider that the comprehensive legislation just introduced by the Senate Finance Committee would impact the industry by 100 times that amount, saving the government $50bn over ten years, according to CBO's score of the bipartisan bill introduced on 23 July. (Also see "Medicare Price Inflation Rebates, Part D ‘Redesign’ Proposed In Senate Finance Bill" - Pink Sheet, 23 Jul, 2019.)
But even as the House and Senate appear to have picked their champions for the major drug pricing fight to come, smaller bills are worth keeping an eye on, both because they may be folded into a comprehensive package and because they could be taken up as less complicated solutions if comprehensive legislation proves unable to pass. (Assuming, of course, the various political factions actually want anything to pass.)
In the case of an FTC campaign against product hopping, CBO's cost estimate of savings from that would come from the Affordable Prescriptions for Patients Act of 2019, S. 1416, which encourages FTC to pursue litigation and impose civil penalties against manufacturers that engage in product hopping. The score estimates the legislation would reduce the deficit by $507m from 2019 to 2029.
The budgetary effect would stem from "generic or biosimilar drugs entering the market earlier, on average, than under current law, resulting in lowering federal spending for prescription drugs and subsidies for health insurance," the CBO says.
However, others believe the legislation will not have much of an impact since the FTC already has the authority to take action against product hopping, in which a manufacturer makes a minor change in formulation as the original version is about to go off patent and tries to get consumers to switch to the patented new product. The FTC filed its first product-hopping complaint this month, alleging that Reckitt Benckiser Group PLC coerced patients to switch from Suboxone (buprenorphine/naloxone) tablets to the sublingual film version of the opioid addiction treatment. (Also see "FTC's First Product Hopping Complaint Targets Safety Claims For Suboxone Film Formulation " - Pink Sheet, 18 Jul, 2019.)
Sen. John Cornyn, R-TX, introduced S. 1416 as a way to bring down the costs of prescription drugs by having earlier entry of generics. The measure originally included a provision to restrict so-called patent thicketing, in which an innovator company obtains a large portfolio of overlapping patents to impede competitors from commercializing their products. That section was cut from the bill during markup by the Senate Judiciary Committee on 27 June. (Also see "Patent Thicketing Provision Cut From Bill Passed By US Senate Judiciary Committee " - Pink Sheet, 27 Jun, 2019.)
CREATES Act Gets Biggest Score For "Minor" Bill
The CBO has scored about 10 bills aimed at reducing Rx drug prices that the Pink Sheet has categorized as "minor" now that the kaiju have entered the arena. Four of these bills are estimated to result in no savings for the government. (See sidebar above.) And two are estimated to result in greater cost savings than the product hopping measure. (See graphic below.)
The bill estimated to have the biggest impact is the CREATES (Creating and Restoring Equal Access to Equivalent Samples) Act of 2019, which would prevent brand drug companies from using Risk Evaluation and Mitigation Strategies or restricted distribution systems to avoid selling samples to generic companies for testing. The CBO score estimates it would provide savings of $3.9bn from 2019 to 2019.
The Senate version of the bill was included in the Lower Health Care Costs Act, S. 1895, which passed the Senate Committee on Health, Education, Labor and Pensions on 26 June.
S. 1895 includes numerous other provisions, including those to protect patients from surprise medical billing and impose new rules for insurers' contracts with pharmacy benefit managers and health care providers. The CBO estimates it will provide cost savings of $7.5bn over ten years.
The House version of CREATES, H.R. 965, was incorporated in Strengthening Health Care and Lowering Prescription Drug Costs, H.R. 987. Several other measures were included in that bill, including those to prohibit pay-for-delay deals. (Also see "House Vs. Senate Drug Pricing Bills: A Snapshot Of Differences" - Pink Sheet, 28 May, 2019.)