Can US FDA Save Pharma From Price Controls?

FDA Commissioner Scott Gottlieb is making drug pricing a big theme of his first weeks as FDA commissioner. Will it be enough to head off other executive or legislative action on the issue?

When people talk about administrative action to control drug pricing, they don’t usually think of FDA, the agency that always says cost is not part of its mission.

That is changing fast.

FDA Commissioner Scott Gottlieb has made addressing concerns about high prices an important and somewhat surprising theme of his first weeks on the job at FDA. During the confirmation process, he noted the important role that FDA plays in ensuring competition – especially in the generic drug space – but also declined to discuss his past positions on drug pricing more generally. He said he would decline to discuss topics outside of “FDA’s purview.” (Also see "Drug Pricing Pundit Gottlieb Likely To Stay In His Lane At FDA" - Pink Sheet, 14 Apr, 2017.)

But, starting with his first address to FDA staff, Gottlieb has embraced the aspects of drug pricing that do fit in FDA’s mission with gusto – building on a theme articulated by his predecessor Robert Califf. “I know FDA doesn’t play a direct role in drug pricing. But we still need to be taking meaningful steps to get more low cost alternatives to the market to increase competition and to give consumers more options,” he said. (Also see "Gottlieb Places Drug Pricing Out Front In First Speech To US FDA Staff" - Pink Sheet, 16 May, 2017.)

Gottlieb followed up by promising a drug pricing “action plan” during his first Congressional appropriations hearing May 27. The focus remains squarely on encouraging generic competition, but will include steps to look at “gaming” of the system by brand name companies.

Gottlieb followed up with an interview with Bloomberg news expanding on ideas to enhance generic drug competition, including prioritizing second- and third-generics, not just first-generics.

At the same time, FDA is preparing for some landmark approvals in the biosimilar space, with proposed versions of Genentech Inc.’s Avastin (from Amgen Inc.) and Herceptin (from Mylan NV) heading to advisory committee on July 13. (See sidebar for related story.) That should bring renewed attention to the potential for biosimilar competition to start to impact specialty drug spending trends.

For the biopharma industry, the only question is whether Gottlieb’s embrace of drug pricing will be enough to defuse calls for more direct action to bring down prices – like the perennial calls for Medicare “negotiation,” embraced by President Donald Trump.

One quick gauge of the political appetite for a pricing fight will be the Senate HELP Committee's hearing on pricing scheduled for June 13. That hearing seems as though it will be structured in the best possible way for pharma manufacturers, but any high-profile event about pricing carries inherent risks for industry. (See sidebar for related story.)

At a minimum, FDA’s actions are sure to be a part of the proposals that emerge from HHS Secretary Tom Price’s “listening sessions” on drug costs. Beyond the generic/biosimilar competition pieces, there could also be more streamlining on the new drug review side in the name of cost control, as well as some additional steps to open up the rules for communication with payors and medical professionals about off-label uses of medicines. (Also see "HHS Action On Drug Pricing: Here's Who Secretary Price Is Listening To" - Pink Sheet, 25 May, 2017.)

But would a package of FDA-focused actions really be enough for President Trump to declare victory on drug pricing? That may be too much to hope for. For one thing, while Gottlieb’s plan has drawn plenty of attention in the political and investor press, Fox News has said nothing so far about FDA taking care of the pricing problem.