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Policies to Speed Generics to Market Gain Momentum

Drug pricing reforms take spotlight in Trump’s 2020 budget and latest Congressional hearing.

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Drug pricing reforms were in the spotlight again last week, appearing in President Trump’s proposed 2020 budget as well as a legislative hearing of the Energy & Commerce Health subcommittee. Both focused on policies to improve competition, including changes to Medicare Part B and Part D and speeding access to generics.

The president’s 2020 budget includes the following drug pricing proposals:

  • Capping patients’ exposure to high-cost therapies through changes in Part D’s benefit structure: Similar to the FY2019 budget, the administration’s 2020 budget includes changes to limit beneficiary out-of-pocket costs and lower Medicare spending in Part D. Some proposals call for eliminating cost-sharing on generics and biosimilars for low-income patients, excluding manufacturer discounts from out-of-pocket calculations, and establishing a new spending cap for beneficiaries.
  • Reforming Part B to lower spending: In Medicare Part B, the budget proposed a few changes that could lower government spending on drugs administered by physicians. For example, one proposed policy would limit increases in Part B drug payments to an inflation benchmark, while a second would shift some Part B drugs into Medicare Part D. (Doing so would open them up to more direct price negotiation and utilization management tools).
  • Curbing anti-competitive behaviors that block generic competition:

    Several proposals would penalize branded drug companies for blocking competition, including one that would cut Medicare payments for brand-name drugs in Part B if the manufacturer enters a pay-for-delay agreement. (That’s when manufacturers pay generic and biosimilar competitors to delay the launch of cheaper drugs).

    Other proposed changes target the 180-day period, giving the FDA greater flexibility to ensure the first-to-file generic does not game this period to block additional generics from entering the market. (The 180-day exclusivity is the period in which first filers can become the exclusive generic for 180 days.)

    Finally, a proposal would grant the FDA greater authority to address abuses of the citizens petition system — it would give the FDA more flexibility to deny “sham” petitions filed by manufacturers with the sole purpose of delaying competition.

Several bills were the subject of a legislative hearing aimed at improving market competition by:

  • Requiring more complete reporting of patents: Witnesses at the Energy & Commerce Health Subcommittee hearing broadly supported legislation that’s critical for generic and biosimilar manufacturers to navigate an existing drug’s patent protection. The budget calls for patent listings to be accurate, up to date, and relevant to the drug’s active pharmaceutical ingredients. Panelist Michael Carrier, a professor at Rutgers Law School professor, drove his point home when he said, “Lantus’ insulin injector pen has 74 patents, 95% of which were introduced after the device entered the market.”
  • Ensuring access to product samples needed for drug development: Panelists called on Congress to pass the CREATES Act, a bill that would make it easier for generic drug manufacturers to obtain the drug samples they need for product testing and approval. (At a recent Senate Finance Committee hearing, executives from seven pharmaceutical companies denied withholding samples. Yet, 150 brand drug makers — including Pfizer and AstraZeneca — are accused of doing exactly that, according to a list released by the FDA.) Despite longstanding bipartisan support, panelists argued that some versions of the bill may weaken its authority and cautioned Congress to consider the strongest form of the bill.
  • Eliminating other obstacles that prevent competitors from entering the market: Witnesses and committee members were split on the BLOCKING Act, which would reform the 180-day generic exclusivity program in similar ways as proposed in the president’s budget. Legal expert Kurt Karst of Hyman, Phelps & McNamara, P.C., cautioned the bill would lead to litigation and undermine the exclusivity period that rewards a generic for being the first to file to bring the drug to market. Witnesses were more unanimous in their support of bills to address “pay-for-delay” agreements, such as The Preserve Access to Affordable Generics and Biosimilars Act, which would reform the FTC’s approach to addressing these deals. (Policymakers have been skeptical of this approach in the past.)