July 18, 2018, 8:11 PM
CDT Updated on July 19, 2018, 2:35 PM CDT
The Trump
administration moved swiftly in the past 24 hours to implement pieces of its
plan to bring down drug prices, preparing several significant steps as one of
the biggest U.S. drugmakers said it would bring down the cost of some
medicines.
The
Health and Human Services Department on Wednesday night submitted a proposal to
the White House that would curb kickback exemptions that allow drugmakers to
offer insurers and pharmacy-benefit managers rebates widely blamed for keeping
drug prices high. Earlier that day, the Food and Drug Administration released a
plan to boost the market for so-called biosimilars,
which are generic copies of expensive drugs that contain living organisms.
Both
moves were part of President Donald Trump’s blueprint for lowering drug prices
released in May.
Trump has
put drug companies in his crosshairs, hammering Pfizer Inc. on
Twitter for raising prices and pledging to make medication more affordable. On
Thursday, Merck & Co. Inc. followed Pfizer and Novartis AG in
responding to the president’s remarks, pledging to cut back some prices and
keep other increases in line with inflation.
FDA
Commissioner Scott Gottlieb also said Thursday that the agency would consider allowing
importation of drugs from other countries under certain conditions, including
when a generic-drug company that is the sole provider of a medication
significantly raises the price of that drug. Astronomical price increases on
sole-source generic drugs are what thrust “Pharma Bro” Martin Shkreli into the
spotlight a couple years ago.
HHS
Deputy Secretary Eric Hargan punctuated the moves on Thursday when he delivered
some tough words to drug-company executives who make up the board of the
Pharmaceutical Research and Manufacturers of America.
“The
blueprint is very real, it’s definitely the president’s blueprint and the
sweeping reforms contemplated in it are on the way,” Hargan told the lobby
group in a closed-door meeting. “When this president talks about fundamental
change to drug markets, he follows through.”
Hargan
told the group that maintaining the free-market principles that govern the drug
supply chain, “requires all of you being open to the expansion of market forces
within the drug industry. In part, that’s going to happen through more freedom
for negotiation within our government programs like Medicare part B and D.”
Medicare
part B and D cover different types of drugs, and the administration has talked
about increasing the ability of pharmacy-benefit managers to negotiate drug
discounts in both programs.
After the
meeting, Holly Campbell, a spokeswoman for PhRMA, said in an email that the
group will work with the administration on “market-based solutions.”
Trump Tweets
Trump
thanked Novartis and Pfizer on Thursday via Twitter for halting drug price
increases they had planned to make this month. A few hours later, Merck said that
it wouldn’t increase the average net price of its drugs by more than inflation
annually.
Merck
also said it was cutting the price on hepatitis C treatment Zepatier by 60
percent, though that drug has struggled to take market share from expensive
rival medications.
Pfizer
delayed its increase this year after Trump called them out on Twitter July 9
and said the company “should be ashamed that they have raised drug prices for
no reason.” Novartis followed suit this week.
The proposed
regulation on rebates sent to the White House Office of
Management and Budget would make changes to federal safe-harbor protections
that have allowed the discounts. The federal anti-kickback statute allows “safe
harbor” to protect normal business practices, an exemption that currently
includes PBMs.
The
budget agency must review all regulations before they’re released publicly.
Details
of the proposal weren’t available, but its title provides a clue to the changes
being considered: “Removal Of Safe Harbor Protection for Rebates to Plans or
PBMs Involving Prescription Pharmaceuticals and Creation of New Safe Harbor
Protection.” It could represent a sweeping shift in how drug prices are set in
the U.S. and potentially eliminate some of the opacity that surrounds the
system.
Shares of
pharmacy-benefit manager CVS Health Corp. fell 2.6 percent to $66.12 at 3:31
p.m. in New York. Express Scripts Holding Co., another PBM, was down 1.4
percent to $76.79.
Moving Fast
Part of
the biosimilar plan involves FDA working with the Federal Trade Commission to
stop “gaming tactics” like piling up patents to extend the commercial dominance
of brand-name medicines.
The
rebates proposal came “faster than we had expected,” said Evercore ISI analysts
Ross Muken and Michael Newshel in a note Thursday, given that the public
comment period on the blueprint ended only Monday.
“The scope
and details are unknown at this point, but the heightened risk and uncertainty
should renew pressure on shares of PBMs, distributors and pharmacies, whose
economics are driven off of gross price,” the analysts wrote.
They
predicted 2020 would be the earliest any changes to the rebate system would
take effect.
“While we
cannot comment on pending regulations, the president’s ‘American Patients
First’ blueprint to lower drug prices and reduce out-of pocket costs clearly
states that we are looking at removing safe harbor protections for drug company
rebates,” Caitlin Oakley, spokeswoman for HHS, said in an email Wednesday. “It
should not come as a surprise that this would require rule-making.”
The
proposal Thursday to look into importing drugs from other countries under
certain circumstances is noteworthy because the FDA has for years -- under
Republican and Democratic administrations -- resisted lawmaker calls to allow
drug imports to lower prices for American patients.
Sudden
price increases and other supply disruptions “can leave patients without access
to drugs they need,” Gottlieb said in announcing a working group to examine the
proposal.
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