Blueprint to Lower Drug Prices could offer a way forward in fight against mushrooming costs
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At a hearing before the Senate Finance Committee last month, Sen. Sherrod BrownSherrod Campbell BrownThe Hill's Morning Report — Trump’s GOP feuds dominate ahead of midterms Dustbin 2020: The best Dems who surely won’t get the nomination Vulnerable Dems side with Warren in battle over consumer bureau MORE (D-Ohio) asked Health and Human Services Secretary Alex Azar if he agreed “that there are scenarios where pharmaceutical companies increase the list price of their product and price-gouge consumers for no reason other than to increase their profit margin?” Secretary Azar’s response left no room for debate: “Of course. We've seen examples of that, yes."

Secretary Azar’s response leaves little doubt that the fundamental problem is the price, and the Trump administration’s recent Blueprint to Lower Drug Prices rightly puts out-of-control drug prices squarely in the crosshairs. And while we may not fully agree with each and every proposal in the Blueprint, as a coalition that represents nationally-respected consumer organizations, businesses, hospitals, physicians, nurses, health plans and others, we believe that it represents a step forward in the fight against skyrocketing drug prices.

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The Blueprint clearly calls out abuses by drug manufacturers, including the “gaming” of an FDA regulatory tool designed for patient safety to deny necessary drug samples to generic manufacturers looking to develop a competitor. It is a tactic often cited by Azar and FDA Commissioner Scott Gottlieb as “one of the most notorious examples” of the anticompetitive tactics that Big Pharma uses to protect its monopoly pricing power.

The FDA has already implemented two important policies contained in the Blueprint to reduce these abuses. First, the FDA published a list of drug manufacturers that are subject to complaints that they are denying the sale of drug samples to would-be generic competitors. Second, the FDA recently released new guidance that will mitigate the ability of brand-name manufacturers to abuse the regulatory system in order to prevent competition. If these actions achieve their stated objectives, we should see fewer examples of drug manufacturer practices that delay competition.

There are measures that go beyond what the administration has proposed which also should be implemented to end these abuses, namely the passage of the bipartisan Creating and Restoring Equal Access to Samples (CREATES) Act. The bill is narrowly-targeted, market-based reform that will speed the introduction of generic and biosimilar competition, help restore the balance between innovation and affordability that Congress intended, and achieve the goal of more-affordable prescription drugs.

The administration’s proposals on price transparency also deserve praise. Direct-to-consumer marketing of prescription drugs has grown 64 percent% since 2012, more than any other ad category, and 9 out of 10 major drug companies spend more on sales and marketing than on research and development. Requiring manufacturers to include the list price of a drug being advertised would provide a welcome dose of transparency and force manufacturers to publicly justify the prices that they set and the price hikes that inevitably follow. Additionally, an array of consumer- and physician-friendly initiatives are welcome, including prohibiting contracts that include so-called “gag rules” that forbid pharmacists from informing patients when they can pay less out-of-pocket for a certain drug, requiring Medicare Part D plans to provide consumers with an annual statement of plan payments, out-of-pocket spending, and drug pricing increases, as well as offering free generics to low-income seniors.

We are also encouraged that the president highlighted Big Pharma’s abuse of the patent system. He rightly stated that our patent system should reward innovation but should not “be used as a shield to protect unfair monopolies.”

One need look no further than the best-selling drug on the planet, AbbVie’s Humira, to see an example of a patent “shield to protect unfair monopolies.” The main patent for Humira expired two years ago and, yet, there are no biosimilar competitors on the market due to the more than 100 patents that the drug company has filed, including over 50 in just the two years leading up to the underlying patent’s expiration. 

AbbVie takes full advantage of its artificially-extended monopoly pricing power: it hiked the price of Humira by 9.7 percent in January, which will cost the U.S. health care system $1 billion in 2018 alone, while at the same time buying back $10 billion in stock from shareholders.

Humira is just the most prominent example of a practice that has become standard procedure in the industry and is one of the key drivers of relentless price hikes unconstrained by competition. Addressing these abuses is an opportunity for collaboration between Congress and the administration. Pro-competitive reforms that preserve incentives for innovation while putting an end to patent gaming will go a long way towards lowering drug prices.

No silver bullet exists that will fix this problem immediately, but that should not diminish the fact that the Blueprint contains praiseworthy ideas to address this crisis. The acid test will be in the follow-through and, while we do not see eye-to-eye with the administration on every issue, that will not stop us from working together to make concrete gains in the fight against out-of-control prescription drug prices. 

The Campaign for Sustainable Rx Pricing (CSRxP) is a broad-based coalition of leaders – physicians, nurses, hospitals, consumers, health plans, PBMs, pharmacists, and businesses – promoting bipartisan, market-based solutions to lower drug prices in America.