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Seven recommendations for holding down drug prices

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Americans consistently say congressional action is needed to lower the price of the medicines we need to stay healthy and live productively. In a January 2021 Politico/Harvard T.H. Chan School of Public Health survey, drug prices came second only to COVID-19 relief as the issue we care most about, with 95% of Democrats and 82% of Republicans calling it “extremely important.” And no wonder, with prices continuing to rise even as more of us face unemployment and other financial stresses.

Dan Leonard

We must keep in mind that the inequities in our society have persisted — and deepened — during the pandemic, and secure access to medicines is an important component of overall well-being. According to another Harvard-led survey, this one conducted in partnership with NPR and the Robert Wood Johnson Foundation, 10% of Black and Latino families report being unable to afford prescription medicines to manage a major health issue. Yielding an average 79% savings (which translated to $313 billion in 2019), generics represent a reliable part of the solution.

While the new Congress and new White House administration face major economic and political challenges, there are new opportunities to mount an effective response to the issue of drug prices. Here are seven recommendations to consider:

  • Harness the power of generics and biosimilars to drive competition and savings — The Hatch-Waxman Act (1984) and the Biologics Price Competition and Innovation Act (BPCIA; 2010), which established the generic and biosimilars industries, respectively, made it possible for U.S. patients to save billions on their prescription medicines. A range of potential risks, however, mean that we can never take these savings for granted. Among the latest concerns of the Association for Accessible Medicines and our member companies: First, threats to the 180-day exclusivity incentive for first generic applicants, which encourages earlier generic entry and savings for patients by rewarding generic manufacturers for challenging brand-name drug patents, and, second, challenges to the “skinny label” pathway as well as patent settlements, both of which ensure timely market entry of affordable generic and biosimilar medicines.
  • Modernize Medicare Part D to address the incentives that favor brand-name drugs over generics and biosimilars — As an AAM white paper demonstrates, the Coverage Gap Discount Program and treatment of brand drug rebates in the catastrophic phase of Part D currently create powerful incentives for payers to prefer higher-cost brand drugs.
  • Reduce cost-sharing for seniors — Medicare Part D offers prescription drug coverage through private plans that actively manage prescription drug benefits through the creation of formulary tiers and cost-sharing, but when generic drugs are placed on higher, non-generic tiers, patient cost sharing can increase. The Ensuring Access to Lower-Cost Medicines for Seniors Act would come to the aid of seniors while securing the sustainability of the industry.
  • Increase patient access to biosimilars — Although biologic medicines are typically administered in a hospital or an infusion center rather than dispensed in a drug store, all pharmaceutical professionals should become familiar with this powerful sphere of medicines. Biosimilars, which offer a cost-effective option for many patients who rely on expensive biologic treatments for chronic diseases, could lead to tens of billions of dollars in savings, but to date this potential has not been fully realized. The BIOSIM Act, the Increasing Access to Biosimilars Act and the ACCESS Act all contain solutions worthy of consideration.
  • Eliminate the Medicaid generics penalty, which is imposed on manufacturers when price increases exceed the rate of inflation — The penalty (which went into effect in 2017) fails to account for the underlying costs associated with manufacturing generic drugs. Passing the Protecting Access to Affordable Medicines Act would rectify this matter.
  • Enhance U.S.-based manufacturing — The pandemic has brought attention to how medicines move along the supply chain from manufacturer to patient. Our current system comprises a closely connected network based in the United States and in U.S.-allied countries. While it has proven to be resilient, there is room for improvement. The AAM Blueprint for Enhancing the Security of the U.S. Pharmaceutical Supply Chain sets out to ensure that U.S. patients and the U.S. health care system have access to a secure and consistent supply of critical pharmaceuticals.
  • Address patent abuse — AAM and our member companies support innovation and the patent system that protects intellectual property of innovators, but when brand-name drug companies attempt to delay competition from generic and biosimilar drugs through “evergreening” or “patent thickets,” it has a chilling effect on the competition that drives access. Humira is often cited as the poster child for this practice; read I-MAK’s report.

Congress and the Biden administration have opportunities to build on the foundations laid by Hatch-Waxman and the BPCIA. Legislation and other measures are needed to restore balance between innovation and access for all patients, and AAM welcomes the partnership of pharmacists and pharmacies in advocating for policies that benefit patients and their families. Recent decades have seen phenomenal innovation in the pharmaceutical sector, with unprecedented new treatments for a range of conditions. The next great challenge is matching this innovation with better access to prescription medicines — a public health victory that will pay dividends for generations.

Dan Leonard is president and chief executive officer of the Association for Accessible Medicines. He can be contacted at dan.leonard@accessiblemeds.org.


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