May 4, 2018 – A drug pricing initiative expected from the White House May 8 is likely to include a number of incremental steps on drug pricing to support a strategy that is trickling down from President Trump to Health & Human Services Secretary Alex Azar and FDA Commissioner Scott Gottlieb, M.D.
This initiative may include new policies or programs that affect generic drug and biosimilar approvals at the FDA, changes to Medicare Part D rebates at the point of sale and demonstration projects that foster innovative contracting arrangements for new therapies at the Centers for Medicare & Medicaid Services (CMS), according to Kate Rawson, Senior Editor, Prevision Policy and The RPM Report.
“All eyes are on this major announcement on drug pricing, which had been postponed from late April due to the HHS Secretary’s hospitalization,” Rawson told the Coalition for Healthcare Communication. “It’s been a long time coming. Trump has been promising some sort of action on drug pricing since before he took office. More than a year ago he said drug companies were getting away with murder and he called drug prices astronomical and said they had to come down.”
Rawson said there has been a shift in the drug pricing agenda since Alex Azar replaced Tom Price as HHS Secretary. “Things appear to be much different under Alex Azar. He went into his confirmation hearings talking about lowering drug prices,” she noted. “What we’re expecting is that there will be some tangible efforts to lower drug prices that are going to be rolled out in terms that the innovator industry can generally support.”
On the FDA front, she predicted that the upcoming announcement may include some continued action on getting generic drugs through FDA faster and a new policy on ending what Gottlieb has called “abuses” of risk management programs (known as REMS) to prevent generic entry. Gottlieb also been interested in moving biosimilar approvals forward and taking steps to encourage the market success of that class of products.
“Maybe we’ll see some tactics that could streamline the process to accelerate the pace of biosimilar launches,” Rawson remarked. “And we’re thinking we will soon see our first-ever interchangeable biosimilar. It sounds like FDA, in recent comments from the agency, is thinking about policies to make the interchangeable biosimilar development a little bit easier a hurdle to clear. There could be something in the upcoming announcement that could build on that.”
Also likely to happen, according to Rawson, is a re-examination of the federal law that says prescription drug rebates are not considered kickbacks. That could end the rebating program as we know it, she said. “We could also see new rules announced that would allow demonstration projects at CMS for innovative contracting arrangements for new therapies,” she said, adding that “we could see some new rules on demonstration projects for Part B anti-cancer drugs and gene therapies that could create some options to spread out payments as a way to deal with those one-time, high-cost therapies.”
Rawson explained that Azar “specifically promised during his confirmation process, although he framed it in pretty broad terms, changes to Medicare Part B – the physician program – to make it more like the Medicare Part D prescription program, so that would allow insurers and PBMs to negotiate which drugs are covered.”
Unlikely to happen, in Rawson’s view, are direct price negotiation under Medicare Part D. “In the beginning of his term, the president make some remark in favor of that, but I think it’s safe to say that cooler heads are going to prevail on this one,” she explained. “Azar made it clear in his confirmation hearings that he doesn’t agree that direct drug price negotiation would be any more effective than the current, private plan-based negotiation. That’s just a non-starter.”
Other possible moves she believes are non-starters are the wholesale importation of drugs from Canada or Europe, or any kind of price caps or measures otherwise limiting price increases. “So the more draconian policies that a lot of Democrats have been pushing for the last several years – those are all nonstarters,” she stated. “But we think there are going to be some interesting things, more incremental steps. Nothing that will directly address drug pricing, but steps that can tackle it from the sides.”
With Gottlieb now at the helm of the FDA, addressing drug pricing may be more coordinated than in the past, because he, unlike other commissioners before him, does not shy away from the issue and take cover under FDA’s lack of influence over drug pricing. “His agenda has, surprisingly, been one of the most visible examples of administrative action on this issue, and Azar has made clear that he is enthusiastic” about what Gottlieb is setting forth, according to Rawson.
Gottlieb, Rawson said, is very media-savvy when communicating policies to stakeholders. “There is rarely a day that goes by that there isn’t some sort of announcement out of FDA that doesn’t share some incremental step about something,” she commented. Whether he is speaking to patient groups or Congress, he always makes news, throwing in comments such as “we are going to be putting out a draft on X,” rarely in formal remarks but often in the Q&A segment. “He is very smart in the way he unveils new policies on an incremental basis to maximize the media coverage,” she said.
Although Gottlieb largely has been silent on healthcare marketing issues, Rawson pointed out that he has talked about making it easier for manufacturers to communicate with payers about their products before they are approved, so that it is easier for payers to plan – especially for high-cost therapies. Regarding any future moves in this arena, Rawson told the Coalition, “If I had to speculate, it’s not going to be negative for industry.”
To hear more from Rawson, register today to attend the third annual Coalition for Healthcare Communication Rising Leaders Conference on Healthcare Policy, held May 22-23 in Washington, D.C. Rawson will present a session entitled, “Healthcare Policy in Washington, Now That the Dust Is Settling.”