Drug manufacturers and middlemen, such as pharmacy benefit managers (PBMs), exploit an opaque pricing system to keep costs high. Increased transparency will empower consumers and employers by providing them with the information they need to purchase quality prescription drugs at reasonable cost.
- Require drug companies to be transparent about drug price increases
- Require the FDA to publish biologic patent information like it does for chemical drugs to encourage biosimilar development
- Require PBMs to make pricing data available to consumers
Support Functional Markets
The health care marketplace is characterized by perverse incentives and inefficiencies. Leveling the playing field by requiring fair business practices would encourage competition and drive down the cost of prescription drugs.
- Prohibit “pay-for-delay” schemes in which brand name drug makers pay generic drug makers to delay introduction of less expensive generic drugs
- Prevent drug companies from gaming the FDA’s new drug approval process in order to preserve profits by blocking generics and biosimilars
- Prevent brand name drug companies from abusing the FDA’s REMS process to obstruct generic and biosimilar development by withholding the brand name drug samples those companies need to make generics
- End “evergreening,” a tactic drug companies use to extend the patent lifetime of an expensive drug to maintain profits and prevent the entry of cheaper generic alternatives
- Stop brand name drug companies from abusing the FDA’s citizen petition process by flooding the FDA with sham petitions meant to delay generic drug approval
Pay for Value
To increase the value of prescription drugs, we must stop rewarding practices that drug makers and intermediaries engage in to artificially raise prices.
- Prevent pharmacy benefit managers from engaging in a secretive profit scraping scheme known as spread pricing: the practice of charging consumers a higher price than it reimburses pharmacies and pocketing the difference
- Eliminate the incentive for PBMs to design formularies to increase their own profits instead of maximizing value for consumers by requiring the pass-through of all rebates.
Capping price increases for prescription drugs would result in overall savings for patients, businesses, and taxpayers. This needs to be coupled with policies that will hold down the initial launch prices of drugs.
Current Legislation We Support
The Lower Health Care Costs Act (S.1895)
Promotes transparency by:
- Requiring drug manufacturers to publicly report and justify price increases for some drugs and requiring PBMs to make pricing data available to purchasers
- Requiring biologic brand companies to publicly list in an online database drug patents they can reasonably defend
Supports competition and functional markets by:
- Preventing generic-first filers from blocking subsequent generic companies for an extended period
- Allowing generic and biosimilar manufacturers to sue brand companies for blocking access to samples
- Discourage evergreening by updating the meaning of New Chemical Entity (NCE) to only include innovative drugs rather than drugs comprised almost exclusively of previously approved elements
- Reduce petition abuse by giving the FDA additional guidance on denying petitions submitted for the purpose of delaying generic approval
Promotes paying for value by:
- Prohibiting spread pricing by PBMs
- Requiring PBMs to pass through all rebates
The Preserve Access to Affordable Generics and Biosimilars Act
Supports competition by banning pay-for-delay deals, restoring market incentives that allow the generic approval process to function as intended and drive down costs of pricey drugs.