Published by Inside Health Policy
An upcoming public workshop spearheaded by the Federal Trade Commission and FDA will delve into possible incentives for generic market entry, what can be done to address tactics used to stall generic competition, the role intermediaries play in drug pricing and how FTC can address these issues.
In addition to looking at ways to speed generic entry, FTC and FDA will examine how pharmacy benefit managers and group purchasing organization affect drug pricing, access and quality, and how well consumers understand the role of these intermediaries. The commission also appears to be answering calls from the generic industry to examine the role of purchaser consolidation in affecting price, access and quality.
The CEO of the PBM trade group tells Inside Health Policy he welcomes the opportunity to explain the role of PBMs at the upcoming Nov. 8 meeting. The CEO, albeit not naming the brand pharmaceutical lobby directly, called attempts to blame PBMs for a high drug prices a “smokescreen.”
Generic entry hurdles. FDA Commissioner Scott Gottlieb has set as a key priority stemming so-called “gaming” of FDA rules to thwart generic competition. But the FTC agenda treats the scope of such gaming as an open question.
The agenda asks: “Some report strategies to reduce generic drug competition when the branded drug is off-patent. Are these reports accurate? If so, what steps are taken to reduce competition? If not, are there other reasons why generic entry is not seen as robust? What can be done?”
When asked by IHP whether FTC is operating out of the assumption that it is an open question as to whether brand companies are using strategies to reduce generic drug competition when the branded drug is off-patent, an FTC spokesperson answered: “It would be wrong to assume that these strategies haven’t been used. There may be some difference of opinion regarding how often they are used.”
The FTC spokesperson held up FTC’s action against so-called pay-for-delay agreements as an example of the commission’s ongoing action against anticompetitive tactics affecting the generic market.
Drug pricing advocates also do not appear concerned over the broad questions guiding the agenda. “We are not too concerned …This open inquiry approach seems okay to me for FTC–asking the questions in a non-prejudicial way. And we were given a slot at the end of the day to kind of pull threads together from a patient perspective. So we feel positive and optimistic about the event,” David Mitchell, founder and president of Patients For Affordable Drugs, told IHP.
A spokesperson for the Association for Accessible Medicines pointed to planned testimony from Mitchell and Michael Carrier, distinguished professor at Rutgers Law School, as evidence that the topic of gaming, including abuse of Risk Evaluation and Mitigation Strategies (REMS), is likely to come up at the meeting.
The AAM spokesperson also underscored FTC’s previous acknowledgment that abuses occur. The spokesperson pointed to the July testimony of Markus Meier, FTC acting director in the Bureau of Competition and assistant director in the health care division, during a July House Judiciary hearing, “Antitrust Concerns and the FDA Approval Process.”
“[T]he problem of branded firms using so-called Risk Evaluation and Mitigation Strategies (REMS) programs to impede generic entry is, in our view, an appropriate area for congressional focus and concern,” Meier said in July.
The role of PBMs, GPOs and consolidation in drug pricing and access. On PBMs, the meeting will discuss: “What role do intermediaries, such as pharmacy benefit managers (PBMs) and group purchasing organizations (GPOs) play in prescription drug pricing, consumer access, and quality? What are the benefits and costs of intermediaries in the pharmaceutical supply chain? Has consolidation affected price, access, or quality?”
Mark Merritt, president and CEO of the Pharmaceutical Care Management Association, tells IHP he believes the more awareness of the role of PBMs in drug pricing the better. Merritt noted that FTC is well versed on the role of PBMs, but lack of consumer awareness can be a challenge.
The Pharmaceutical Research and Manufacturers of America (PhRMA) launched a consumer-centric campaign earlier this year painting PBMs as shadowy middleman which don’t share savings with patients. “Ever wonder who decides what you pay for your medicines? It’s not who you might think. Biopharmaceutical companies set the list prices for their medicines, but it’s your insurer that ultimately determines how much you pay out-of-pocket. More than one-third of the list price of a medicine is rebated back to middlemen, like insurers and pharmacy benefit managers (PBMs). These rebates and discounts create savings of more than $100 billion, but these savings aren’t always shared directly with patients,” one ad states.
Merritt, albeit not naming PhRMA directly, called attempts to blame PBMs for a high drug prices a “smokescreen.”
PBMs were also recently grilled by Senate health committee Chair Lamar Alexander (R-TN), who during an Oct. 17 hearing questioned the usefulness of drug rebates negotiated by PBMs. Merritt isn’t concerned over the potential for the rebate issue to surface at the FTC meeting.
FTC also appears to be taking on the issue of purchaser consolidation, which multiple generic stakeholders have flagged as an issue affecting the generic business. It is not immediately clear, however, whether FTC will see eye to eye with generic drug makers.
When pressed on the issue of purchaser consolidation, Elizabeth Jex, attorney advisor in FTC’s Office of Policy Planning, recently acknowledged the role of FTC in approving mergers, but noted that this scenario presents an usual set of circumstances, given that the consolidation could actually bring down prices.
“The issue about consolidation is one that is germane to obviously the work that FTC does … so if facts after the mergers are consummated show that the industry consolidation has led to a reduction in output and an increase in prices, that information should be shared with the FTC. … The tricky issue … is that when consolidation leads to prices going down, as an agency our typical response is that is a good thing,” Jex said Sept. 12 at the Association for Accessible Medicines biosimilar conference.
Speakers on generic competition at the Nov. 8 meeting will be: Carrier; AAM CEO and President Chip Davis; Ronny Gal, senior vice president and senior research analyst at Sanford Bernstein; Aaron Kesselheim, associate professor of medicine and director of the program on regulation, therapeutics, and law (PORTAL) at Harvard Medical School, as well as a faculty member at Brigham and Women’s Hospital; and Stephen W. Schondelmeyer, professor and head of the department of pharmaceutical care and health systems at the University of Minnesota.
The generic competition session will be moderated by Suzanne Munck, deputy director in FTC’s Office of Policy Planning, and Maarika Kimbrell, deputy chief of staff in the office of the FDA Commissioner.
Participants on the PBM panel will be: Merit; Rob Andrews, CEO of Health Transformation Alliance; Jennifer Bryant, senior vice president of policy and research at PhRMA; Adam Fein, president of Pembroke Consulting, Inc; Susan Pilch, vice president of policy and regulatory affairs at the National Community Pharmacists Association; and Neeraj Sood, professor and vice dean for research at University of Southern California’s Sol Price School of Public Policy.
The panel will be moderated by David R. Schmidt, assistant director in FTC’s Office of Applied Research and Outreach in the Bureau of Economics.
Those slated to speak at the GPO panel are: Anthony Barrueta, senior vice president of government relations for Kaiser Foundation Health Plan, Inc; Todd Ebert, president and CEO of the Healthcare Supply Chain Association; Erin Fox, senior director of drug information and support services at University of Utah Health; Hal Singer, principal, Economists Incorporated; and Stephanie Trunk, partner at Arent Fox LLP.
The GPO panel will be moderated by Meier.
Mitchell and Rena Conti, assistant professor in the Departments of Pediatrics and Public Health Services at the University of Chicago, will round out the day by presenting on “Potential Next Steps to Encourage Entry and Expand Access through Lower Prices.” – Nicholas Florko (firstname.lastname@example.org)