Bill Targets Pharma Tactics to Delay Generics

The Senate Judiciary Subcommittee held a hearing on S. 3056, the Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act. The bill would allow generic-drug companies to bring actions in federal court to get the drug samples they need to develop generic versions of brand drugs. It would authorize judges to award damages. Proponents say that the bill would prevent brand drug manufacturers from abusing risk evaluation and mitigation strategies to block generic competition. It would encourage more development of generic and biosimilar drugs and reduce drug costs. “This legislation will help bring generics to market faster, which is key to reducing drug costs,” said Pharmaceutical Care Management Association (PCMA) president and CEO Mark Merritt.

The bipartisan legislation was introduced by Senators Charles Grassley (R-IA), Patrick Leahy (D-VT), Amy Klobuchar (D-MN), and Mike Lee (R-UT). The legislation is supported by a broad group of stakeholders, including the Generic Pharmaceutical Association, the Academy of Managed Care Pharmacy, Public Citizen, Consumers Union, and the Blue Cross Blue Shield Assn. PCMA also suggests these solutions to bring down drug prices:

  • Accelerate FDA approvals of drugs that face little or no competition.
  • Make copay coupons an illegal kickback for all insurance that receives any federal subsidy.
  • Modernize the Medicaid pharmacy to make it more like the commercial market and Medicare Part D.
  • Create new incentives for physicians to prescribe biosimilars.

Drug Spending Growth Reaches 8.5% in 2015

Total spending on drugs in the United States reached $310 billion in 2015, up 8.5% from the previous year, according to a report by the IMS Institute for Healthcare Informatics. The surge of new drugs remained strong last year, and demand for new brands was high. Savings were relatively low from branded drugs facing generic competition. Price increases on brands had a limited effect due to higher rebates and price concessions from manufacturers. Specialty drug spending reached $121 billion on a net price basis, up more than 15% from 2014. (Net-price spending does not relate to a patient’s out-of-pocket costs or the amount health plans pay for drugs. It estimates the amount received by pharmaceutical manufacturers so it reflects rebates, off-invoice discounts, and other price concessions that manufacturers make to distributors, health plans, and intermediaries.)

Manufacturers are accepting lower price increases on existing products. At the same time, spending on new brands continued at near-historic levels. Increasingly, healthcare is being delivered by different types of healthcare professionals and from different facilities while patients face higher out-of-pocket costs and access barriers. The study predicts mid-single digit growth for drug spending through 2020, driven by innovative treatments and offset by brands facing generic or biosimilar competition.

Heightened competition among manufacturers, along with more aggressive efforts by health plans and pharmacy benefit managers to limit price growth, resulted in significantly lower price increases than in prior years. The report also reveals the following:

  • Spending on specialty drugs has nearly doubled in the past five years, contributing more than two-thirds of drug spending growth from 2010 to 2015. Treatments for hepatitis, autoimmune diseases, and oncology drove increased specialty spending. The year 2015 saw a 21.5% spending increase for specialty drugs.
  • Forty-three new active substances were launched in 2015 with a third receiving orphan drug designations from the FDA. An additional 30 brands were launched last year, bringing new combination therapies, alternative dosing, and treatment administration options to patients. The strong momentum of breakthroughs and R&D productivity is reflected in the 2015 cohort of new drugs.
  • Total prescriptions dispensed in 2015 reached 4.4 billion, up 1% year over year. Demand was higher in some therapy areas, such as antidepressants and anti-diabetes, each of which increased about 10% in 2015.
  • Over the past five years, integrated-delivery networks have expanded their affiliations with healthcare professionals to increase negotiating power with insurers, save money, and drive pay-for-performance initiatives. More than 54% of healthcare professionals are affiliated with integrated-delivery networks. In the past five years, there has been a 115% increase in urgent care centers and pharmacy in-store clinics. The number of prescriptions written by nurse practitioners and physician assistants more than doubled over the past five years.
  • While brand price increases are expected to continue in the 10% to 12% range, they will be significantly offset by rebates, discounts, and other price concessions.
  • The are very bright prospects for innovative drugs becoming available through 2020. The late-phase pipeline holds 2,320 novel products, with an average 43 to 49 to be launched annually over the next five years.

Last Updated 11/13/2019

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