The US Drug Pricing Hearing Pharma Wants

The pharmaceutical industry likely will be looking to redirect some of the Senate punches on drug pricing away from its collective jaw and toward other players in the market when a hearing on the issue convenes next week.

Senate Health, Education, Labor and Pensions Committee Chairman Lamar Alexander, R-Tenn., scheduled a hearing on drug pricing for June 13 titled "The Cost of Prescription Drugs: How the Drug Delivery System Affects What Patients Pay."

Witnesses had not been announced as of press time June 6, but it appears that the hearing title could fit the drug industry's ideal plan for a hearing on the problematic topic.

Rather than be forced to answer questions about justifying the high costs of new drugs or substantial annual price increases for products already marketed, pharma would like to deflect some of the attention to others in the delivery chain. Those include pharmacy benefit managers and wholesalers.

If the hearing doesn't become a multi-hour referendum on the drug industry, it may feel like it was a success.

Industry representatives would prefer to talk about how or whether the discounts they negotiate with payers and wholesalers are passed on to patients and how figures like the list price are misleading.

In the best of all possible worlds, the pharma industry would likely prefer that drug pricing not be the subject of a hearing at all because any attention is potentially bad attention.

Assuming they are on the witness list, pharma industry's representatives won't be able avoid tough questions about companies' spending on advertising, their actual research and development costs, and annual price increases. But if the hearing doesn't become a multi-hour referendum on the drug industry, it may feel like it was a success.

Efforts to shift the drug pricing discussion to focus on actors aside from the drug makers have had mixed results. When the controversy over EpiPen price increases flashed up, Mylan NV CEO Heather Bresch asserted that the rest of the drug delivery system is pushing more of the cost burden to patients. (Also see "EpiPen Price Story Highlights Growing Impact Of Drug Deductibles" - Pink Sheet, 30 Aug, 2016.)

Despite Bresch's argument that industry is not entirely to blame for higher prices, the House Oversight and Government Reform Committee still levied heavy criticism on her last year. (Also see "Scrutiny Of EpiPen Pricing Invited By Mylan Lobbying, Congressman Says" - Pink Sheet, 21 Sep, 2016.)

The pricing hearing fulfills a pledge Sen. Alexander made in order to prevent the issue from complicating the committee's work on the FDA user fee bill.

Still, if there has to be a drug pricing hearing, one focused on the delivery chain is the kind that pharma wants. The HELP hearing fulfills a promise Alexander made to Sens. Al Franken, D-Minn., and Bill Cassidy, R-La., in part to prevent the issue from complicating the committee's work on the FDA user fee reauthorization bill.

Alexander told the senators in a letter that the hearing would include a discussion of current US drug spending levels, future spending projections, and the types of drugs driving spending. (Also see "User Fee Bill Caught In Comey Firing Tidal Wave" - Pink Sheet, 10 May, 2017.) He also hinted to Franken and Cassidy that the hearing could be the first of several.

"This will help ensure that we are operating from [a] similar understanding of the facts about drug spending, and help inform what other topics we might want to explore,"' he wrote in the May 9 letter.

AAM Savings Report May Be Welcome Distraction

Whether it was by design or sheer luck is unclear, the Association for Accessible Medicines, the trade association for the generic drug industry, plans to formally release its annual report on generic savings the day before the hearing.

Last year, the report indicated generics created $227bn in savings in the US and saved Medicare $67.6bn. (Also see "Pricing Transparency Policies Not Suited To Generics, GPhA Argues" - Pink Sheet, 19 Oct, 2016.)

The report may help relieve some of the pressure on the generic industry and provide a new talking point, although the troubles spurred by Mylan and other generic drug makers will likely surface.

AAM's report might also highlight a policy approach that some members of Congress have been pushing solution to the drug pricing problem: expedited approval of generics to increase competition.

The user fee bill includes a provision that would allow FDA to give ANDAs for drugs with limited competition a priority review. The hope is that enhancing generic drug review can place more downward pricing pressure in markets where there are only a few manufacturers. (Also see "Generic Priority Review Expanded In Senate User Fee Bill" - Pink Sheet, 11 May, 2017.)

FDA's new commissioner, Scott Gottlieb, is focusing on accelerating generic approvals even in the absence of legislation. (See sidebar for related story.)

Avoiding Reimportation, Part D Negotiation Talk

Industry also likely is preparing answers that could minimize the impact of the inevitable questions that will arise about drug reimportation and federal negotiation of prices for Medicare Part D.

FDA, industry, and many other stakeholders oppose reimportation, but one of its champions, Sen. Bernie Sanders, I-Vt., is a member of the HELP Committee and almost surely will bring it up during the drug pricing hearing.

During the committee's mark-up of the FDA user fee reauthorization bill, Sanders pushed for an amendment to be included that would allow patients to buy cheaper drugs in Canada. But Alexander managed to have the bill tabled. (Also see "Drug Importation Blocked But Not Forgotten As User Fee Bill Clears Senate Cmte" - Pink Sheet, 11 May, 2017.)

President Trump's plans to use the federal government's power to help drive down drug prices also will come up in the discussion. Trump has thrown his support behind negotiating drug prices for Part D (Also see "Trump Drug Pricing Plan May Include Rebate Pass-Through Push – Novartis CEO" - Pink Sheet, 1 Jun, 2017.), and the Office of Management and Budget has hinted at potential changes to the Medicare rebate system that could affect prices. (Also see "The Latest Furor Over Trump’s Drug Pricing Plan" - Pink Sheet, 16 May, 2017.)