Opinion

Policymakers Must Take More Steps to Boost Competition, Address Generic Drug Prices

President Donald Trump’s recent blueprint to reduce drug prices and the broad range of responses from health care stakeholders have brought additional needed attention to the persistently high drug prices plaguing American patients.

Although the administration and Congress have taken important steps to help alleviate price spikes, there is more that must be done to ensure that patients and hospitals have access to the medications they need. As policymakers continue to look for solutions to high drug prices, they should focus on remedies that remove barriers to entry and foster competition in the generic drug marketplace.

Patients have long relied on generic drugs to increase access to, and reduce the costs of, essential medications, and hospitals lean on generic injectable drugs as workhorses in the acute care setting. Without access to those generic drugs, patients and providers alike would be faced with difficult choices and limited resources.

Price spikes often occur when a lack of competition among manufacturers allows high prices to go largely unchecked. Last year, Congress took important steps toward increasing competition in the marketplace by including a provision in the Food and Drug Administration Reauthorization Act of 2017 that would prioritize review of abbreviated new drug applications for drugs with fewer than three approved alternatives.

The provision allows more generic drugs to enter the marketplace at a faster pace, providing patients with more affordable alternatives to brand-name medications. However, there are some additional common-sense steps that Congress and the administration can take to increase competition.

A lack of competition in the marketplace has been exacerbated by some brand-name manufacturers that exploit loopholes in the FDA’s Risk Evaluation and Mitigation Strategies program to deny generic manufacturers access to the product samples they need in order to come to market. In addition, some brand manufacturers engage in “pay for delay” tactics — attempting to pay the manufacturer of the first generic alternative not to enter the market in order to keep their prices and profits high.

These abusive tactics have become so widespread that the FDA recently released a list of more than three dozen companies that are accused of delaying competitors from entering the market by refusing to share their samples. That number is only going to rise until concrete steps are taken to fix the distorted drug market.

Reforms like the ones contained in the bipartisan CREATES Act would prevent anti-competitive abuses from companies and provide recourse for generic competitors that are denied the necessary samples. These reforms will improve competition in the marketplace, reduce drug prices and allow an increased number of drugs to enter the marketplace. The CREATES Act will also help to reduce the number of drug shortages, as the FDA has repeatedly pointed to quality-control problems, manufacturing issues and barriers to getting new suppliers online as the primary causes of drug shortages.  

Congressional action isn’t the only answer for increasing competition in the marketplace. The FDA can also help foster generic competition by taking steps such as providing more notice to manufacturers of drugs that go through the Drug Efficacy Study Implementation program.

Due to the disparity in FDA approval standards, drugs approved between 1938 and 1962 must be reviewed again through the DESI process. Many of these drugs have a long history of safety and efficacy and have maintained relatively low prices due to their length of time on the market.

However, manufacturers of DESI drugs are required to exit the market upon approval of a new drug application, which has led to price spikes. Providing current manufacturers of DESI drugs with more notice before they’re required to exit the market would enable them to engage with appropriate stakeholders and seek FDA approval for a competing drug, resulting in greater competition.

As the sourcing and purchasing partners for America’s acute and long-term health care providers, health care group purchasing organizations have a unique line of site into the market conditions that give rise to price spikes. GPOs monitor every aspect of the health care supply chain, from the manufacturing of a drug to its delivery to a patient. We know firsthand just how devastating price spikes can be for health care providers and the patients they serve.

No patient should be priced out of receiving essential medications. We urge Congress and the administration to look at additional ways to help increase competition in the generic drug marketplace.

 

Todd Ebert, R.Ph., is the president and CEO of the Healthcare Supply Chain Association.

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