Drug Pricing and Quality Are Top Issues for 2018

Policy makers look to boost generic drugs, curb opioid abuse, and maintain incentives for innovation.
Jan 02, 2018
Volume 42, Issue 1, pg 20–21

Concerns that high and rising drug prices hinder patient treatment will continue to shape pharmaceutical markets in what promises to be a tumultuous year in Washington. Policy makers will weigh access to medicines with the desire to encourage biopharmaceutical R&D, which relies on regulatory efforts to streamline clinical research, ensure product quality, and achieve more efficient oversight. The November mid-term Congressional elections already are heating up, as Republicans seek to maintain control of the House and Senate amidst continuing debate over government funding and healthcare policies. These developments will affect resources and initiatives for FDA, the National Institutes of Health, and federal and state health programs. 

Global regulatory issues will be important, as drug sourcing and production expands overseas and disease outbreaks threaten public health around the world. International harmonization of regulatory standards and mutual recognition agreements will advance as authorities look for efficiencies in ensuring drug quality, in managing product lifecycles, and in blocking illegal trafficking of counterfeit drugs. Drugmakers also face extensive changes under Brexit, including relocation of the European Medicines Agency to Amsterdam and the need to ensure appropriate marketing authorizations in Europe. 

Coverage and controls

The heated, ongoing debate over revising the Affordable Care Act (ACA) and state Medicaid and children’s health programs will remain in the spotlight as manufacturers evaluate how policy changes may limit drug coverage and reimbursement. Pharma companies backed the ACA and agreed to pay millions in additional taxes to expand pharmacy benefits. Now consumers may face higher out-of-pocket costs that will squeeze drug utilization and ignite further efforts to rein in pharmaceutical prices. The Centers for Medicare and Medicaid Services (CMS) recently revised how Medicare Part B pays hospitals for administering certain drugs and seeks to facilitate coverage of newly approved biosimilars and generic drugs. A new proposal calls for Medicare Part D prescription drug plans to share with patients the rebates and discounts negotiated by manufacturers and pharmacy benefit managers (PBMs). This push for more transparency in drug prices and discounts could erode revenues for PBMs and further escalate the finger-pointing by manufacturers, insurers, and PBMs over who’s to blame for high-priced medicines. 

These trends will build interest in value-based pricing strategies that link drug reimbursement to patient response to treatment. CMS and insurers also contemplate arrangements that spread reimbursement over several years for important one-time therapies. Manufacturers will need strong data to justify launch prices, especially for targeted therapies. And payers will look more to reports from the Institute for Clinical and Economic Review (ICER) and other third-party analysts on whether benefits of a new medicine justify costs. 

Encouraging innovation

A main concern for the biomedical research community is that any form of price controls would discourage private investment in biomedical innovation and limit development of new cures for critical diseases. Even though drug companies enjoy healthy profits, policy makers are reluctant to dampen the current boom in scientific discovery that has led to new gene and cellular therapies and robust R&D pipelines. FDA approved more than 40 novel medicines through early December 2017, heading for a record year. 

US-patent policy and market exclusivity provisions are crucial to maintaining an inviting climate for investing in the biotech industry, but issues have emerged about innovator firms using patents to block competition. The development and marketing of new biosimilars face delays from intense patent battles, and a recent effort to extend protections by transferring patents to a Native American tribe has generated a strong backlash. These actions fuel questions about over-extended exclusivity periods for newly approved drugs and biologics, particularly for orphan drugs and reformulated products. The Supreme Court will weigh related issues as it considers an important case in 2018 that could revise the current US Patent Office process for reviewing patent challenges. 

While FDA generally avoids involvement in pricing issues, commissioner Scott Gottlieb looks to enhance consumer access to medicines by promoting market competition. A main strategy is to speed the development and approval of generic drugs, particularly for complex therapies and combination products and in classes dominated by one or two brands. Gottlieb also wants to prevent brands from blocking generic-drug makers from obtaining supplies needed for bioequivalence testing and other tactics that delay market entry. 

More efficient and timely FDA review and approval of new medical products also will enhance competition, and the agency should gain added flexibility in this area from implementing the 21st Century Cures Act and reauthorized user fee programs. Further advances should emerge in the coming months as Gottlieb unveils more proposals for spurring efficient clinical research methods, particularly to broaden indications for cancer therapies, and wider use of digital technology and updated information systems. Janet Woodcock, director of the Center for Drug Evaluation and Research (CDER), is working to further automate and better manage the new drug development and application review system. And Peter Marks, director of the Center for Biologics Evaluation and Research (CBER), is implementing a framework for identifying and evaluating regenerative medicine advanced therapies (RMATs), including gene therapies. 

To meet goals for the timely evaluation of applications for these cutting-edge medicines, including priority generics, FDA wants manufacturers to update facilities and processes to ensure more reliable production of high-quality medicines so that manufacturing issues will not delay the approval of new breakthrough drugs or biosimilars. To this end, FDA is requiring applications for new drugs, biologics, and generics to list all facilities involved in product testing and production in order to meet accelerated review goals. Ongoing shortages in sterile injectibles, biotech therapies, and even conventional drugs spotlight the need for industry to invest in modern facilities and quality operations able to detect and prevent distribution of adulterated and contaminated medicines. 

Combating opioids

The deadly opioid epidemic, which is taking thousands of lives and driving up healthcare costs on every level, presents serious challenges to pharmaceutical companies. Health authorities and medical practitioners recognize the need for pain medicines for patients with genuine need of treatment, while also struggling to curb excessive prescribing and distribution of drugs subject to abuse and misuse. Congress and the White House have rolled out policies and plans for limiting inappropriate opioid use and for expanding treatment for addicts and access to opioid overdose rescue drugs to lower the death rate from abuse and will look to implement new strategies more effectively. 

FDA has ramped up its direct involvement in tackling opioid abuse by encouraging research on new non-opioid pain treatments and more effective medicines to prevent and treat addiction. A related goal is to help overcome hurdles in developing low-cost generic abuse deterrent formulations (ADFs) and overdose treatments and to devise more secure packaging and distribution strategies for pain medications. 

On the international front, FDA is collaborating with other agencies to combat import of falsified/substandard medicines, including dangerous pain treatments from overseas. At home, opioid manufacturers face criminal investigations and lawsuits for excessive marketing and distribution of these products, and legal challenges are likely to escalate as overdose rates continue to rise.

Article Details

Pharmaceutical Technology
Vol. 42, Issue 1
January 2018
Pages: 20-21

Citation

When referring to this article, please cite it as J. Wechsler, "Drug Pricing and Quality Are Top Issues for 2018," Pharmaceutical Technology 42 (1) January 2018.

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