Politics and Pricing Will Challenge Manufacturers in 2016

Published on: 
Pharmaceutical Technology, Pharmaceutical Technology-01-02-2016, Volume 40, Issue 1
Pages: 26–29

The bio/pharmaceutical industry will face increased scrutiny of product quality and cost drivers.

The escalating attack on rising expenditures for prescription drugs and biologics is prompting more proposals from Congress and political candidates to strengthen oversight of biopharmaceutical development, manufacturing, and marketing. While
Democrats have been most vocal in challenging industry practices, Republicans have joined the campaign, citing the need to manage medical costs as part of proposals for revising the Affordable Care Act. All parties acknowledge the importance of supporting biomedical and genomic discoveries able to cure lethal conditions such as cancer and hepatitis, but also want to ensure that innovative therapies are available to patients who stand to benefit.

The debate thus is moving beyond industry “bad actors” and drug reimbursement issues to encompass a broad range of policies affecting pharma operations. The Justice Department, for example, is assessing competitive issues related to pricing strategies of products marketed by Eli Lilly, Merck, Mylan, and others. Pharma mergers and acquisitions will face even more scrutiny of potential impact on competition and pricing, as well as jobs, operations, and R&D. The Trans-Pacific Partnership agreement and other trade pacts may lose support among those who consider these deals overly protective of pharma intellectual property rights at home and abroad.

The spreading epidemic of opioid abuse and deaths from overdoses also will increase scrutiny of manufacturer R&D and marketing activities. State and local governments are filing lawsuits that target industry practices seen to encourage excessive opioid prescribing and dispensing. FDA is encouraging development of abuse-resistant formulations and new easy-to-use opioid antidotes as it seeks to provide patient access to needed painkillers less likely to cause harm.

Congressional concerns
One result of the anti-pharma rhetoric has been to delay approval of the 21st Century Cures legislation, as questions multiply about the value of developing new medicines that may be too costly for many individuals to access. Such concerns slowed efforts in the Senate to craft a companion “Cures” bill and may dim prospects for provisions in the House-approved measure that provide added incentives for drug research and testing.

Congressional committees will examine drug access issues more closely in early 2016, as Republican leaders in the House and Senate respond to calls for reform, as well as pressure from Democrats to tackle rising costs. The House Oversight & Government Reform Committee has opened an investigation into prescription drug pricing and expects further hearings this year. The Senate Special Committee on Aging set the pace with a hearing in December 2015 focused on price increases by Valeant and Turing Pharmaceuticals. And the House Judiciary Committee will continue to explore drug pricing as part of its examination of factors affecting competition in the US healthcare system, as seen at a November 2015 hearing on the role of pharmacy benefit managers.  

The Obama administration will further examine strategies for managing outlays on drugs by public health programs, as discussed at a high-profile pharmaceutical forum in November 2015. A wide range of experts addressed whether value-based purchasing and other approaches can improve patient access to medicines while maintaining incentives for biomedical innovation. The White House has backed calls for Medicare to have more leeway to negotiate drug prices, and states are looking more closely at options for revising Medicaid drug reimbursement policy.  

Regulatory pressures
These developments have entangled FDA in cost and competition issues much more than it desires. At the November 2015 Senate hearing to weigh the confirmation of Robert Califf as the next FDA commissioner, Committee members repeatedly pressed the nominee on how the regulatory process could improve access to medicines. Califf’s main response was to promise to do “a good job” to move new generic drugs through the approval process and to eliminate the generic-drug application backlog. Similarly, FDA approval of more biosimilars would enhance patient access to less expensive biotech therapies, a process that would be facilitated by agency clarification of controversial issues related to biosimilar development, such as product naming and interchangeability.

Califf also acknowledged the need to streamline regulation of combination products, a topic of continued importance to biopharma and medical-device manufacturers. And he mentioned FDA efforts to set standards for legitimate drug compounding, which could produce alternatives to costly medicines, as proposed for a compounded version of Turing’s costly antiparasitic treatment. FDA aims to do more to track and prevent drug shortages, with an eye to avoiding monopoly situations leading to price increases, as seen in allegations involving manufacturers of saline solutions and other common generic injectables.


Some of these issues may be addressed through FDA initiatives to improve drug and biotech product quality. The agency hopes to finalize a program for collecting quality metrics data that can help demonstrate the state of operations at pharma manufacturing facilities and refine its risk-based method for scheduling site inspections. The larger benefit will be to reduce drug recalls and quality-related shortages and to reward manufacturers able to document high-performance systems.

FDA also is stepping up scrutiny of the accuracy of clinical and manufacturing information submitted to FDA by manufacturers in applications and reports, as part of its increased focus on data integrity. The agency wants to ensure that information filed in all agency submissions is complete and truthful, particularly in numerous documents related to production quality and adherence to GMPs. FDA regards data integrity as basic to any quality system, commented Doug Stearns, director of the Office of Enforcement and Import Operations in FDA’s Office of Regulatory Affairs (ORA), at the November 2015 FDA Inspections Summit sponsored by FDA News. False or altered data often are hard to fix, particularly cases involving overseas operations and where errors arise more from negligence or carelessness than from criminal activity. The agency still will take enforcement action against fraud, Stearns commented, but noted that FDA seeks to rely on companies to have “appropriate quality systems” to address such problems when they emerge.

In addition to ensuring industry compliance with standards and rules, FDA’s larger goal is to support development and appropriate testing of innovative therapies. The agency is working on policies to advance research on cellular and gene therapies, which involve complex processing and quality control issues.

In vitro diagnostics are in the news, as drug and medical-device makers look for clearer FDA standards for co-development and appropriate use of these products. The agency also is working with genomic testing operators to develop rational approaches for enhancing consumer access to personal genomic information.

Many of these issues will be on the table as FDA and industry negotiate the next version of the Prescription Drug User Fee Act (PDUFA VI); the program has to be reauthorized in 2017 to keep industry payments flowing to support FDA oversight of drugs and biologics, as well as fees for medical devices, generic drugs, and biosimilars. All stakeholders look to continue initiatives for integrating patient perspectives into drug development and regulatory decision-making, while also enhancing FDA information technology and its workforce and ensuring the long-term stability of fee programs. But hopes for quickly enacting a “clean” user-fee reauthorization bill will continue to fade as the political rhetoric heats up. 

Article DetailsPharmaceutical Technology
Vol. 40, No. 1
Pages: 26–29

When referring to this article, please cite it as J. Wechsler, "Politics and Pricing Will Challenge Manufacturers in 2016," Pharmaceutical Technology 40 (1) 2016.