Democrats Propose Wide-Ranging Bill to Lower Drug Costs

Posted 30 March 2017 By Zachary Brennan

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More than a dozen House and Senate Democrats late Wednesday unveiled a host of new provisions to bring down the rising cost of pharmaceuticals, offering up many ideas that have been publicly opposed by the pharmaceutical industry.

The bill, known as the Improving Access to Affordable Prescription Drugs Act, was introduced alongside a House companion, though neither is likely to gain much traction in the Republican-controlled House and Senate.

However, some of the bills' parts might catch the eye of President Donald Trump because of the way they seek to make sweeping changes to how pharmaceuticals are regulated and how companies price their drugs. HHS Secretary Tom Price said Wednesday he and Trump are working on their own drug pricing bill.

Transparency and Exclusivity Changes

Under the Democrats’ bill, drugmakers would be required to significantly increase their transparency on research and development, manufacturing and marketing costs – data that industry has previously said is proprietary.

Exclusivity periods guaranteeing a brand drug or biologic’s monopoly on a market would also be lessened as part of efforts to accelerate competition with generics and biosimilars.

“First, the bill modifies the New Chemical Entity (NCE) exclusivity period to allow FDA to accept a generic drug application for the branded product after three years rather than five, but maintains market exclusivity for five years. Second, this section would add in a requirement that products awarded the 3-year New Clinical Investigation Exclusivity must show significant clinical benefit over existing therapies manufactured by the applicant in the 5-year period preceding the submission of the application,” the bill says.

Biologics exclusivity would also be reduced from 12 years to seven years under the bill, another sticking point for industry that has been proposed by Democrats numerous times over the years but which Republicans and industry have said would stall the development of innovative therapies because of lessened incentives.

The Government Accountability Office would be directed to study orphan drug development, which it already says it's doing, as well as the awarding of exclusivities and revenues generated from orphan drugs. The Federal Trade Commission (FTC), meanwhile, would be tasked with submitting a report to Congress on what’s known as “product hopping,” or when a company slightly modifies a drug to extend exclusivity protections and prevent generic entry.

Pay-for-delay deals that also often delay generic drugs from entering the market would be made illegal under the bill, and FDA would be able to take away the 180-day generic drug exclusivity period from any generic company that agrees to such settlements with brand-name drug manufacturers.

On the drug promotion front, the bill would eliminate tax breaks drug companies receive from the federal government for expenses related to direct-to-consumer advertising.

Innovation at NIH, CMS, OIG

In direct opposition to industry group PhRMA’s wishes, the bill would allow Medicare to further leverage its purchasing power to negotiate lower drug prices and instruct the Secretary of HHS to issue regulations allowing for the import of qualifying prescription drugs manufactured at FDA-inspected facilities from licensed Canadian sellers.

HHS’ Office of the Inspector General (OIG) would also be tasked with monitoring changes in drug prices and if a company increases the price of a drug “beyond medical inflation (over a one year period or cumulatively), the drug manufacturer is subject to a graduated excise tax that depends on the size of the price increase.”

According to a Public Citizen summary of the bill, “Revenues from annual price spikes beyond the level of medical inflation but less than 15% would be fined at a level of 50%. Those equal to or greater than 15% but less than 20% would be fined at a level of 75%. Revenues from price spikes equal to or greater than 20% would be fined at 100%.”

However, OIG and FTC would work with drug companies to assess the extent to which a price increase was due to changes in a drug’s supply chain or for other justifiable reasons.

"Our bill would for the first time impose stiff penalties on drug companies that gouge their patients," said Sen. Kristen Gillibrand (D-NY).  

The bill would also create a $2 billion prize fund at the National Institutes of Health (NIH) to fund the development of new antibiotics that treat serious and life-threatening bacterial infections and to fund research that advances such treatments.

A Center for Clinical Research would also be created at NIH to conduct clinical trials on drugs that may address an existing or emerging health need, with the bill providing $10 billion in funding over 10 years.

Improving Access to Affordable Prescription Drugs Act Summary

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Categories: Government affairs, Manufacturing, Research and development, News, US, FDA

Tags: drug prices, Medicare drug negotiations, drug imports, drug exclusivity, FDA regulations

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