Prescription drug price spikes have been plaguing American patients, physicians, and hospitals. And they have drawn renewed scrutiny following the release of President Trump’s blueprint to lower drug prices. Americans across the country have become priced out of receiving essential medications due to a distorted drug market that creates perverse incentives for some manufacturers to keep prices high.
As policymakers and healthcare stakeholders continue to search for solutions, they must concentrate on reforms that revitalize the generic drug marketplace through increased competition and reduced barriers to entry.
The generic drug marketplace has long been a valuable resource for patients, physicians, and hospitals seeking essential medications at an affordable price. Thankfully there are pro-competitive steps that policymakers can and should take to increase competition in the marketplace and preserve patient care.
Bipartisan legislation called the CREATES Act would close loopholes in the Food and Drug Administration’s Risk Evaluation and Mitigation Strategies, or REMS, program. Currently, some brand name manufacturers are exploiting those gaps in the REMS program to engage in delay tactics — such as refusing to make available for purchase by generic manufacturers the necessary samples of their drugs or attempting to pay the manufacturer of the first generic alternative not to enter the market — in order to choke out potential generic competition and keep prices high. In doing so, brand name companies are not only delaying generic competition, but also delaying patient access to cheaper alternatives. The CREATES Act contains light-touch regulatory reforms that would ban such anti-competitive tactics and provide recourse for generic competitors. These reforms would allow the marketplace to flourish and drug prices to become more affordable.
The FDA can also help increase competition in the generic marketplace by streamlining the process for supplemental requests from manufacturers. When drug manufacturers submit supplemental requests — like requests to modernize or improve their manufacturing process — their submissions are treated as Abbreviated New Drug Applications, or ANDAs. This significantly delays their review and approval. This process creates a disincentive for manufacturers to improve as the costs associated with the approval delay far exceed the costs associated with dealing with outdated manufacturing. Instead of taking a one-size-fits-all approach to manufacturing requests, the FDA should handle supplemental manufacturing requests separately from ANDAs, thus allowing manufacturers to produce drugs more efficiently and increase supply.
As the sourcing and purchasing partners for America’s acute and long-term healthcare providers, healthcare group purchasing organizations, or GPOs, have a unique line of sight into the market conditions that create price spikes. GPOs monitor every aspect of the healthcare 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 patients and healthcare providers. And we know that the conditions will not improve until competition in the marketplace is allowed to flourish.
Patients cannot afford to wait any longer for solutions to price spikes. It’s time for Congress and the Trump administration to pursue market-based solutions that make the generic drug marketplace competitive again.
Todd Ebert is the president and CEO of Healthcare Supply Chain Association.