Drug Prices Targeted in Biden Competition Initiative

A broad White House proposal to advance competition in major U.S. industries features several measures intended to make medicines more affordable for patients. The executive order also instructs the Department of Health and Human Services (HHS) to aide consumers by reducing the cost of hearing aids, limiting certain hospital mergers, and clarifying insurance options offering affordable coverage.¹

With 72 wide-ranging proposals, the initiative challenges multiple areas where curbs on free competition may harm consumers and workers. There are measures designed to help workers negotiate with employers, limit airline fees, curb data collection and surveillance by tech companies, and support open online marketplaces.

To spur competition in the health care arena, HHS is directed to issue a comprehensive plan within 45 days to map out ways to combat high drug prices and “price gouging” and enhance domestic pharmaceutical supply chains.² One item on the list is to revive a rule that requires health marketplaces to offer at least one health plan with a standard benefit to make it easier for consumers to compare coverage options. The Federal Trade Commission (FTC) and Department of Justice (DoJ) also will review merger guidelines to prevent patient harm from certain hospital mergers and assess the need for controversial rules requiring hospitals to disclose the prices they negotiate with health insurance firms.

The FTC also will investigate and take action against “pay for delay” and other agreements between pharma manufacturers found to discourage competition. And regulators will reduce the cost of hearing aids for consumers by permitting over-the-counter sales of these products to inject competition into the market. This puts pressure on FDA to issue proposed rules for OTChearing aids without delay.

The White House also revives support for importing less expensive drugs from Canada, directing FDA to work with states and tribes to establish procedures to obtain lower-cost medicines without imposing risks to public health. Such drug importing proposals have been on the table for more than a decade, but have been opposed by Canadian officials and difficult for state and federal agencies to implement. A Trump administration drug importation program prompted two states to develop and seek FDA certification of such importation plans, a process that has been challenged by brand pharma companies. FDA is weighing a citizen petition opposing authorization of state import programs but recently informed industry lawyers that it needs more time to review these “complex issues.”

A related area of focus involves facilitating the development, testing and approval of generic drugs and biosimilars. The Biden initiative calls on FDA to fully implement agency plans issued in 2017 and 2018 to advance competition in prescription drug markets by clarifying the approval framework for these products, including standards for interchangeability and for biologics licensing. The executive order further advises FDA to implement recent legislation designed to prevent brand manufacturers from limiting access to drug samples needed to test new generic products.

Additionally, HHS should provide effective educational materials and communications to improve the understanding of biosimilars and interchangeable products among healthcare providers, patients and caregivers. Similarly, FDA and the FTC are instructed to identify and address deceptive, false and misleading statements designed to undermine consumer confidence in the safety and effectiveness of generics and biosimilars. And FDA should collaborate with the Patent and Trademark Office to prevent patent extensions designed to delay competition from generics and biosimilars. The Centers for Medicare and Medicaid Services (CMS), moreover, should prepare for coverage of interchangeable biological products and support new payment models to increase utilization of these products.

Despite offering multiple strategies for tackling high drug prices, the Biden proposal largely leaves it to Congress to move forward on the more contentious proposals, such as granting Medicare authority to negotiate pharma reimbursement. House Democrats are looking to include such measures in the reconciliation bill to approve the federal budget for 2022, now moving through the legislative process.

In the Senate, where broad agreement is needed to advance such pricing proposals, the Senate Judiciary subcommittee on Competition Policy, Antitrust and Consumer Rights opened the discussion of these issues at a hearing this week on “cracking down on anticompetitive conduct in prescription drug markets.”3 Subcommittee chair Amy Klobuchar (D-Minn) supported legislation to further limit pay-for-delay and other tactics that keep generics off the market. While representatives of brand manufacturers maintained that existing antitrust policies promote innovation while ensuring appropriate competition, reformers argued that current policies and judicial decisions permit a range of anticompetitive conduct to limit generic marketing such as “product hopping,” blocking patents, and abuse of citizen petitions.

Notes

1. https://www.whitehouse.gov/briefing-room/statements-releases/2021/07/09/fact-sheet-executive-order-on-promoting-competition-in-the-american-economy/
2. https://www.whitehouse.gov/briefing-room/presidential-actions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/
3. https://www.judiciary.senate.gov/meetings/a-prescription-for-change-cracking-down-on-anticompetitive-conduct-in-prescription-drug-markets