Industry Groups Comment to FTC on Competition Issues in US Drug Market

In November 2017, the Federal Trade Commission (FTC) held a meeting, comprising industry groups representing generic and brand-name drugs, pharmacies, and pharmacy benefit managers (PBMs), to discuss possible solutions to increase competition and lower the cost of drugs in the United States. Afterward, numerous stakeholders submitted comment letters to the FTC addressing competition issues.

The Association for Accessible Medicine (AAM), a generic industry group, discussed barriers to industry competition, including delays in approval, the inability to acquire active pharmaceutical ingredients (APIs), ingredient cost and supply chain fluctuations, a low potential for return on investment driven by consolidation in the wholesale and retail markets for generics, and wide-scale annual price deflation.”

To demonstrate that generics companies are seeing a decline in their bottom line, AAM’s letter stated, “For every $100 spent on dispensing generic medicines in this country, approximately $65 goes to the distribution and reimbursement of those products by the members of the supply chain. PBMs make nearly [3] times as much on generics as they do on brands. Wholesalers make about [8] times more. Pharmacies make more than 10 times for every $100 spent on generics than brands."

Industry group Pharmaceutical Research and Manufacturers of America (PhRMA), offered other opinions on the current system: “More than $140 billion of US brand sales are projected to face generic competition between now and 2021. Competition from biosimilars is estimated to account for $38 billion of the loss in brand spending.”

PhRMA also pointed to middleman PBMs as part of the pricing problem, citing the “change [in] the contractual definition of rebates to exclude certain administrative fees, allowing the PBM to retain these payments rather than passing them back to the plan sponsor.”

The Biotechnology Innovation Organization (BIO), the world’s largest trade association representing biotechnology companies, academic institutions, state biotechnology centers, and related organizations across the United States and in more than 30 other nations, submitted a letter that commended FDA Commissioner Scott Gottlieb, MD’s, strides in encouraging competition and addressing drug prices through the Drug Competition Action Plan.

However, BIO also warned that before both the FTC and FDA “embark on a wholly new regulatory approach in this space, we encourage [both the FTC and FDA] to monitor activities currently under way that are designed to speed generic entry and promote efficiencies through market-based mechanisms.”

BIO believes that before considering additional regulatory action in order to promote competitive markets, stakeholders should wait to assess the effects of plan currently in place, as only after these plans are implemented can their impact be fully understood.

In addition to the companies mentioned, comments came in from leaders across the healthcare world, such as the Kaiser Foundation Health Plan, Pharmaceutical Care Management Association (PCMA), and the American Medical Association (AMA), as well as 318 other organizations.