HHS Seeks Input on "American Patients First" Proposals

On May 11, 2018, “American Patients First,” The Trump Administration’s Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs, was released. HHS, under President Trump, provided more than 50 regulatory and legislative proposals addressing 4 key strategies for reform: improved competition, better negotiation, incentives to lower list prices, and reduced patient out-of-pocket spending. The nature (positive, neutral, or negative) and level of impact of proposals on the biosimilar market will become clearer over time as the President directs HHS to take immediate action on some proposals, and as HHS takes future action, with feedback, on additional proposals.

On May 16, 2018 the formal Request for Information (RFI) was released to gather comments on the additional proposals that HHS is actively considering to bring down prices. Below, I highlight proposals included in the RFI that may impact the biosimilar market, along with some of the areas on which HHS seeks feedback:

Proposals to Increase Competition

Increasing access to reference product samples. Like some generic drug developers, companies engaged in biosimilar and interchangeable product development may encounter difficulties obtaining sufficient samples of the reference product for testing. HHS seeks comments on actions that should be considered to facilitate access to reference product samples.

Improving biosimilar development, approval, education, and access. The FDA prioritizes ongoing efforts to improve the efficiency of the biosimilar and interchangeable product development and approval process. For example, the FDA is working to identify areas in which additional information resources or development tools may facilitate the development of high-quality biosimilar and interchangeable products. HHS seeks comments on the specific types of information, resources, or development tools that would be most effective in reducing development costs for biosimilar and interchangeable products.

Improving the Purple Book. In the Purple Book, the FDA publishes information about biological products licensed under section 351 of the Public Health Service Act, including reference products, biosimilars, and interchangeable products. HHS seeks comments on how the Purple Book could be more useful to health care professionals, patients, manufacturers, and other stakeholders, and on and what additional information could be added to increase its utility.

Educating providers and patients. Physician and patient confidence in biosimilar and interchangeable products is critical to the increased market acceptance of these products. The FDA intends to build on the momentum of past education efforts, such as the launch of its Biosimilars Education and Outreach Campaign in 2017, by developing additional resources for health care professionals and patients. HHS seeks comments on the types of information and educational resources on biosimilar and interchangeable products that would be most useful to healthcare professionals and patients to promote understanding of these products, and on the potential role of state pharmacy practice acts in advancing the utilization of biosimilar products.

Addressing interchangeability. HHS is seeking comments on how the interchangeability of biosimilars could be improved, and what effects such changes would have on the prescribing, dispensing, and coverage of biosimilar and interchangeable products.

HHS is also deliberating proposals and seeking comments on government programs that cause underpricing of generic drugs, the potential for the Best Price reporting requirement of the Medicaid Drug Rebate Program to pose a barrier to negotiation and shifting costs to other markets, Affordable Care Act excise taxes and increased Medicaid drug rebate amounts potentially impacting manufacturer list pricing practices, and government programs being cross-subsidized by higher list prices and excess costs in the commercial market.

Policies Addressing Better Negotiation

HHS is contemplating various proposals and seeking comments on improving negotiations by furthering the use of value-based purchasing in federal programs, moving drugs or classes of drugs from Part B to Part D, creating site neutrality in payment for physician-administered drugs (addressing higher hospital and hospital-owned outpatient departments facility fees), and changing payment policies for inpatient (Part A) and outpatient (Part B) prescription drugs.

Proposals Creating Incentives to Lower List Prices

HHS is considering reforms to the rebating system, including imposing fiduciary duty for Pharmacy Benefit Managers (PBMs) and reducing the impact of rebates on list prices and prices paid by consumers, employers, and commercial insurers.

The agency also seeks comments on whether PBM rebates and fees based on a percentage of the list price create an incentive to favor higher list prices (and the potential for higher rebates) rather than lower prices. They also ask whether payers manage formularies favoring benefit designs that yield higher rebates rather than lower net drug costs, how beneficiaries are negatively impacted by incentives across the benefits landscape (manufacturer, wholesaler, retailer, PBM, consultants, and insurers) that favor higher list prices, whether Medicare Part D should prohibit the use of rebates in contracts between Part D plan sponsors and drug manufacturers, and instead be required to base contracts only on a fixed price for a drug over the contract term.

HHS is also contemplating proposals and seeking comments on the possibility of Part D and Part B drug manufacturers committing to a price over a particular lookback period; removing the cap on inflationary rebates in Medicaid; changing the exclusion of certain payments, rebates, or discounts from the determination of Average Manufacturer Price and Best Price; using drug copay discount cards for beneficiaries of federal health care programs; and growth, eligibility and duplicate discount issues in the 340B Drug Pricing Program.

Policies Reducing Out-of-Pocket Costs

HHS is considering additional measures to inform Medicare Part B and D beneficiaries, prescribers, and pharmacists about lower-cost alternatives specific to individual patients. They seek comments on how tools could reduce out-of-pocket spending for people with Medicare, how technology present in all or most electronic prescribing or pharmacy dispensing systems can help, whether Medicare should require the use of systems that support providing this information to patients, whether appropriate technology exists for this approach to be quickly and inexpensively implemented, and whether implementation would create an unreasonable burden for prescribers or pharmacists.

Additional Feedback

Lastly, HHS is interested in feedback on any other suggestions to improve affordability and accessibility of prescription drugs; regulations or government policies that may be increasing list prices, net prices, and out-of-pocket drug spending; and policies or legislative proposals that HHS should consider to lower drug prices while encouraging innovation.