Sarah D'Orsie
The US Patent and Trade Office is just granting scores of junk patents, which is why we need to do settlements between biosimilar companies and the brand, because we cannot afford to litigate these scores of junk patents.
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Biosimilar Industry Critiques Biden's Drug Pricing Reforms
Specialty tiers for biosimilars and reforms that address the proliferation of poor-quality patents would help lower costs and improve access, biosimilar industry veterans said.
Price negotiations for biologics and forcing drug manufacturers to rebate CMS for drug costs that exceed rates of general inflation are options the federal government is considering to control drug spending.
But these policies “are in lieu of addressing the root cause” of drug cost increases, and programs that disallow rebates paid by manufacturers to pharmacy benefit managers (PBMs) and payer plans would be more effective, argued a biosimilars manufacturer representative at the recent GRx+Biosims conference sponsored by the Association for Accessible Medicines.
Some industry stakeholders contend “pay-for-delay” deals unfairly restrict competition whereas others contend they facilitate drug affordability and market access. GRx+Biosims panelist Sarah D’Orsie said that instead of seeking to curtail and regulate pay for delay deals between drug makers, the federal government should raise the bar on the quality of patents issued to drugmakers. D’Orsie is vice president of government affairs and policy for Fresenius Kabi.
If approved, the Build Back Better Act, President Joe Biden’s safety net spending initiative would allow drug price negotiations for a small number of high-cost Medicare Part D and Part B drugs that lack generic or biosimilar competition. Prices of up to 10 drugs could be negotiated in 2025, with the annual number of drug prices negotiated increasing to 20 by 2028. The proposal would also cap the upper limit of the negotiated price. Further, an excise tax would be levied on drug makers that don’t comply with negotiation and monetary penalties would apply to companies that don’t maintain negotiated prices.
Separately, a bill in Washington, DC, the Preserve Access to Affordable Generics and Biosimilars Act, would limit pay-for-delay deals that compensate drug manufacturers for withholding their products from market.
Patent thickets, which are clusters of patents that shield originator products from competition, and poor patent quality tend to impede biosimilar competition, D’Orsie said, explaining that patents, good or bad, can give the originator company leverage to negotiate pay-for-delay settlements, which keep biosimilars and generics off the market.
As D'Orsie described, rebates paid by manufacturers can become a vicious cycle if both the original brand manufacturer and the biosimilar company feel compelled to offer them.
“As a biosimilars company, we have to compete in some way with the brand, and the way it’s going, that means giving a rebate. In order to compete [with other companies] on bigger and bigger rebates, you raise your price in order to have more room. So the concept is that the manufacturer is breaking even every year and the PBM and the plan are getting a bigger rebate…and the Medicare patient ends up paying [more, as a percentage of costs] every single year,” she said.
One provision of the Build Back Better Act would require drug manufacturers to rebate the federal government if their prices for biologics covered under Medicare Part B and Part D increase faster than the rate of inflation. “Everybody’s worried about the inflationary penalties,” D'Orsie said.
She said pay-for-delay settlements actually help biosimilar companies to bring their products to market. Although these agreements appear to delay biosimilar competition, the “root cause” of delayed competition is an excess of patent approvals that are granted on a weak basis of evidence of product improvement or innovation, she said.
“The US Patent and Trademark Office is just granting scores of junk patents, which is why we need to do settlements between biosimilar companies and the brand, because we cannot afford to litigate these scores of junk patents,” D’Orsie said. “The settlements actually get us closer; [they] allow us to launch, sooner than if we were just going to wait for the patent to expire.”
Panelist John Brooks, a partner with health policy consulting firm South Capitol, said reforms are needed to Medicare Part D, which he said was designed for an era when generic drugs were a significantly smaller proportion of prescriptions written and biosimilars didn’t exist.
“It’s really exciting to see the potential for significant changes here that could improve the program but also provide additional opportunities to level the playing field for products and manufacturers,” he said.
The current design of Medicare coverage, along with manufacturer rebates, “creates a series of incentives for [payer] plans that can drive them toward using higher-cost products,” Brooks said.
He suggested that policy makers level the playing field, in part, by putting biosimilars, such as adalimumab, on specialty tiers. “We’ve seen just in the past year that CMS has given plans additional flexibility to create a second specialty tier. That should improve the negotiating leverage of biosimilars.”
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