White House Report Backs FDA Reforms to Help Curb Costs

A new report on cutting drug prices from the White House’s Council of Economic Advisers has recommended innovation cost reductions through FDA reforms, among other suggestions. Because it takes 10 years and $2.6 billion to develop a drug and reach approval, reforms that significantly reduce the fixed costs of entry could help keep drug costs down, according to the report entitled: Reforming Biopharmaceutical Pricing at Home and Abroad. Potential reform areas include clinical trial requirements and FDA review, which the report says are the most time-and resource-intensive steps for gaining drug approval.

The report recommends that FDA could continue to facilitate the validation and qualification of new drug development tools that allow sponsors to demonstrate safety and efficacy more efficiently and earlier. It also hinted at considering expanding certain pathways (expedited, breakthrough, fast track) to new but similar drugs on the market without the need to demonstrate a clinical improvement or an unmet medical need.

Another recommendation would be to improve the use of biomarkers and surrogate endpoints, the report says. “The 21st Century Cures Act has encouraged utilization of surrogate markers but more scientifically validated markers need to be discovered,” it says. “The problem is that there is currently no way originators of biomarkers and surrogate endpoints can capture the value of their innovation to other manufacturers using it after it has been developed. Once a biomarker or endpoint is published, it can be difficult for originators to capture the value of their innovation to other manufacturers using it. Rewarding firms that invest in the pooling, curating, and validating of potential biomarkers and surrogate endpoints that can shorten clinical trials could create appropriate incentives for more high quality research.”

Additionally, the report examined biologic costs to the healthcare system and how biosimilar competition has been slow to mature. While only 2% of Americans are being treated with biologics, the products represent between 27% and 40% of U.S. drug spending. “The cost of bringing biosimilars to market, as well as the complexity of manufacturing biologics and biosimilars, make it likely that large, well-established companies will dominate the biosimilars market, which would limit the number of entrants,” the report says. “The FDA has indicated it will not finalize guidelines on demonstrating biosimilar interchangeability for another two years or more. Speeding up the issuance of final guidelines could add certainty and attract additional biosimilar applicants. If these guidelines are relatively easy and inexpensive to adhere to, it couldspur interchangeable applications and approvals, which could result in more effective competition with the reference biosimilar and lower prices.”

Public advocacy group Public Citizen was highly critical of the report, saying most Americans will not see health care costs fall significantly as a result of the recommendations. “The administration is foregoing the most effective and obvious prescription cost reforms in order to serve Big Pharma,” it says. “The problem with the Trump proposal is that it refuses to take measures to curtail Pharma’s pricing abuses and refuses to take on the monopolies that undergird the industry’s marketing power.” It did note some positive ideas in the report that would yield some savings for the government (reducing physician incentives to administer expensive medications) and patients (out-of-pocket caps).

Additionally, Public Citizen said the Trump Administration should:

• Leverage government negotiating power. The government should be able to negotiate directly with prescription manufacturers for lower prices on behalf of America’s seniors who rely on Medicare. Ninety-two percent of Americans support this proposal, which could save the government $16 billion a year.
• Stop annual spikes. Every year, prescription companies raise their prices on old medicines at rates several times medical inflation. The administration should support the Stop Price Gouging Act (S. 1369), introduced by Sens. Sherrod Brown (D-OH) and Kirsten Gillibrand (D-NY).
• Curb monopoly abuse. Under existing law, the administration has the power to authorize generic competition with expensive patented medications. This would transform pharmaceutical markets and make therapies more affordable by an order of magnitude, including among treatments for the opioid addiction crisis. In addition, the administration should support the CREATES Act (S. 3056), which would stop brand-name interference with product samples and help bring generics to market more quickly.