HR 3 proposes targeting for negotiation those drugs that consume a large share of the healthcare budget and that have limited biosimilar or generic competition. Writing in a perspective article in The New England Journal of Medicine, Peter B. Bach, MD, MAAP, a noted critic of high drug prices, proposed a different set of targets.
HR 3, the drug pricing plan put forth by House Democrats, has put the possibility of drug price negotiation for products in Medicare Part D and Part B at the center of the conversation about how best to bring down the skyrocketing cost of prescription drugs in the United States.
HR 3 proposes targeting for negotiation those drugs that consume a large share of the healthcare budget and that have limited biosimilar or generic competition. Writing in a perspective article in The New England Journal of Medicine, Peter B. Bach, MD, MAAP, a noted critic of high drug prices, proposed a different set of targets: drugs that do not carry enough evidence to support full approval and are therefore authorized on a conditional basis and those that are older, high-cost products that are late in their life cycles.1
These products, which Bach terms “too little” and “too late” drugs, respectively, hold monopolies that “are unjustified by the current incentive framework for innovation.”
With respect to the “too little” drug category, Bach points to drugs like eteplirsen, which treats Duchenne muscular dystrophy and costs approximately $1 million per patient per year, and which was granted a conditional approval by the FDA, but for which required follow-up studies have lagged behind schedule. Medicare’s current inability to negotiate prices for such drugs, says Bach, is detrimental, as drug makers have little incentive to complete development.
Among the “too late” drugs, Bach says that pay-for-delay tactics and patent thicketing have created a market in which drug makers have effectively forestalled generic and biosimilar competition. Drug price negotiation for these products could result in substantial savings, which Bach illustrated through an analysis of top-selling drugs.
Working from the assumption that current US average prices (derived from Part B prices in the first quarter of 2019) could be negotiated down to the level paid in the United Kingdom (derived from UK data sources) for each product, Bach found that the United States could reap close to $26 billion in savings, in 2019 alone, for these older drugs.
Those savings would include more than $9 billion from adalimumab (Humira), more than $3 billion from etanercept (Enbrel), nearly $3 billion from rituximab (Rituxan), and more than $2 billion for pegfilgrastim (Neulasta), among others.
Bach points out that negotiating prices for these drugs would bring the United States in line with other high-income countries in terms of drug pricing policy, though it would represent “a sea change” for drug makers, with whom drug price negotiation is unlikely to be popular.
In previous proposals, Bach, along with a team of coauthors, has argued that biosimilar competition has proven to be an inefficient way to achieve lower prices for biologic therapies.2 According to the group’s argument, US policy makers should require innovator biologic makers to reduce prices after a period of market exclusivity instead of continuing to promote biosimilar competition.
That proposal resulted in a flurry of responses from economists and from former FDA Commissioner Scott Gottlieb, MD, who argued that Congress could instead make straightforward changes to better promote biosimilar competition as a means to rein in costs.
1. Bach PB. Which drug prices should Medicare negotiate? A “too little” or “too late” approach [published online November 28, 2019]. NEJM. doi: 10.1056/NEJMp1912736.
2. Atteberry P, Bach PB, Ohn JA, Trusheim M. Biologics are natural monopolies (part 1): why biosimilars do not create effective competition [published online April 15, 2019]. Health Aff (Millwood). doi: 10.1377/hblog20190405.396631.