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More Competition And More Biosimilars Mean Lower Costs

by Marilyn Tavenner, President & CEO, AHIP

March 8, 2018

FDA Commissioner Scott Gottlieb, as part of his remarks at the AHIP National Health Policy Conference 2018, addressed the need for a more robust biosimilar market in the United States.

We agree 100 percent.

We share Commissioner Gottlieb’s call for action for competition to lower prescription drug prices. Why? Because the consequences of rising prices hurt every single American—from patients and consumers to families and hardworking taxpayers.

President Trump agrees, too: The problem is the price. More choices and more competition in the prescription drug market can lead to lower prices.

Commissioner Gottlieb called on various sectors of the healthcare industry, including health insurance providers, to find solutions that would create incentives for new biosimilar market entrants. For many years, AHIP has called for robust and sustainable biosimilar industry.

Biologics and other specialty drugs represent the fastest growing component of prescription drug spending, rising between 11.3 percent and 17.7 percent last year alone. In 2016, spending on biologics and other specialty drugs reached $105.5 billion—with some treatments having annual costs exceeding $250,000 or more. More importantly, high drug prices place financial burdens on patients who rely on biologics to treat and manage serious and chronic medical conditions.

Because launch and list prices are so high, the role of health insurance providers is to negotiate the lowest possible price with manufacturers—and pass that savings onto our members.

In developing and administering drug benefits and formularies for our members, health insurance providers have one goal: getting the most clinically effective treatment to patients at the lowest net cost.

Seeking value for consumers does not contribute to the slow development of the biosimilars market.

Decades of evidence show that competition is the key to lowering drug prices and providing value to consumers. That’s why a robust, competitive biosimilar marketplace is so important. Since the passage of the Biologics Price Competition and Innovation Act of 2010, the FDA has approved only nine biosimilar products, and only four are currently available to consumers, including approved biosimilar alternatives to Neupogen and Remicade.

The slow growth of the industry is the result of a number of legal, regulatory, and market-based barriers that have prevented and limited the availability and widespread adoption of biosimilars in the marketplace. For example, we know that manufacturers “game” the system by denying biosimilar manufacturers access to the samples they require in order to conduct necessary testing. Manufacturers  also “game” the system by putting up patent fortresses around their products that prevent biosimilar entry.  This pattern of anticompetitive practices stifles competition and artificially extends monopoly pricing power.

Critical to the development a robust and affordable biosimilar market is the FDA’s determination that a biosimilar product is “interchangeable” with its reference product—similar to the way that generic drugs are interchangeable with their branded counterparts.  We eagerly await FDA’s guidance and rules around interchangeability.

Additionally, AHIP has strongly supported adoption of the CREATES Act. Lawmakers from Diane Feinstein and Ted Cruz and organizations from Families USA to Freedom Works agree: CREATES will help bring more generics to the market sooner and deliver more choices and more competition.  Who could disagree with that?

We have long advocated for effective solutions to address the barriers that generic drugs face. These solutions would increase competition and help thwart abusive behaviors by manufacturers. We believe these solutions are the key ways to promote a sustainable biosimilar market.

We appreciate the administration’s efforts to shine a spotlight on rising drug prices. We welcome the opportunity to work with the Administration as part of a comprehensive, multi-stakeholder strategy for ensuring that consumers have access to effective, affordable alternatives to high priced drugs.