Azar Says Trump's Drug Price Shake-up Is Working

In a keynote speech to a generic and biosimilar drug industry group, Alex M. Azar, secretary of HHS, gave a pat on the back to outgoing President Donald Trump, praising his policies and executive orders aimed at reducing prescription drug costs.

In addition, accelerated approvals of biosimilars and generic drugs combined with growing market competition since 2017 have contributed to a plateau in drug price inflation the past several years, Azar said at the Association for Accessible Medicine (AAM) GRx+Biosims virtual conference.

He attributed this trend not to pricing restraint on the part of manufacturers but, specifically, to market dynamics and drug policies promoted by Trump.

Slower Price Increases

“Since we released the president’s drug pricing ‘blueprint’ in May 2018, the official government measurement of drug price inflation has been flat. That measure saw the largest drop in nearly 50 years from June 2018 to June 2019. Now, I don’t think that’s because of the goodness of drug companies’ hearts. In fact, I worked at a drug company myself, and I can more or less assure you it’s not. In significant part, it’s because of the market discipline that your companies provide,” Azar said.

Numbers from a JAMA study published earlier this year indicate list prices for prescription drugs climbed sharply from the start of the Trump administration through 2018, but net drug prices increased much more moderately during those years, according to the study. The study did not describe drug price behavior after 2018.

“I believe we’ve seen more efforts to promote competition in prescription drug markets from HHS and our colleagues at FDA than we’ve seen since the passage of Hatch-Waxman in the 1980s,” Azar said. The Hatch-Waxman Act (1984) encouraged the manufacture of generic drugs and created a regulatory system for these agents.

“We’ve set records for approvals of generic drugs in 2017 [937], 2018 [971], and 2019 [1171], while also accelerating approvals of biosimilars. The savings that these drugs deliver are massive,” Azar said. There were 10 biosimilar approvals in 2019, a record number, but just 2 so far in 2020.

There are roughly 90 ongoing biosimilar development projects on file with the FDA, which has not officially given any explanation for the reduced number of approvals this year, although in general remarks FDA officials have stated that efforts to approve trials and review treatments related to coronavirus disease 2019 have required a massive shift of priorities and resources.

Savings and Potential Savings

Generic drug savings totaled $313 billion in 2019, $96.1 billion of that for the Medicare program and $48.5 billion under Medicaid, Azar said, quoting from a 2020 AAM report. “We’ve also taken steps to drive not just faster generic and biosimilar approvals but also faster adoption of these options, and we’ve allowed Part D plans to accelerate substitutions of generic drugs for brand drugs, and we’ve given Medicare Advantage plans new tools to negotiate lower prices that they’ve already used to substitute lower cost biosimilars.”

Azar said a 2018 HHS report identified $3 billion in potential savings on $9 billion that Medicare Part D plans are spending annually on name brand drugs that have generic alternatives. Achieving those savings involves eliminating “kickbacks” to middlemen in the drug supply chain and fixing the “broken rebate system” that rewards payers and pharmacy benefit managers for preferring certain drugs, whether or not they are lowest cost, he said.

“We’re also working to propose rules around Part B drugs that have the potential to be equally significant for American drug costs, especially with regard to rapidly rising expenditures on biologics, which today represent almost 40% of prescription drug spending,” Azar said.

He said biosimilar uptake in the health care marketplace has been “slower than we’d like, in part because the Part B system actually encourages prescribing more expensive options. If we can bring to the biologics market just a fraction of the savings that generic drugs have brought to American patients, that will be a transformative shift.”

Reference

Hernandez I, San-Juan-Rodriguez A, Good CB, et al. Changes in list prices, net prices, and discounts for branded drugs in the US, 2007-2018. JAMA. 2020;323(9):854-862. doi:10.1001/jama.2020.1012