Employer Groups Form Coalition on Drug Affordability, Support Policies Addressing Biosimilars

Employers are increasingly feeling the pressure of high drug costs, particularly as spending on high-cost biologics like adalimumab and etanercept continue to represent a significant share of spending despite comprising a relatively small proportion of total prescriptions. Drug spending is expected to keep rising alongside the dominance of specialty drugs, and so-called “super spenders,” or patients whose prescription drug costs exceed $250,000 per year, are growing in number.

It is against this backdrop that a trio of employer groups has formed a new partnership to advocate for policies that address the problem of high—and growing—drug costs. The Pacific Business Group on Health (PBGH), the ERISA Industry Committee, and the National Alliance of Healthcare Purchaser Coalitions this month announced a new initiative, called the Employers’ Prescription for Affordable Drugs, that they say seeks to drive the passage of legislation that will promote competition, transparency, and value in the marketplace. Collectively, the groups represent the largest purchaser of healthcare in the United States, purchasing care for more than 153 million individuals.

Among the policies that the new group supports are requiring pharmacy benefit managers (PBMs) to make pricing data available to payers, requiring PBMs to pass along savings from rebates, mandating that drug companies report and justify price increases for some drug products, and prohibiting conduct (such as PBM price spreading) that stifles competition from biosimilars and generics.

Other priorities for the group include requiring the FDA to publish patent information for biologics in the Purple Book, ending patent evergreening, halting “sham” citizen petitions to the FDA that can be used to delay competition, prohibiting pay-for-delay settlements, and preventing drug makers from using Risk Evaluation and Mitigation Strategy (REMS) programs to withhold samples needed for biosimilar and generic drug development.

The coalition also notes that capping price increases for drugs would result in overall savings, and price caps could be coupled with policies to limit drugs’ initial launch prices.

Two items of legislation expressly endorsed by the group are the Preserve Access to Affordable Generics and Biosimilars Act, which targets pay-for-delay deals, and the Lower Health Care Costs Act, which addresses abusive citizen petitions, allows generic and biosimilar developers to sue companies that withhold samples, and eliminates the requirement for a biosimilar or generic to use the same REMS program as the originator product’s sponsor.

In a statement, Elizabeth Mitchell, president and chief executive officer of PBGH, said that “Employers and patients are tired of bearing the brunt of high costs caused by a gamed system set up by drug manufacturers and pharmacy benefit managers. Employers are doing everything they can to contain costs, but this problem is too big to fix without action from the government.”

The launch of the coalition comes at a time when employers are increasingly recognizing their role in biosimilar adoption. Earlier this year, a report from Matrix Global Advisors and the National Business Group on Health used data from a large manufacturing company with a high-deductible plan to illustrate the fact that if biosimilars for common biologics are used half of the time at a 40% discount, the employer could save nearly $2 million each year.