Drug Price Negotiation Proposals Undermine Current Bipartisan Approaches to Lower Drug Spending

Tuesday July 26, 2022

Congress is actively seeking to advance legislation to allow the Medicare program to “negotiate” the prices of brand drugs. However, these proposals neglect to consider the impact on the development of lower-cost generic and biosimilar medicines. These safe and equally efficacious medicines continue to offer lower costs and increased access to care, but the drug price negotiation proposals would actively harm millions of patients by rewarding brand drug manufacturers with a perpetual monopoly in many instances. And even further they include unrealistic timelines for generic and biosimilar manufacturers to be able to bring new, more affordable medicines to patients.

That’s not all. A great irony of these efforts is they not only ignore successful legislative approaches to reduce drug spend through competition as established by the Hatch-Waxman Act. But they also ignore better and bipartisan options to sustainably lower drug prices by encouraging generic and biosimilar adoption.

In a recent letter, Kathi Vidal, the Director of the PTO, committed to focus on precisely these types of issues, noting that the PTO intended to “ensur[e] that [the] patent system promotes research and development and protects innovation while not incentivizing, protecting, or permitting activity that will improperly or unnecessarily delay access to low-cost medicines.” As part of that letter, the PTO states it is implementing a number of procedures and policies to help ensure that access to low-cost medicines is not delayed. Congress is also considering bipartisan legislation that would enhance the PTO’s ability to take a second look at patents that should not have been granted through a process known as inter partes review.

Likewise, numerous observers, including MedPAC and the HHS Inspector General (OIG), have highlighted the manner in which Medicare rewards plans for pushing patients to use higher priced medicines. In fact on average, newly approved first generics launched in 2020 but by only 21% of Medicare Part D plans. And while the BBB includes provisions to update the design of the Medicare prescription drug program, those could be strengthened by previously introduced legislation that creates effective incentives for plans to use lower cost medicines – either through changes to plan liability or by ensuring that plans and their PBMs cover new generics and biosimilars and place generics on generic tiers.

Given the immense impact the generics and biosimilars industry has on providing savings for drug expenditures, it is clear that as the nation’s policymakers work towards the goal of sustaining access to affordable pharmaceutical care for all, this is a set of negotiations that we can’t afford.

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About the Biosimilars Council

The Biosimilars Council, a division of the Association for Accessible Medicines (AAM), works to ensure a positive environment for patient access to biosimilar medicines. The Biosimilars Council is a leading source for information about the safety and efficacy of more affordable alternatives to costly brand biologic medicines. Areas of focus include public and health expert education, strategic partnerships, government affairs, legal affairs and regulatory policy. More information is available on our about page.

About AAM

AAM is driven by the belief that access to safe, quality, effective medicine has a tremendous impact on a person’s life and the world around them. Generic and biosimilar medicines improve people’s lives, improving society and the economy in turn. AAM represents the manufacturers and distributors of finished generic pharmaceuticals and biosimilars, manufacturers and distributors of bulk pharmaceutical chemicals, and suppliers of other goods and services to the generic industry. Generic pharmaceuticals are 90 percent of prescriptions dispensed in the U.S. but only 20 percent of total drug spending.

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