WASHINGTON — Food and Drug Administration Commissioner Scott Gottlieb said that it’s not his agency’s job to regulate drug prices — but on Wednesday morning, he used his bully pulpit to condemn a “rigged payment scheme” that he said he fears is keeping some generic drugs out of the market.
Speaking to a group of hundreds at a conference run by America’s Health Insurance Plans, Gottlieb spoke about the challenges facing biosimilar manufacturers, which make generic biologic drugs. He called on the audience primarily of insurance professionals to do something, offering a few concrete suggestions.
“We have a lot of finger-pointing that ignores shared complicity for pricing practices that are eroding trust in both payors and innovators,” Gottlieb said. “I hope that you’ll act before that trust is eroded completely.”
As an example of such action, Gottlieb pointed to a recent decision by UnitedHealthcare to pass savings from drug rebates directly on to consumers, calling it an “intriguing development” and a “potentially disruptive step” that could save money for patients.
However, it remains unclear how UHC’s move will impact the total cost for patients and overall costs to the system. UHC could increase the cost of premiums to make up the money it would not be receiving from rebates.
Gottlieb also suggested that insurers make it easier for patients to get biosimilar drugs, perhaps by giving them preference over the original biologic drug on the insurer’s formulary, or by reducing the amount of money that patients must pay out of pocket.
This is related to a bigger problem, Gottlieb said, which is an increasingly consolidated market of pharmacy benefit managers, wholesalers, and pharmacies.
“Market concentration may prevent optimal competition,” Gottlieb said. “And so the saving[s] may not always be passed along to employers or consumers.”
Gottlieb did not call on drug makers to lower the list price of their drugs. In a statement responding to the speech, AHIP said that manufacturers share some of the blame for high costs.
“Manufacturers of branded drugs still cause a price problem,” the group representing health insurers said.
Similarly, the Pharmaceutical Care Management Association, the trade group representing pharmacy benefit managers, said in a statement, that “it’s unfair to blame payers — who pay 2/3 the cost of drug benefits — for seeking the lowest costs in a marketplace where they have no control over the prices drugmakers set, how quickly FDA approves biosimilars, or when FDA will finalize workable interchangeability guidelines to increase uptake of biosimilars.”
One problem with biosimilar pricing, Gottlieb said, is that the structure of the rebate system encourages insurers to favor the original biologic drugs even when biosimilars come onto the market. Biosimilars might be cheaper — but not cheap enough to offset the rebates that insurers receive on biologic drugs.
In a brief question-and-answer session after his speech, Gottlieb talked about one specific initiative at the FDA that might make it easier for biosimilar drugs to be approved.
Currently, biosimilars must prove that they’re within a certain range of similarity to the original biologic drugs. But all of the biologic drugs of a certain product might not be exactly the same.
“We see a lot of variability in the innovator products… not variability that necessarily creates a safety issue but variability that creates a level of uncertainty that then requires the biosimilar that’s looking to enter the market to do a larger trial,” Gottlieb said.
Gottlieb said that the FDA is looking at “tightening the allowance for variability,” which would make it “more efficient to run biosimilar studies and demonstrate interchangeability.”