November 26, 2018 Sean Skulski

Sanders’ Drug Price Relief Act would make pharma feel the burn

PRICENTRIC BRIEF:

  • Prescription Drug Price Relief Act aims to cut drug prices for certain drugs by 40%
  • IRP will be used with a focus on Canada, the United Kingdom, France, Germany, and Japan
  • This law suggests indexing as a trend towards indexing as an approach to equalizing prices with other countries that has a broad spectrum of support

 

THE DETAILS

A new bill has been introduced by Senator Bernie Sanders in the United States Senate aiming to bring down the levels of drug prices to be in line with five other major economies. If the law passes, pharma could soon “feel the burn.”

The Prescription Drug Price Relief Act will significantly reduce prescription drug prices for Americans. The Secretary of Health and Human Services would need to ensure Americans don’t pay more for drugs than the median price of five major countries: Canada, the United Kingdom, France, Germany, and Japan.

The passage of this law means that the median price of brand name drugs could go down on average 40%.

If manufacturers refuse to lower drug prices to the median level, then the federal government will approve cheaper generic versions of these drugs, despite patent or market exclusivity.

This legislation follows suit with President Donald Trump’s proposed pilot program of enacting an international reference pricing (IRP) scheme to lower the cost of blockbuster drugs for Medicare Part B; however, Senator Sanders and bill co-author Representative Ro Khanna say Trump’s proposal falls short of helping 150 million other Americans who get private health insurance from their employee and 30 million Americans who are uninsured and, thus, pay out-of-pocket for the total cost of the drug.

Both US legislatures are zeroing in on pharma, accusing the industry of price gouging. Sanders said, “No other country allows pharmaceutical companies to charge any price they want for any reason they want. Somebody in America today can walk into a pharmacy and find out the medicine they have been using for years can double, triple, or quadruple literally overnight. That needs to change.”. Further, Khanna said, “There is absolutely no reason for the big pharmaceutical companies to make Americans pay higher prescription drug prices than they charge our friends in Canada, Germany, and the UK. Today we’re sending big pharma a message: market exclusivity is a privilege, and when you abuse that by price gouging the sick and aging, then you lose that privilege.”

However, others have pointed out that there are many more complicating factors that the bill does not consider, all of which could be negatively impacted by the bill:

  • Not all products are higher priced in the US. In some cases, such as generics generally, the prices in the US are much lower
  • The countries cited often have greater delays and sometimes greater restrictions and supply challenges in accessing drug products than the US
  • In general, pharma companies spend more on patient assistance in the US than overseas, which is not factored into the total value/cost equation
  • Similarly, drug products may provide more value in the US market, due to higher overall healthcare costs, such that even at a higher price, the drug provides greater savings

Under this bill, according to a memo from Sanders, prices for a selection of widely-used drugs would resemble the following:

  • Pfizer’s Premarin (conjugated estrogens tablets) for menopause, which currently costs about $165 for a 30-day supply in the U.S., could cost $94
  • Merck’s (known as MSD outside the US and Canada) Januvia (sitagliptin) for diabetes, which currently costs about $436 for a 30-day supply in the U.S., could cost $248
  • GSK’s Advair Diskus (fluticasone propionate 250 MCG and salmeterol 50 MCG inhalation powder) for asthma and COPD, which currently costs about $390 for a 30-day supply in the U.S., could cost $222
  • Pfizer’s Xarelto (rivaroxaban) for blood clots, which currently costs about $432 for a 30-day supply in the U.S., could cost $246
  • Sanofi’s Lantus (insulin glargine injection), which is insulin for diabetes and currently costs about $387 for a 30-day supply in the U.S., could cost $220
  • AbbVie’s Humira (adalimumab) for arthritis, which currently costs about $2,770 for a 30-day supply in the U.S., could cost $1,576
  • Pfizer’s Enbrel (etanercept) for arthritis, which currently costs about $4,941 for a 30-day supply in the U.S., could cost $2,811
  • GSK’s Ventolin (albuterol sulfate) for asthma, which currently costs about $60 for a 30-day supply in the U.S., could cost $34
  • Pfizer’s Xtandi (enzalutamide) for cancer, which currently costs about $101 for a 30-day supply in the U.S., could cost $58
  • Pfizer’s Pristiq (desvenlafaxine) for depression, which currently costs about $40 for a 30-day supply in the U.S., could cost $23

This is a radical policy change for the US, which currently has no set IRP system in place. The Trump administration has proposed reference pricing for Medicare Part B, which requires only regulatory approval, not legislative passage, and as such, has an easier path to becoming policy. However, according to Alan Crowther, General Manager of EVERSANA’s Global Pricing and Access Solutions Group, Sanders’ proposal may represent several trends at once. “First and most concerning to pharma companies, this may represent a growing consensus around exploring price indexing as an approach to drug pricing in the US.” Crowther cited three overall trends this bill may represent that should be of concern to manufacturers:

  • a growing bi-partisan consensus about some kind of price indexing, which would represent a significant change to policy.
  • a more popular alternative approach to lowering prices than the legislative calls for re-importation of cheaper drugs from overseas, and the issues associated with that
  • one of perhaps several proposals by Democrats that may see a need to respond in a similar manner to the Trump administration to address perceived drug pricing issues

In this way, the most important consequence may not be the specific proposal, which may or may not have a relatively low probability of passing as law in its current form; instead, the most important consequence may be a trend towards indexing as an approach to equalizing prices with other countries that has a broad spectrum of support. Crowther asserted that the industry will need to need to carefully consider its responses in the context of responding to a trend, as opposed to a specific proposal.

To read the statement from Bernie Sanders, please use the following link: https://www.sanders.senate.gov/newsroom/press-releases/sanders-khanna-to-introduce-legislation-to-drastically-lower-prescription-drug-prices

To read the memo on price changes, please use the following link: https://www.sanders.senate.gov/download/one-pager-prescription-drug-price-relief-act-2018?id=84D5977E-AA74-4AC7-BEB9-8C30095B3C54&download=1&inline=file

To read the Prescription Drug Price Relief Act, please use the following link: https://www.sanders.senate.gov/download/prescription-drug-price-relief-act-2018?id=B06E31B7-D178-4019-800F-E21D72FEA9CE&download=1&inline=file