The Inflation Reduction Act (IRA) could be only the first of a wave of legislative efforts to lower drug prices.
The U.S. Senate’s Health, Education, Labor and Pensions (HELP) Committee voted Thursday to advance a basket of bipartisan bills with the goal to tighten rules that have benefited pharma companies and pharmacy benefit managers and introduce new ones to increase transparency.
The bills are now headed to Senate Majority Leader Chuck Schumer, D-New York, to schedule and bring the bill to the whole chamber for debate.
Compared with the IRA, the new bills are much less damaging for pharma and focus more on increasing transparency to boost competition and on closing some loopholes in existing rules.
The Ensuring Timely Access to Generics Act of 2023 (S.1067) aims to crack down on pharma’s use of the FDA’s citizen petition process to delay generic entry.
While originally designed to allow people to raise concerns about drugs the FDA is reviewing, the citizen petition pathway is often used by brand-name drugmakers to target proposed generics under what’s known as the 505(q) petition. The originators often question whether generics are indeed equivalent meds.
The FDA has denied the vast majority of such petitions. But the FDA needs to evaluate each petition, and the result could be delayed approval of the generic.
The new bill proposes a way to identify those petitions whose primary focus is delaying an application and potentially refer them to the Federal Trade Commission for an anti-competition investigation.
Next, the Expanding Access to Low-Cost Generics Act of 2023 (S.1114) is going after quid pro quo deals between innovative pharma companies and generic makers. Specifically, a brand-name drug developer may agree not to sue the first company that files a generic application in exchange for a delayed launch of that copycat.
As a measure to incentivize early generic development, the “first filer” of a generic drug enjoys 180 days of market exclusivity. The new bill would impose a 75-day window for that first comer to start commercialization, or it would effectively lose the “first filer” status, and the FDA could grant the 180-day perk to another contender.
The third bill, the Retaining Access and Restoring Exclusivity Act, known as the RARE Act (S.1214), addresses an old loophole in the orphan drug designation pathway. The flaw in the current law allows drug manufacturers to develop newer versions of the same drug while piggybacking on an orphan status of the older drug and enjoy market exclusivity even if they should no longer be considered an orphan drug.
In bills that seek to improve transparency, the Increasing Transparency in Generic Drug Applications Act (S.775) aims to grant the FDA the ability to disclose more information to generic applicants, and the Fair Accountability and Innovative Research Drug Pricing Act of 2023 (S.935) hopes to require drug manufacturers to explain certain major increases in drug prices.
Perhaps the most important bill—and music to pharma’s ear—in the package is the Pharmacy Benefit Manager Reform Act (S.1339), which was introduced by HELP Committee Chair Bernie Sanders, I-Vermont, and Ranking Member Bill Cassidy, R-Louisiana. The bill would require PBMs to pass all rebates to plan sponsors and to conduct various detailed analyses of their activities.
But in a major shortfall, the bill didn’t include an amendment that would ban PBMs from charging fees based on a percentage of a drug’s list price. Critics have pointed to that percentage fee as a main driver behind rising drug prices. But Sanders didn’t allow a vote on the clause Thursday because of the lack of a budget impact analysis by the time of the markup, according to Stat.
Biopharma companies have long rooted for PBM reforms. Before the HELP committee bill, the Senate Commerce, Science and Transportation Committee also passed the bipartisan Pharmacy Benefit Manager Transparency Act, sending the bill to the full Senate.
Thursday’s passage of the bill package came a day after the HELP committee held a hearing bringing together PBMs and CEOs from Novo Nordisk, Sanofi and Eli Lilly to discuss high insulin prices. During the hearing, executives from the three major PBMs said they’re already passing more than 90% of their rebates to their customers and promised to keep low-cost insulins on their formularies.