2019 Year in Preview

Why drug prices will continue to roil the waters–and why Scott Gottlieb, MD, will be in the center of the action

We’ll see what happens to the administration’s Part B proposal. Congress is not likely to take bold action, partly because drugmakers are a strong influence on both parties. That leaves the FDA and Administrator Scott Gottlieb, MD, as major players in efforts to rein in drug prices.

Jan Greene
Contributing Editor

Scott Gottlieb, MD

Throughout 2018, drug prices kept going up and outrage about it followed close behind. President Trump was one of the loudest voices complaining about rising prices on brand name prescription drugs and eye-popping price tags on new specialty drugs as they reached the market.

And yet the list of potential fixes issued by the administration in May 2018 was long but did not include any price controls likely to draw significant fire from the influential pharmaceutical industry. Later in the year the federal government issued occasional salvos, such as a proposal to require television drug ads to include prices and a requirement that pharmacists had to tell consumers if there was a cheaper alternative.

Then in October the administration offered its first truly hard-hitting proposal that involved actual price-fixing, a concept sure to upset congressional Republicans and pharma. The proposal to have Medicare start experimenting with negotiating prices of certain specialty drugs administered by physicians under Medicare Part B and to benchmark them to the lower prices in other Western countries was meant in part to reduce drag from “global freeloaders,” Trump declared.

The proposal will go through the regulatory meat grinder in 2019, so time will tell if it emerges intact. The plan is sure to stir opposition with powerful constituencies such as drug companies and physicians; part of the plan would cut the doctors’ share of drugs they provide to Medicare patients directly. At the same time, it has one key political advantage: Congress doesn’t have to get involved unless the administration wants to expand the experiment beyond specific geographic areas to all Medicare beneficiaries.

Milena Sullivan

Milena Sullivan

None of these ideas to control the complicated pharmaceuticals market is new, notes Milena Sullivan, director of policy for Avalere Health, a consulting firm. But most have been impossible to get past political hurdles or were dropped for lack of interest. “Since we’ve seen these proposals or some variation thereof, we can certainly expect there would be pushback from a range of stakeholders,” Sullivan predicted.

Meanwhile, much of the action is likely to remain with the FDA. The agency, under Administrator Scott Gottlieb, MD, has been working to increase competition in drug markets by pushing through generic applications quickly and encouraging the development of biosimilars. Gottlieb has been outspoken about the need to make some sense of “Kabuki” drug pricing schemes that obscure profit taking across the supply chain; he also called out PBMs and their complicated rebate arrangements.

But drug pricing is its own strange, counterintuitive world. Janet Woodcock, MD, director of the FDA’s Center for Drug Evaluation and Research, said in late 2018 that raising the price of a given generic “a thousandfold” could make that product attractive and draw other pharmaceutical firms to offer a version of it at a more competitive price. Such is the state of the drug marketplace.

After halt, price increases have resumed

Other proposals floating around HHS and Capitol Hill would go after the rebates that PBMs currently hold onto or give to their employer clients and shift them to point of sale and directly to consumers. Another line of reform focuses on drug patents and giving brand name makers fewer tools to extend patents and block generic versions. Congress could also pursue price transparency, requiring drugmakers to publicize significant price increases. It could also give Medicare beneficiaries relief by capping their out-of-pocket costs for prescriptions.

Action on Capitol Hill is somewhat dependent on what Democrats might do with their control of the House, but in reality drugmakers have significant influence over both parties and efforts to control prices have flagged under both parties. There has also been activity on drug prices in state legislatures in 2017 and 2018, but Sullivan said that appears to have slowed down for 2019.

In the private sector, insurers, wholesalers and retailers are also on the lookout for ways to rein in drug costs. CVS Caremark, the PBM part of CVS Health, is offering employers a plan that would restrict formulary access to drugs that meet a threshold of $100,000 per quality-adjusted life year (see “CVS and the $100,000 QALY”).

Drugmakers themselves see the writing on the wall and say they are making efforts to show good faith, such as Amgen’s move to cut the cost of its cholesterol drug Repatha from $14,000 per year to $5,850.

Others have halted planned price increases, though skeptics say the moves had little actual impact; the Associated Press reported in September that for every drug price cut, there were 96 price increases. Pfizer CEO Ian Read said in late October that the company would resume raising prices next year; other companies may follow suit. Analysts believe drug prices will just keep going up overall in 2019; the Vizient Drug Price Forecast predicted drug prices will go up 5%.