To increase competition and lower patient and plan sponsor costs, it is imperative that policymakers take a stand to end the anticompetitive tactics pharmaceutical manufacturers pursue. Strategies like “evergreeningObtaining new patents on incremental changes to a product formulation or other ancillary features of a product to extend the term of patent protection past the original term, potentially without adding meaningful clinical benefit to the product. ,” “patent thicketPatent thickets are made up of duplicate patents linked through terminal disclaimers, secondary patentPatents on the active ingredients in a drug are primary patents. Secondary patents are those filed on each component of a drug (i.e., formulation, dosage, production method, etc.).s, and/or patents on each component or feature of a drug. A terminal disclaimer can be used to allow an inventor to make small changes to the invention (even as small as changing the wording in a label – “one week” as opposed to “seven consecutive days,” for example) and file a patent for the same invention. If the second patent is granted, the patent term for the second patent will be linked to the term of the first patent. Although terminal disclaimers do not extend the length of patent protection, competitors seeking to come to market will face additional challenges and expenses as they seek to defeat each patent.s,”  and “product hoppingThe practice of filing a new application for a previously-approved product (with some changes such as a change in dosage form) and removing the older product from the market (hard switch) or otherwise effectuating a market switch to the new product (soft switch) as patents or exclusivity on the old product expire, forcing patients onto the new product, which has its own patent and exclusivity protections.,” prevent less expensive competing products, like generics and biosimilars, from entering the marketplace. Ways to combat these harmful practices through legislation and regulation include:

• • Codify the definitions of “evergreeningObtaining new patents on incremental changes to a product formulation or other ancillary features of a product to extend the term of patent protection past the original term, potentially without adding meaningful clinical benefit to the product. ,” “product hoppingThe practice of filing a new application for a previously-approved product (with some changes such as a change in dosage form) and removing the older product from the market (hard switch) or otherwise effectuating a market switch to the new product (soft switch) as patents or exclusivity on the old product expire, forcing patients onto the new product, which has its own patent and exclusivity protections.,” “patent thicketPatent thickets are made up of duplicate patents linked through terminal disclaimers, secondary patentPatents on the active ingredients in a drug are primary patents. Secondary patents are those filed on each component of a drug (i.e., formulation, dosage, production method, etc.).s, and/or patents on each component or feature of a drug. A terminal disclaimer can be used to allow an inventor to make small changes to the invention (even as small as changing the wording in a label – “one week” as opposed to “seven consecutive days,” for example) and file a patent for the same invention. If the second patent is granted, the patent term for the second patent will be linked to the term of the first patent. Although terminal disclaimers do not extend the length of patent protection, competitors seeking to come to market will face additional challenges and expenses as they seek to defeat each patent.,”  “secondary patentPatents on the active ingredients in a drug are primary patents. Secondary patents are those filed on each component of a drug (i.e., formulation, dosage, production method, etc.).,” and similar practices as antitrust violations under the Federal Trade Commission (FTCFederal Trade Commission) Act to empower the FTCFederal Trade Commission to challenge these actions as anticompetitive and seek penalties.
  • Eliminate anticompetitive “pay-for-delayBrand pharmaceutical companies sometimes strike deals with potential competitors, paying them to keep their products off the market for a specified period. This is referred to as reverse payment settlements or pay-for-delay.” agreements. Defining settlements that prevent lower-cost alternatives from entering the market as antitrust violations—current and retrospective—under the FTCFederal Trade Commission Act, would allow the FTCFederal Trade Commission to challenge these actions and seek remedies.
  • Apply stricter scrutiny to patent applications and thwart abuse by curbing “patent thicketPatent thickets are made up of duplicate patents linked through terminal disclaimers, secondary patentPatents on the active ingredients in a drug are primary patents. Secondary patents are those filed on each component of a drug (i.e., formulation, dosage, production method, etc.).s, and/or patents on each component or feature of a drug. A terminal disclaimer can be used to allow an inventor to make small changes to the invention (even as small as changing the wording in a label – “one week” as opposed to “seven consecutive days,” for example) and file a patent for the same invention. If the second patent is granted, the patent term for the second patent will be linked to the term of the first patent. Although terminal disclaimers do not extend the length of patent protection, competitors seeking to come to market will face additional challenges and expenses as they seek to defeat each patent.s,” including by capping (at 20) the patents assertable in infringement claims; requiring patentees to disclose all patents within 30 days of licensure and report any patents later granted, invalidated, or rendered unenforceable; and disallowing patentees from suing for infringement of a patent that was not disclosed to the U.S. Food and Drug Administration (FDAFood and Drug Administration).

Innovation without affordability undermines patient access. Congress has granted overlong exclusivity periods for biologics and orphan indications, leading to delays in getting more affordable biosimilars to the market. Addressing these and other abuses will create more competition and lead to lower overall drug costs for patients. To accelerate competition, PCMA recommends policymakers take the below actions.

• • End Orphan Drug Exclusivity (ODEEnd Orphan Drug Exclusivity) abuses. Limit ODEEnd Orphan Drug Exclusivity to products with no reasonable expectation of recouping development costs with U.S. sales, regardless of patient population, and revoke ODEEnd Orphan Drug Exclusivitys granted otherwise.
  • Reduce Biological Product Exclusivity to seven years and prohibit additional periods of exclusivity for reference biologics due to minor changes in product formulations. Seven years (reduced from 12 years under current law) of market exclusivity would provide sufficient return for manufacturers, speed competitor biosimilars to market to promote affordability and access, and drive innovation to meet unmet patient needs.
  • Grant a five-year New Chemical Entity (NCENew Chemical Entity) market exclusivity only if a product’s molecular structure contains a meaningful change from the existing drug to reduce product hoppingThe practice of filing a new application for a previously-approved product (with some changes such as a change in dosage form) and removing the older product from the market (hard switch) or otherwise effectuating a market switch to the new product (soft switch) as patents or exclusivity on the old product expire, forcing patients onto the new product, which has its own patent and exclusivity protections. and preserve the intent of NCENew Chemical Entity exclusivity to incentivize the development of certain fixed-combination products that improve patient outcomes.
  • Ensure nonpatent exclusivities deliver on the promise of innovation—not higher prices. Direct the U.S. Office of Science and Technology Policy to measure innovative output, clinical outcomes, accessibility, price and spending trends, and other collateral effects associated with pharmaceutical innovation policy changes, including market and data exclusivities.
  • Require significant clinical benefit for New Clinical Investigation Exclusivity. Limit New Clinical Investigation Exclusivity to products that demonstrate significant clinical benefit over therapies marketed during the prior five-year period.
  • Limit the scope of the 180-day First Generic Exclusivity. Allow certain non-first generic applicants (“me-too” generics) to obtain a court decision of patent invalidity or noninfringement to seek FDAFood and Drug Administration approval or licensure.

Drug manufacturers block competitors from coming to market through a variety of anticompetitive tactics used to undermine the market in their favor. In addition to the patent games above, companies may participate in “shadow pricingShadow pricing is a practice used to keep prices as high as possible for a group of competing products. In this arrangement, companies closely monitor the pricing behaviors of competitors, and as prices increase on related brands of competing products, companies adjust prices in a synchronized fashion.” or abusing the FDAFood and Drug Administration’s citizen petitionThe Code of Federal Regulations (CFR) Title 21 provides a process by which people (not limited to U.S. citizens) can ask for an exception to processes followed by the FDA, for example, delaying the approval of a generic drug. (CPcitizen petition) process. To ensure a level playing field, PCMA recommends policymakers take the below actions.

• • Reform the citizen petitionThe Code of Federal Regulations (CFR) Title 21 provides a process by which people (not limited to U.S. citizens) can ask for an exception to processes followed by the FDA, for example, delaying the approval of a generic drug. process, including by allowing the FDAFood and Drug Administration to deny a CPcitizen petition based on filer intent to delay competition and clarify the process for doing so; and allowing the FTCFederal Trade Commission to initiate civil action against entities involved with submitting CPcitizen petitions to the FDAFood and Drug Administration that are without merit, imposing civil money penalties, and making illegal CPcitizen petitions submitted to the FDAFood and Drug Administration primarily to delay competition.
  • Enforce anti-trust laws to stop shadow pricingShadow pricing is a practice used to keep prices as high as possible for a group of competing products. In this arrangement, companies closely monitor the pricing behaviors of competitors, and as prices increase on related brands of competing products, companies adjust prices in a synchronized fashion..

As evidenced by the impact of generic drugs, the most effective way to reduce prescription drug costs is to increase competition in the marketplace. Similarly, when more biosimilars enter the market, increasing their uptake will help boost competition and lower costs for patients. Proliferation of biosimilars can be achieved gradually by streamlining how new biosimilars come to market, educating physicians and patients on the efficacy of biosimilars, and protecting generic and biosimilar manufacturers from expensive lawsuits designed specifically to deter them. To encourage proliferation and uptake of generic and biosimilar drugs, PCMA recommends policymakers take the below actions.

• • Remove the interchangeability designation to reduce confusion and costs. The interchangeability designation is codified in the Biologics Price Competition and Innovation Act (BPCIABiologics Price Competition and Innovation Act ). To attain interchangeability, a biosimilar must meet additional requirements to demonstrate it will produce the same results as the reference product in all patients, and that switching between the biosimilar and the reference product will not produce any additional risks for patients. An interchangeable biosimilar product may be substituted without the intervention of the prescriber – the same way generic drugs are substituted for brand drugs – subject to state pharmacy laws. Removing the interchangeability designation requires a change to the BPCIABiologics Price Competition and Innovation Act . Alternatively, policymakers could focus on streamlining the process to attain interchangeability.
  • Encourage biosimilars through therapeutic substitution. Fully realize the potential savings and affordability of biosimilars by increasing biosimilar switching or therapeutic substitution, including by revisiting the FDAFood and Drug Administration’s nonproprietary label name guidance for interchangeable biosimilars.
  • Acknowledge that biosimilars for a single reference product are biosimilar to one another.
  • Require a common billing code for a reference biologic and its biosimilars. Use consolidated billing codes to pay for Medicare Part B products, assigning a single code for reference biologics and associated biosimilars.
  • Encourage the use of generics and other more cost-effective drugs in Medicare Part D, including by implementing differential cost sharing for preferred vs. non-preferred brand drugs for low-income subsidy (LIS) enrollees or eliminating cost sharing on generic drugs for LIS enrollees.
  • Flip the burden of proof to the patentee. Flip the burden of proving patent validity from the generic manufacturer or biosimilar product sponsor to the brand / biological product sponsor, in part by presuming later-expiring patents expire unless the patentee proves otherwise.
  • Enable biosimilars to launch without risk of treble damages.
  • Provide the FDAFood and Drug Administration with sufficient resources to speed competition – particularly for lifesaving drugs and drugs with limited or no therapeutic competition. 

Click here to learn more about biosimilar competition. 

Pharmacy benefit companies have the same goals as the drug affordability provisions of the Inflation Reduction Act (IRAInflation Reduction Act) – driving down drug prices. However, direct government negotiation for prescription drugs does not support a competitive free market and is not the most efficient or effective way to address the problem of high prescription drug prices in this country. Pharmacy benefit specialists – with their scale, deep pharmacy and prescription drug expertise and proven strategies to secure cost savings for employers, health plans and ultimately, patients and taxpayers – are much better equipped to play this role. The Inflation Reduction Act’s (IRAInflation Reduction Act) requirement for Part D plans to include all selected drugs on their formularies may have the unintended consequence of disincentivizing generic and biosimilar manufacturers who might otherwise seek to compete. To incentivize production of competing products and improve the functionality of the prescription drug market, PCMA recommends policymakers take the below actions.

• • Limit CMSCenters for Medicare & Medicaid Services’s Maximum Fair Prices to drugs without any competition. As policymakers begin to implement the IRAInflation Reduction Act drug negotiation provisions, efforts should be taken to ensure other brand, generic, and biosimilar manufacturers remain incentivized to develop lower-cost products that reduce costs for all Americans. The Centers for Medicare & Medicaid Services (CMSCenters for Medicare & Medicaid Services) should broadly define “competition” at the therapeutic class level, and only calculate Maximum Fair Prices for drugs that truly leave prescribers and patients no alternative. 
  • Provide an offramp for drugs on the negotiated drug list. In addition to limiting Maximum Fair Price assessments to drugs without any real competition, CMSCenters for Medicare & Medicaid Services must identify a path to remove drugs from the selected drug list to ensure that lower-cost options can come to market and allow market forces to lower costs. New brand, generic, and biosimilar drugs can quickly drive down net prices in a therapeutic class. Additionally, decisions about selected drugs need to be made in accordance with the Medicare Part C and D program bid cycle to allow plans time to adjust and ensure compliance with the law.

Maintaining a competitive market for prescription drugs requires participation from all members of the supply chain. Where a patient acquires a drug can impact its cost significantly. Policies that restrict pharmacy benefit specialists’ ability to develop pharmacy networks drive costs up, while well-managed pharmacy networks offer savings to both plan sponsors and enrollees. Health plan sponsors may select – or in the case of Medicare Part D, prefer – specific networks of pharmacies to provide drugs to their enrollees at competitive prices. Nationally, 76% of employers report using a narrowed pharmacy network and employees typically save about 38% out-of-pocket using in-network vs. out-of-network pharmacies. To preserve the benefits of pharmacy networks, PCMA recommends policymakers take the below actions.

• • Seek to better understand the critical role of pharmacy services administrative organizations (PSAOsPharmacy services administrative organizations) in supporting pharmacies. Pharmacies large and small are important partners in delivering care to patients. Most pharmacy networks are designed to provide patients with a variety of options allowing them to get the drugs they need where they need them. Most independent pharmacies use large pharmacy services administrative organizations PSAOsPharmacy services administrative organizations to negotiate favorable contracts with pharmacy benefit specialists. Data shows the independent pharmacy market is strong, and it is the only sector of retail pharmacy that has experienced growth over the last 10 years. By leveraging the power of large PSAOsPharmacy services administrative organizations to negotiate with pharmacy benefit specialists on their behalf, independent pharmacies can secure favorable contract terms and, on average, higher reimbursements than chain drugstores.
  • Protect pharmacies’ ability to operate optimally within their area of expertise. Health plans with a variety of sites of care in their networks are able to promote access, affordability, and value. The right mix of brick-and-mortar, mail, and specialty pharmacies improves adherence and patient safety. Not all pharmacies can or should do all things because they offer differing levels of expertise and services to ensure patients are getting what they need to secure the best health outcomes.
  • Protect employers’ and health plan sponsors’ ability to make choices that allow them to effectively serve plan participants. Health plan sponsors need the ability to design plans without government interference to make affordable choices for their participants. As health plan sponsors strive to create accessible, affordable benefits that meet the needs of the populations they cover, policymakers should avoid mandates that could increase costs and decrease quality.

Click here to learn more about independent pharmacies.