- Hatch Amendment to CREATES Act Could Interfere with Generic Drug
Competition and Affordability
- FDA Commissioner Gottlieb on the Advantages of Creating a Competitive Biosimilars Market
- New Report: Generic Drug Access and Savings in the United States
- Cadillac Tax Delay Omitted from U.S. House Health Care Package
Republican Senator Orrin Hatch of Utah recently proposed the Hatch-Waxman Integrity Act of 2018, an amendment to the CREATES act that could, effectively, enable brand-name manufacturers to accumulate “low-quality” patents to delay market entry and price competition of generic drugs.
The CREATES Act currently allows generic companies to sue brand competitors when they are allegedly withholding samples necessary for FDA-required testing. If the amendment is passed, generic manufacturers would be limited to pursuing lawsuits in court as the only way to challenge low-quality patents, due to a process called inter parties review (IPR). Therefore, the amendment would require a manufacturer filing a generic drug application with the FDA to certify that it will not use the IPR process to file a challenge for a patent.
“I have a keen interest in ensuring we have a well-functioning generic drug industry,” stated Senator Hatch in a press release for the Hatch-Waxman Integrity Act of 2018. “There are two sides to that coin. One is ensuring that generic companies are able to develop drugs. The other is ensuring that brand companies have sufficient protections in place to recoup their investments.”
The concept of patents considered to be “low-quality” boils down to whether or not the claim by the manufacturer is a clear improvement to a product or a new feature, which, in many cases, would not normally require patent protection. Such low-quality patents could impede price competition, or even market entry, of generic drugs that infringe items protected by low-quality patents.
The IPR process is vital for encouraging competition and regulating drug prices across pharmaceutical businesses. The Hatch Amendment will likely extend monopoly pricing and, therefore, would be detrimental to the public in its attempts to undermine reduction of high drug costs.
In a recent panel in Washington, FDA Commissioner Scott Gottlieb addressed the growing concern for the biosimilars market and its lack of competitive market share. According to Gottlieb, although the biosimilar market is still not firmly established, its future holds promise.
To address the growing need for a more competitive market, Gottlieb announced a biosimilars action plan, which will be aimed at promoting competition and affordability as part of President Trump’s blueprint to lower prescription drug costs. The competitive market of biosimilars will benefit from these four strategies:
- Improving the efficiency of the biosimilar and interchangeable product development and approval process.
- Maximizing scientific and regulatory clarity for the biosimilar product development
- Developing effective communications to improve understanding of biosimilars among
patients, clinicians, and payors.
- Supporting market competition by reducing gaming of FDA requirements or other attempts to unfairly delay competition.
Missed opportunities and an “anemic” market have inhibited growth that would have saved $4.5B in 2017. But, according to Arti Rai, Elvin R. Latty Professor of Law at Duke, there are many patent issues for biosimilars, particularly “bad patents in the industry which can’t be investigated by FDA,” and are contributing heavily to the problem.
Improving patent development and requirements will be a big hurdle for the action plan, but the Commissioner is optimistic; the FDA’s partnership with the FTC to increase transparency on this process, as well as establishing a consensus between the US, Canada and the EU on naming conventions and clarity, will lead to more conversations and market advancement for generic drugs and biosimilars alike.
In its latest annual report on generic drug savings and access, the Association for Accessible Medicines (AAM) defines key data affirming the significant role that generic and biosimilar medicines play in modern healthcare policy development. The report presents independent findings of IQVIA, and asserts notable benefits of generic access, including lower costs for consumers, improved access to medication and growth potential for creating innovative, life-saving medicines. A few key highlights include:
- Generic medicines fill nine out of every ten prescriptions
- 93% of generic prescriptions are filled at $20 or less
- Generic medicines generated a total of $265 billion in savings last year and $1.8 trillion over the past decade
- Savings for Medicare amounted to $82.7 billion, or $1,952 per enrollee
- Savings for Medicaid was $40.6 billion, or $568 for every enrollee
In addition to identifying general use and trends, the report also illustrates information by use case; the data has been broken down to show total savings by patient condition, such as arthritis, diabetes or heart disease, as well as data on savings by drug class, state, payer type, and age demographic.
This week, the House will vote on a range of bills that would expand eligibility and use of HSAs passed July 12 by a sharply divided House Ways & Means Committee. Two measures-one that would free up premium tax credits for plans on or off the exchanges including catastrophic coverage and another to delay the health insurance tax – will be up for votes as well.
However, committee-approved moratorium on both the Cadillac tax on high-cost insurance plans and the employer mandate will not get a vote this week. A repeal or delay of the tax had strong bipartisan support.
The Cadillac tax, which is a 40 percent tax on benefits above specific levels, was originally included as part of the Affordable Care Act in an attempt to reduce health care spending. Those who would be most affected by the tax are older workers, those with family coverage, part-time workers, and employees suffering severe or chronic health conditions.
The Roundtable opposes the implementation of the Cadillac Tax which would impose extensive financial burdens on public workers, retirees and their families.
Learn more about The Roundtable’s priorities in our Action Agenda.