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ACP Calls for End of Pay-for-Delay, Other Practices That Raise Prescription Drug Costs

Advocate Masthead

Newly released policy paper expands on ACP's comprehensive policy on drug pricing

Sept. 25, 2020 (ACP) – The American College of Physicians is calling for practical legislative reforms that will increase the availability of lower-cost drugs in the marketplace.

In a new policy paper, ACP outlines steps that would reward innovation but also halt practices that lead to increased costs so that medications will be more affordable for patients who need them most. The paper is the third installment in a series published in the Annals of Internal Medicine. The three papers expand on ACP's comprehensive policy on drug pricing introduced in the 2016 paper “Stemming the Escalating Cost of Prescription Drugs.”

Specifically, ACP supports legislative reforms to the Orphan Drug Act (ODA) that would bolster incentives to increase innovation in rare disease drug development. “When there is a rare disease where a certain medication is critical, it's difficult for pharmaceutical companies to recoup their costs because of the small customer base,” said Dr. Heather Gantzer, chair of the ACP Board of Regents and an internist at the Park Nicollet Clinic at Methodist Hospital in St. Louis Park, Minnesota. “There needs to be a mechanism so that the cost of these drugs is not unaffordable for patients who have the misfortune to be affected with rare diseases.”

Moreover, ACP supports reducing the period of data and market exclusiveness for biologic drugs from 12 years to seven years. “There should be enough time for a drug company to make a profit that motivates them, but not such an excessively long time that there is a huge delay in getting less expensive biosimilars on the market as there is today,” she said.

ACP also supports removing additional barriers to biosimilar market entry, including modifications that would reduce excessive patenting on brand-name and biologic drugs and pay-for-delay strategies. Under the Drug Price Competition and Patent Term Restoration Act (the Hatch-Waxman Act), a generic manufacturer may challenge a patent before it runs out. Brand-name manufacturers respond by threatening legal action. The two companies often “settle” to avoid litigation. This settlement often entails pay-for-delay compensation to the generic company to delay market entry. “A drug company should not be allowed to pay another drug company to refrain from making generics and biosimilars,” Gantzer said.

In the policy paper, ACP also calls for the elimination of tax deductions for direct-to-consumer product claim advertisements.

If these strategies are implemented, there will be a trickle-down effect on prescription drug costs, Gantzer said. “These are the things that could help the underlying structure by making medications less expensive to begin with; the less the base cost of a medication, the lower the cost to patients,” she explained.

The rising costs of prescription drugs is a hot-button issue that resonates with all physicians, Gantzer said. “Our patients often don't put money to other things that they need because it has to go to their medication, they split pills or skip doses to stretch out their supply or they seek over-the-counter remedies, which may be useless or even dangerous,” she said.

Another common and unfortunate scenario is when the first-choice medication isn't covered by insurance and patients need to use an alternate medication, which may be contraindicated or have side effects. “Then doctors and patients jump through many hoops to get prior authorization,” Gantzer said. The new recommendations would also alleviate much of the need for prior authorization as costs would be contained.

More Information

The policy paper “Policy Recommendations to Promote Prescription Drug Competition: A Position Paper From the American College of Physicians” is available on the Annals of Internal Medicine website.

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Back to the September 25, 2020 issue of ACP Advocate