CBO re­port high­lights ris­ing cost of brand-name drugs in Medicare as Con­gress con­sid­ers price ne­go­ti­a­tions

As the De­moc­rats’ big shot at ma­jor drug pric­ing re­form hangs in the bal­ance, the Con­gres­sion­al Bud­get Of­fice has re­leased a new re­port show­ing the av­er­age net price of brand-name pre­scrip­tion drugs in Medicare Part D more than dou­bled from 2009 to 2018.

Over­all, the av­er­age net price of a pre­scrip­tion — the cost af­ter dis­counts and re­bates giv­en to pri­vate in­sur­ers and fed­er­al pro­grams — fell from $57 in 2009 to $50 in 2018 in the Medicare Part D pro­gram and from $63 to $48 in the Med­ic­aid pro­gram, ac­cord­ing to the CBO’s lat­est pre­scrip­tion drug spend­ing, use and pric­ing re­port. That par­tial­ly re­flects the in­creased use and falling av­er­age price of gener­ic drugs.

How­ev­er, the av­er­age net price of brand-name drugs sky­rock­et­ed in that time frame, ris­ing from $149 to $353 in Medicare Part D and from $147 to $218 in Med­ic­aid.

Sen­ate Fi­nance Com­mit­tee Chair Ron Wyden (D-OR) said in a state­ment that the re­port “dri­ves home the ur­gent need” for change.

It comes as Sen­ate De­moc­rats look to forge a bill that would al­low Medicare to ne­go­ti­ate prices for some of the most ex­pen­sive drugs, force drug­mak­ers to pay re­bates if their prices rise faster than in­fla­tion, cap the cost of in­sulin, and cre­ate an out-of-pock­et spend­ing cap for se­niors, among oth­er pro­vi­sions.

But with­out sup­port from Sen. Joe Manchin — who de­railed Dems’ ef­forts to pass the same pro­vi­sions as part of the Build Back Bet­ter Act just be­fore Christ­mas — or any Re­pub­li­cans, that leg­is­la­tion re­mains un­like­ly to pass.

“It’s time to give Medicare the tools to fight back against high prices,” Wyden said in re­sponse to the CBO’s re­cent re­port. From 2010 to 2017, net prices for brand-name drugs rose by an av­er­age of 6.3% faster than in­fla­tion per year, ac­cord­ing to his of­fice.

Sean Dick­son

Sean Dick­son, di­rec­tor at the West Health Pol­i­cy Cen­ter in Wash­ing­ton, DC, cred­its in­creas­es in spend­ing to high­er launch prices and longer pro­tec­tions from gener­ic com­pe­ti­tion.

“We’re see­ing a lot more ag­gres­sive de­fense of these mo­nop­oly drugs, as brand man­u­fac­tur­ers have fo­cused on ek­ing out as much mon­ey as they can from ex­ist­ing prod­ucts,” he said.

Na­tion­wide spend­ing on pre­scrip­tion drugs has seen a rel­a­tive­ly steady in­crease over the last few decades, with a few ex­cep­tions. It saw a con­sid­er­able uptick af­ter 1995 as a num­ber of drugs reached block­buster sta­tus, in­clud­ing statins for high cho­les­terol, ACE in­hibitors for high blood pres­sure, pro­ton-pump in­hibitors for acid re­flux and gas­tric ul­cers, and an­ti­de­pres­sants and an­tipsy­chotics for men­tal ill­ness­es.

When those patents ex­pired, low­er-priced gener­ics were in­tro­duced, around the same time that the Medicare Part D pro­gram was cre­at­ed in 2006. As a re­sult, per capi­ta spend­ing on pre­scrip­tion drugs lev­eled off at about $940 in the mid-2000s and fell to $900 by 2013 (all es­ti­mates of drug spend­ing and prices in the re­port are ex­pressed in 2018 dol­lars). There was an­oth­er uptick be­tween 2013 and 2015, which co­in­cid­ed with the in­tro­duc­tion of ex­pen­sive he­pati­tis C drugs.

Over­all, na­tion­wide spend­ing on pre­scrip­tion drugs in­creased from $30 bil­lion in 1980 to $335 bil­lion in 2018 (ex­pressed in 2018 dol­lars), the CBO said. Over that pe­ri­od, re­al per-capi­ta spend­ing on pre­scrip­tion drugs in­creased more than sev­en­fold, from $140 to $1,073. Spend­ing on pre­scrip­tion drugs grew from $74 bil­lion in 2009 to $120 bil­lion in 2018 in the Medicare Part D pro­gram and from $18 bil­lion to $32 bil­lion in Med­ic­aid.

In re­cent years, Dick­son said drugs have tak­en price in­creas­es above the rate of in­fla­tion and may re­bate some of those in­creas­es back to in­sur­ance com­pa­nies through phar­ma­cy ben­e­fit man­agers.

“But when they launch a new drug, they launch it at the high, over­ly in­flat­ed price of a high­er drug in that sort of sec­tor, and don’t of­fer those same re­bates that off­set the price in­creas­es,” he said. “And so we have this growth, where ar­ti­fi­cial price in­creas­es on ex­ist­ing prod­ucts dri­ve high­er launch prices for new prod­ucts”

Manchin told re­porters ear­li­er this week that he’s will­ing to talk to De­moc­rats on the BB­BA, though he’ll be “start­ing from scratch,” per an NBC News re­port. An­oth­er re­cent re­port from the CBO — out­lin­ing how Medicare ne­go­ti­a­tions could take a bite out of the amount of new drugs that make it to mar­ket — isn’t help­ing Dems’ case.

Ac­cord­ing to a new slide deck re­leased by the CBO last week, an up­dat­ed mod­el sug­gests a 10% long-term re­duc­tion in the num­ber of new drugs, where­as a pre­vi­ous CBO re­port from Au­gust es­ti­mat­ed that 8% few­er new drugs will en­ter the mar­ket over 30 years. The new mod­el sug­gests we could see 40 few­er new drugs in the third decade, com­pared to the 34 few­er pre­dict­ed by the old mod­el.

“What I think is re­al­ly im­por­tant to un­der­stand about the CBO re­port is their mod­el­ing shows that these drugs, whether it’s 8% or 10%, are drugs that were go­ing to be mar­gin­al­ly prof­itable to even start with,” Dick­son said.

Hy­po­thet­i­cal­ly, Dick­son says the drugs that wouldn’t make it to mar­ket would like­ly be the ones so close to that thresh­old of prof­itabil­i­ty — the “me too” drugs that are hop­ping on the band­wag­on, and not adding any­thing “ther­a­peu­ti­cal­ly valu­able,” he said.

“It’s not, you know, a ran­dom pick, we’re gonna pick 10% of all the drugs that were go­ing to come to mar­ket and re­move those,” he said. “The com­pa­nies are on­ly go­ing to take the ones that were mar­gin­al­ly el­i­gi­ble to come to mar­ket to start with in terms of prof­itabil­i­ty, and those are not like­ly to be drugs that have a huge health ben­e­fit or help a lot of peo­ple.”

PhRMA blast­ed the BBB bill’s pas­sage in the House back in No­vem­ber, say­ing it will “throw sand in the gears of med­ical progress.”

The ver­sion that passed the House is ex­pect­ed to save the gov­ern­ment (and cost in­dus­try) about $76 bil­lion over 10 years, and about $85 bil­lion in in­fla­tion re­bate penal­ties if drug prices rise above cer­tain lev­els. That’s a far cry from House Speak­er Nan­cy Pelosi’s for­mer drug price ne­go­ti­a­tions bill, known as HR3, which the CBO scored in Au­gust as $456 bil­lion in sav­ings over 10 years.

The Medicare ne­go­ti­a­tions deal al­so in­cludes ex­ten­sive lim­i­ta­tions, and it’s un­clear what kind of dent, if any, the deal will make on drug prices over the longer term, or for those out­side of Medicare.

“More im­por­tant­ly, it would set new prece­dents for the mar­ket, and in par­tic­u­lar, I’m talk­ing about the com­bi­na­tion of those ne­go­ti­a­tion pro­vi­sions with the in­fla­tion penal­ties that are part of them,” Dick­son said.

Bio­mark­er 'roadmap­s' and the fu­ture of can­cer R&D; Cur­tain rais­es on #AS­CO22; Pfiz­er, No­var­tis tack­le drug ac­cess; and more

Welcome back to Endpoints Weekly, your review of the week’s top biopharma headlines. Want this in your inbox every Saturday morning? Current Endpoints readers can visit their reader profile to add Endpoints Weekly. New to Endpoints? Sign up here.

While this was not a week for earth-shattering news, there were certainly a lot of interesting tidbits. If you found this recap helpful, please recommend it to your friends and colleagues. We’ll see you on the other side of the long weekend.

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Keep­ing pres­sure on Am­gen, Mi­rati draws mixed re­views on lat­est cut of KRAS da­ta

As the close runner-up to Amgen’s Lumakras in the KRAS race, any data cut from Mirati’s adagrasib continues to draw scrutiny from analysts. And the latest batch of numbers from ASCO is a decidedly mixed bag.

While a quick comparison suggests that adagrasib spurred slightly more responses and led to a longer overall survival than Lumakras among a group of non-small cell lung cancer patients, its duration of response appears shorter and the safety profile continues to spark concern.

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Ann is one of ViiV Healthcare's newest spokespeople as the retired school administrator speaks up about her HIV status.

GSK's Vi­iV de­buts next evo­lu­tion in HIV med Dova­to cam­paign with new spokes­peo­ple and new mes­sage

When Ann saw the first TV commercials for HIV medicine Dovato, she didn’t see herself represented. So the 74-year-old retired school administrator who’s been living with HIV since 1998, reached out to GSK’s ViiV Healthcare and asked why not?

Now Ann is one of three people starring in ViiV’s latest Dovato campaign called “Detect This.” The next-step evolution in the branded campaign plays on the word “detect” — often used in describing HIV status under control as undetectable — but in this case, uses the word as a directive for people to understand they can use fewer medicines.

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Switzer­land to de­stroy over 600,000 ex­pired dos­es of Mod­er­na Covid vac­cine

As concerns related to uptake and distribution continue to linger, Switzerland is among the first countries that plans to destroy hundreds of thousands of expired and unused Covid-19 vaccine doses.

The European country said it plans to destroy more than 600,000 doses of Moderna’s Spikevax Covid-19 vaccine as the doses have reached their expiration date.

However, Moderna CEO Stéphane Bancel told the World Economic Forum in Davos, Switzerland that he’s in the process of throwing 30 million doses in the garbage, exclaiming, “We have a big demand problem.”

Lina Khan, FTC chair (Graeme Jennings/Pool via AP Images)

Pile-on over PBMs con­tin­ues with FTC com­ments and a new bi­par­ti­san Sen­ate bill

More than 500 stakeholders sent comments to the FTC on whether the commission should look further into pharma middlemen, known as PBMs, with many of the commenters calling for more federal oversight.

Similar to the critical open comment period in a deadlocked FTC session last February, pharmacies and pharmacy groups are continuing to call out the lack of transparency among the top 3 PBMs, which control about 80% of the market.

Pharma brands are losing their shine with US consumers who are now thinking about the economy and inflation instead of Covid. (Credit: Shutterstock)

Phar­ma brands fade in an­nu­al Har­ris con­sumer vis­i­bil­i­ty poll: Mod­er­na drops off and Pfiz­er dips

As Covid-19 concerns are fading in the US, so is biopharma visibility. The annual Axios Harris Poll survey to determine and rank the 100 most top-of-mind brands in the US finds Moderna, which was No. 3 last year, not on the list at all for 2022, and Pfizer sinking 37 spots.

However, it’s not that Moderna or Pfizer did anything wrong, it’s just that Americans have moved on to other worries beyond Covid.

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HHS Secretary Xavier Becerra (Jacquelyn Martin/AP Images)

HHS fin­ish­es off Trump-era rule that would've erased ba­sic FDA regs with­out fre­quent re­views

HHS on Thursday finalized its decision to withdraw a rule, proposed just before former President Donald Trump left office, that would’ve caused thousands of HHS and FDA regulations to automatically expire if they weren’t reviewed within two years, and every 10 years thereafter.

The decision follows the filing of a lawsuit last March, in which several nonprofits alleged that the outgoing administration planted “a ticking timebomb” for HHS, essentially forcing it to devote an enormous amount of resources to the unprecedented and infeasible task of reviewing thousands of regulations regularly.

Tran­si­tion to new Eu­ro­pean clin­i­cal tri­als in­fo sys­tem starts slow­ly

At the end of January, the European Medicines Agency officially launched its new clinical trials info system (CTIS), although the migration to the new platform has only really just begun, and sponsors have until the end of January 2023 before all initial trial applications must be submitted through CTIS.

Overall, 56 clinical trial applications have been submitted in CTIS during the first 3 months since the launch of the system on Jan. 31, according to new data posted by the EMA. By comparison, about 4,000 new trials are authorized each year across Europe.

Vi­iV Health­care looks to make long-act­ing HIV pre­ven­tion shot ac­ces­si­ble in low- and mid­dle-in­come coun­tries

The Joint United Nations Programme on HIV and AIDS set a lofty goal back in 2019 to end the HIV epidemic by 2030. But according to the World Health Organization, infection rates are not falling rapidly enough to meet that target.

GSK’s ViiV Healthcare thinks it can help change that.

On Friday, ViiV announced that it’s in talks with the UN-backed Medicines Patent Pool (MPP) for patent rights to its cabotegravir long-acting HIV injectable for pre-exposure prophylaxis (PrEP) in low- and middle-income countries.