Secretary Alex M. Azar II
Department of Health and Human Services
200 Independence Ave. SW, Room 600E
Washington, DC 20201
Re: Response to the Health and Human Services Blueprint to Lower Drug Prices and
Reduce Out-of-Pocket Costs
Dear Secretary Azar:
The Coalition for Affordable Prescription Drugs (CAPD) agrees with a majority of Americans, Congress, and the Administration that drug companies are setting the price of prescription drugs too high and raising those prices at an unsustainable rate. CAPD represents a diverse group of large employers, labor unions, health plans, public sector employees and retirees, and others who partner with pharmacy benefit managers (PBMs) to offer affordable, accessible health and drug benefit coverage to their employees and members—ultimately lessening the impact high drug prices have on patients and their families.
We believe the “HHS Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs” signals a willingness to find real solutions, and that the Administration is right to recognize that “improved competition” and “better negotiations” are two critical strategies for reform. We also agree with the Administration that the prices of prescription drugs are too high and increasingly out of reach for many Americans.
For years, drug companies have been raising the price of prescription drugs at rates far exceeding inflation, effectively pricing patients out of the medicines they need. We were disappointed to see that in the few weeks following the introduction of the Blueprint, drug companies increased 104 drug prices in June and early July. This follows an additional 48 price hikes in May. It is the same pattern we continue to see year after year from drug companies. While Pfizer has recently been pressured to delay these price increases for some drugs, this incident underscores the need for broader reform.
As you know, PBMs play a critical role in protecting consumers and keeping drug prices down. PBM tools reduce pharmacy cost trends, decrease overall health care cost, and improve quality. CAPD supports the greater use of innovations and technology solutions, many of which are made available by our members in the market today, to bring real-time price and health plan benefits information to providers and consumers at the point of prescribing. The results are lower costs, better adherence and more-satisfied patients.
CAPD also believes that a vigorous and competitive pharmaceutical market – in other words, a marketplace that works – is the best way to address increasing costs and ensure sustainable access to vital medications. The two critical pillars for any well-functioning marketplace are robust competition and effective negotiation.
When the marketplace works and competition exists, PBMs, on behalf of the purchasers they serve, are able to effectively negotiate with drug manufacturers to offset unsustainably high drug prices. We appreciate HHS’ acknowledgment of the success PBMs have delivered for beneficiaries and the government in the Medicare Part D program and support the agency’s efforts to provide additional flexibility in Part D formulary management to further empower PBMs to contain drugs costs in the Part D program. If PBM tools and capabilities were more fully utilized in Medicaid, they would save the Medicaid program more than $100 billion over the next decade and result in a 23% reduction in total Medicaid spending.
Unfortunately, PBMs cannot effectively deliver savings for patients and purchasers through negotiation when there is no competition in the marketplace. When competition is delayed though regulatory schemes or abuses of the patent system, drug companies maintain their monopoly pricing power and continue to raise prices at will.
We ask that the Administration work with Congress, as necessary, to pursue changes to ensure more robust competition, and in turn provide the necessary environment for effective negotiation to drive down drug prices and health care costs.
These changes could include:
- Prohibition of brand-generic settlements that are deemed anticompetitive by the FTC;
- Further action by the FDA and Congress to thwart misuse of REMS programs to delay generic approval, including passage of the CREATES Act;
- Putting an end to new patents and market exclusivities for products that are not truly innovative;
- New and improved pathways to FDA approval for generic and biosimilar versions of complex medicines; and
- Promoting regulatory policies that increase uptake of biosimilars and the designation of interchangeability.
Each of these actions are critical to creating a marketplace that works and, ultimately ensuring affordable, sustainable access to prescription drugs for patients.
CAPD appreciates the opportunity to comment on the Administration’s Blueprint and looks forward to working together to find ways to ensure a competitive and efficient marketplace that delivers prescription drugs at a price that patients can afford.
“Medicaid Pharmacy Savings Opportunities: National and State-specific Estimates,” The Menges Group, October 2016.