Inside HSCA: Round-up: The Latest Developments on Generic Drug Price Spikes and the Importance of Competition

Healthcare group purchasing organizations (GPOs) are the sourcing and purchasing partners to America’s hospitals, nursing homes, surgery centers and clinics, and we advocate for policy solutions to help curb generic drug price spikes affecting healthcare providers and the patients they serve.

Healthcare Supply Chain Association (HSCA) President and CEO, Todd Ebert R.Ph., recently detailed some of the policy solutions that HSCA and its members support in a Morning Consult op-ed, including: 1) Support for the bipartisan “Increasing Competition in Pharmaceuticals Act” (S. 2615), which mandates FDA priority review of abbreviated new drug applications (ANDAs) for products with only one manufacturer; 2) Expanded priority review for generic injectable drugs with two or fewer manufacturers; and 3) Priority review of an ANDA in instances where there have already been significant spikes — specifically, where the market price of an existing product increases at a rate of more than five times the percent change that occurred in the Prescription Drugs Index of the Consumer Price Index for the previous year.

Governmental agencies, medical journals and leading medical researchers have recently released new research and reports on pharmaceutical pricing and the positive impact of competition on the pharmaceutical marketplace.

A wrap-up of some of the relevant reports is highlighted below:

1) The U.S. Government Accountability Office (GAO) released an August report titled Generic Drugs Under Medicare: Part D Generic Drug Prices Declined Overall, but Some Had Extraordinary Price Increases, which found that significant price spikes for some generic drugs jeopardize patient access to affordable healthcare and drive up costs for patients, providers, Medicare and American taxpayers. The report affirmed what GPOs hear both from healthcare provider members and from generic drug manufacturers: Competition in the generic drug market is critical to mitigating price spikes; a broad range of factors, including access to active ingredients, production complexity, and supplier consolidation affect competition; and a reduction in the FDA backlog of ANDAs could increase competition in the market.

2) The GAO released another report in July, Drug Shortages: Certain Factors Are Strongly Associated with This Persistent Public Health Challenge, which examined trends in drug shortages, the FDA’s efforts to alleviate these shortages, and the relationship between certain factors and shortages of sterile injectable drugs. Among the report’s top findings were:

Manufacturing and quality control problems that disrupt supply are the primary cause of drug shortages;
Increased competition from suppliers is part of the solution to persistent shortages; and
FDA priority review of applications for sterile injectable drugs has been effective in helping to address some shortages.

3) The Journal of the American Medical Association (JAMA) published a review in July conducted by Harvard Medical School Researchers on prescription drug cost drivers in the United States titled, The High Cost of Prescription Drugs in the United States: Origins and Prospects for Reform. The study authors found that the FDA’s backlog of ANDAs has, in some instances, led to delays of up to three or four years for product review and approval, which discourages manufacturers from trying to bring competitive products to market.

HSCA and its member GPOs consistently advocate for policy solutions that reduce costs, increase competition, and remove barriers to market entry. Common-sense policy solutions such as these will help foster competition, speed up entry for new manufacturers and help avoid generic drug price spikes in the future.