Another tough week for pharma on drug pricing policy

The past week has been another one of punching the pharma industry in the face over its pricing and marketing practices, a topic which is being buoyed along by the presidential-election season where not-too-friendly charges are being laid at its feet. It began with a press conference and policy statement from the Campaign for Sustainable Rx Pricing, an offshoot of the National Coalition on Health Care, a broadly based group of medical societies, payers and consumer groups, and ended with news of a more restrictive set of practices by Express Scripts on formularies and drug price concessions. In between was another Congressional hearing to rake over Valeant Pharma and its outgoing CEO, J. Michael Pearson.

CSRxP issued a policy statement on pricing transparency, value and competition. Some of the 12 points are fairly rudimentary: reporting drug price increases annually, encouraging FDA to speed up generic approvals, and strengthening post-approval trial reviews and adverse-event reporting; some of these are being done already but could be accelerated. A few others are a wish list that industry will balk at: reporting the cost of development of newly approved drugs; including an estimate of treatment cost and its effect on federal spending; and restricting market exclusivity provisions to “truly” innovative drugs. One common theme being resurrected these days that doesn’t appear is to allow for drug re-importation.

Then came the April 27 hearing before the Senate Special Committee on Aging, a third in a series that has been held to examine industry pricing practices. Pearson, former Valeant CFO Haward Schiller and current board member and major investor, Michael Ackerman, were grilled for their extreme price increases for both branded drugs and generics for which the company is sole or primary provider. Pearson, who is leaving office in the next few days, expressed his “personal regrets” over “mistakes” and “poor execution” of Valeant commercial practices; Ackerman said that incoming CEO, the former Perrigo CEO Joseph Papa, has a “track record of lowering healthcare costs,” and that he would recommend a 30% price cut for several drugs that have seen extraordinary price hikes in recent months.

It’s worth noting that, even in the face of this hearing and the preceding ones, Valeant management has made only slight adjustments to its pricing (such as a discount for drugs distributed through an arrangement with Walgreens announced in December). Ackerman’s offer of potentially cutting the price of, for example, Cuprimine by 30% would still leave the drug (current price: approximately $26,000 for a typical prescription) 280% over its price of last July, and that price is more than 2,000% over its price in 2013. Pearson repeatedly noted that the company will be spending $1 billion on patient assistance programs in 2016, but as minority member Claire McCaskill (D-MO) pointed out, even Valeant’s PAP programs have a net commercial benefit to Valeant.

The week was rounded out by news coming out of an Express Scripts client meeting that the company was holding. As reported by Bloomberg News, the giant PBM will be setting up an optional “market events” plan that would automatically start shifting patients away from drugs that have spikes in pricing (as opposed to working out these shifts one by one with client health plans). Additionally, it would expand a practice called “indication specific pricing” to reimburse for drugs at different levels depending on the therapeutic condition. The practice is currently in use for some oncolytics; Express Scripts will expand it to rheumatoid arthritis and other autoimmune diseases. Previously, Express Scripts has been leading a program to simply drop coverage of certain drugs for which there are generic alternatives; it had also constrained the coverage of Gilead’s Sovaldi treatment for hepatitis C until a lower-priced alternative, AbbVie’s Veikira Pak, was on the market. These actions are aggressive on the part of the PBM, but not a full frontal assault on drug prices; if anything, it could make some pharma brand managers more careful to extract maximum value of first-in-class drugs where they can.

Susan Collins (R-ME, pictured), head of the Senate Special Committee, had previously introduced a bill (S.2615) to push FDA to accelerate approval of generic drugs to encourage more price competition (something that the Campaign for Sustainable Rx Pricing also advocates). Senator McCaskill, in summing up her comments at the hearing, said, “Pigs get fed; hogs get slaughtered. It’s time to slaughter some hogs.”