FDA to boost generics and change drug rebates to lower prices

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FDA to boost generics and change drug rebates to lower prices

Generics/General | Posted 08/06/2018 0 Post your comment

In two recent speeches US Food and Drug Administration (FDA) Commissioner Scott Gottlieb has outlined plans to fight back against high drug prices. Two of the ways the agency plans to do this include increasing generics and targeting drug rebates

In a statement to the US Senate appropriations committee, FDA chief outlined his plans to reduce the time taken for generics to reach the market by making their review, more seamless and efficient. In addition, he outlined plans to promote more widespread use of existing generics, by looking for ways to keep generics labels up-to-date with the latest information about each medicine’s safety and benefits.

Then on 3 May 2018, in a keynote address to the Food and Drug Law Institute Annual Conference (FDLI), Commissioner Gottlieb pointed to the system of rebates between payers and manufacturers as contributing to higher list prices. He therefore suggested that ‘the federal government re-examine the current safe harbour for drug rebates under the Anti-Kickback Statute’.

Pharmaceutical companies pay rebates so that pharmacy benefit managers will make their product the only one of its kind on the list approved for reimbursement or so that the co-payment for its product is less than the co-payment of competing products.

Insurers say these rebates spread the savings from discounts to lower overall premiums and US law currently grants a safe harbour to the practice, protecting them from legal scrutiny. Critics of this practice, however, argue that savings from the rebates are not passed on to patients.

In his speech, Dr Gottlieb also pointed to ‘a web of rules and restrictions – some implemented as a result of industry lobbying – that prevent truly market-based pricing and competition’ for generics. He added that it is short sighted ‘to defend the principle of market-based pricing if individual firms seek to use legal and political manoeuvring to seek temporary advantage by gumming up the rules in their favour’.

Finally, Dr Gottlieb said that changing the rules on rebates ‘could help restore some semblance of reality to the relationship between list and negotiated prices, and thereby boost affordability and competition’.

Rebates for biologicals have also been accused of contributing to the slow uptake of biosimilars in the US [1].

Reference
1. GaBI Online - Generics and Biosimilars Initiative. Insurance payment arrangements are an obstacle to biosimilars use in the US [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2018 Jun 8]. Available from: www.gabionline.net/Biosimilars/Research/Insurance-payment-arrangements-are-an-obstacle-to-biosimilars-use-in-the-US

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Source: US FDA