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A few topics keep popping up in discussions about the future of U.S. healthcare over the past couple of years. The need to pass rebate reform and address pharmacy benefit manager practices. The need to rectify the drug price control provisions in the Inflation Reduction Act (IRA). The need to bolster preventative care.
Each of these topics (and more) was covered during a recent event, “Medicare & Drug Pricing: Time to Think Differently,” hosted by The Hill and the Alliance for Aging Research. And each of these topics has been a major priority for the Biotechnology Innovation Organization (BIO), which has worked with industry and policymakers to address, educate, and resolve these problems.
1. We need to nix the IRA ‘pill penalty’ and support orphan drug development
While the IRA helped American patients in a number of ways, undeniable missteps are already hitting the drug development pipeline: the small molecule “pill penalty,” and a provision that de-incentivizes orphan drug developers from exploring other uses for their products.
As Bio.News reported in February, the IRA creates an arbitrary distinction between biologics and small-molecule drugs. Under the law, biologics are granted 13 years of exemption from price controls, while small molecule drugs are granted nine years.
“I just saw a graph yesterday that showed that the investment in small molecules in neurology has gone almost to zero and the investments in biologics has gone up,” said Rep. Scott Peters (D-Calif.), Member, House Energy & Commerce Committee, during The Hill event.
“The other [issue] is with respect to orphan drugs,” Rep. Peters continued. “If you’ve got a drug that you’ve got a single use for now, but you want to find other uses for it, there’s only protection for the first bite and you have to negotiate the price for it after that, so there is no incentive for the use of existing drugs for new diseases—orphan diseases in particular.”
Two pieces of legislation under consideration, both supported by BIO, would start remedying these issues: the Ensuring Pathways to Innovative Cures (EPIC) Act, which would address the pill penalty, and the ORPHAN Cures Act, which would address the orphan drug provision.
2. We need to reform PBMs.
Pharmacy benefit managers, or PBMs, choose which drugs receive insurance coverage, charging drug makers rebates and fees for covering them. PBMs profit from keeping drug prices high—and they’re often integrated with pharmacy chains and insurers, with three PBMs controlling 80% of the market.
As Bio.News reported back in April 2022, “Put very simply, if a drug manufacturer prices a drug at $1000, a PBM often is able to negotiate that price down by 50% in exchange for putting those drugs on their formulary. However, these savings are not necessarily passed on to patients.”
Rep. Mariannette Miller-Meeks, MD (R-IA), Member of the House Energy & Commerce Subcommittee on Health, echoed these concerns during The Hill’s event. “You have 80% of medications that now come through the PBM marketplace, which typically mails drugs. They also reimburse, in this case, independent pharmacies for a medication often at a price that’s lower than it takes that pharmacy [to cover cost]. So what’s happened is that small independent pharmacies are going out of business.”
Not only are small local businesses going out of business, but the rural citizens they often serve then have difficulty accessing the medicines they need.
As with the IRA, lawmakers are considering legislation to address the issue. The DRUG Act “would ensure that covered PBM revenues are limited to fair market value service fees and would prohibit PBMs from charging health plans more than what they ultimately pay to pharmacies,” said Rep. James Comer (R-KY) in February. Additionally, the Preventative Health Savings Act would direct the Congressional Budget Office to reflect the longer-term transformative cost-saving potential of preventive healthcare initiatives by extending the office’s analysis beyond the existing 10-year budget to a 30-year period.
Rep. Miller-Meeks said she traveled from state to state to take care of the healthcare and prescription needs of her mother towards the end of her life. This experience drives her desire to push through PBM reform.
“It’s [part of] what makes me such a passionate advocate for PBM reform and helping to lower that costs and helping to keep our small individual community pharmacies in place,” she said.
3. We need to bolster preventative healthcare.
The last major topic discussed was preventative care, which includes a role for biotech and drug development.
GLP-1 weight loss drugs have fundamentally shaken up the industry in a way only previously seen by the development of hypertension drugs in the 80s. Their use in preventative care is a key topic of conversation.
The Treat and Reduce Obesity Act just passed the House Ways and Means Committee in June by 36-4. However, the legislation only covers obesity treatments for a small sliver of beneficiaries. The legislation “directs Medicare to cover obesity treatments strictly for new enrollees whose insurance previously covered the medication for at least a year before they signed up for Medicare,” as reported by Endpoints News.
As Bio.News reported during the BIO CEO and Investor Conference in New York in February, researchers are working to improve the quality and durability of these drugs, as well as tolerability. They’re also exploring biomarkers for the use of weight loss drugs.
“It’s really early days when it comes to the field of weight loss and obesity,” said Vipin Garg, President and Chief Executive Officer at Altimmune, a clinical-stage company developing peptide therapeutics for obesity and liver disease.
