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The biotech industry must constantly navigate the ins and outs of Beltway politics. During an election year, the need to anticipate and plan for policy shifts increases considerably. This was the topic of discussion at the start of Day 2 of the Biotechnology Innovation Organization (BIO) CEO and Investor Conference on February 27 in New York.
“Increasingly, we are seeing a far more punitive regulatory environment,” said BIO’s Chief Policy Officer, John Murphy, to start the conversation. “Biotech now has a very high profile, whether we like it or not, for both the presidential election and also in the broader elections, all of which probably look to change the balance of power in the Senate and the House, depending on the numbers.”
From Bayh-Dole march-in rights and Inflation Reduction Act (IRA) price controls to the need for pharmacy benefit manager (PBM) reform, the panel explored the big issues ahead and how they’re already affecting the industry’s ability to plan for the future.
Bayh Dole march-in rights
“There’s a really, really large contingency of folks in the administration, and in D.C. in general, right now who equate high drug prices with patents,” explained Lindsay Androski, President and CEO at Roivant Social Ventures.
“There really are multiple attacks going on right now,” Androski continued, “that are very, very important and have very big impacts on our industry that all of us need to be paying attention to and weighing in on—one of which is march-in rights.”
As Bio.News explained in early February, the National Institute of Standards and Technology (NIST) proposed to use the Bayh-Dole Act “march-in” provision to control drug prices. In comments on NIST’s Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights, BIO emphasized that the clause cannot be used for price controls.
“The government can ‘march in’ and give away patents in very specific circumstances, but using march-in rights for price controls is against the law’s scope and intention,” said BIO.
“The draft framework threatens to undermine the substantial progress made over the past 43 years under the Bayh-Dole Act in promoting commercialization of federally funded inventions,” continued BIO. “It does so by endorsing a liberal and expansive use of the limited ‘march-in’ authority, creating uncertainty about when, whether and how the government might exercise the march-in authority of the Act.”
Statute 1498
Another issue Androski highlighted was Statute 1498, a World War II-era statute related to patent issues.
The federal statute states, “Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner’s remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture.”
“It was adopted to allow the government to essentially break patents if needed for war readiness or for national security issues,” explained Androski. There’s been a “drumbeat” of support for using it to authorize generic manufacturing of medicines at a lower price. “In the past few years, we’ve seen both of the chairs of the Senate Health Committee—Senator [Elizabeth] Warren first, now Senator [Bernie] Sanders—sending letters to [Health and Human Services] saying, you have a tool to take a high-priced drug and authorize a generic manufacturer to produce it or sell it at a lower price.”
In this case, the patent holder usually has to sue the government and try to get some money back. Biotech companies are taking note.
IRA and drug pricing
The IRA and drug price controls are not topics that are going to go away any time soon, especially now that price controls are already coming down the pike.
The manufacturers of the first 10 selected drugs have already received an initial offer. They have until Saturday, March 2, to provide a counteroffer to Centers for Medicare and Medicaid Services (CMS), said Erin Estey Hertzog, Partner at Foley Hoag.
“Then there’ll be some back and forth between the agency and the company,” continued Hertzog. “If they don’t agree on a price, then there’s a very significant tax that goes into effect. But the whole thing is relatively political, given that the publication date of these prices will be in September—so pretty close to the election. I think it’d be really interesting to see where the government lands on those prices, in part because it is a political issue, but at the same time, the government is facing litigation and companies are challenging whether this really is a negotiation.”
PBMs and rebate reform
“The biggest thing that is missing from the equation is that there’s a very large focus upon the list prices of products in the U.S., and that’s not something that translates into what a patient experiences when they go to fill a product or get their prescription at the pharmacy counter,” said Chris Mancill, SVP & Head, Global Market Access, Pricing, and Value Demonstration at Bristol Myers Squibb.
“We’ve got to get better at explaining the issue in more layman’s terms,” he noted. “The problem isn’t necessarily the prices of drugs—which I do believe in the U.S. and around the world are generally priced at the value that is delivered to the healthcare system—it’s the framework in which we negotiate, particularly in the U.S.”
“The problem is that the amounts that patients pay in their copays and out-of-pocket expenditures is not based on the price of the medicine, it’s based on your insurance,” he continued.
“Price negotiations always get the headlines, but to me, it always comes back to access,” said Michael Ward, Vice President of Public Policy and Government Relations at Alliance for Aging Research. “Part D plans are covering 8% fewer drugs than they were five years ago. So, there are already formularies that are going to be getting more stringent and few drugs are being covered.”
Ward noted the IRA’s Part D drug-related provisions, which include “instituting a $35 out-of-pocket cap on a month’s supply of each covered insulin, eliminating out-of-pocket costs for Advisory Committee on Immunization Practices [ACIP]-recommended adult vaccines under Part D, imposing a maximum out-of-pocket cap of $2,000 starting in 2025,” as explained by the Department of Health and Human Services.
But there’s also a trade-off with other pieces of legislation, noted Ward. “There’s a redesign of Part D that shifts a lot of the financial responsibility in the catastrophic spaces of benefits towards payers. Last year, payers were responsible for 15% of costs, and in 2025, they’ll be responsible for 60%. That’s a huge delta.”
Let’s talk about value
The panel ended with a final consensus on how biotech should talk about patients’ access to drugs: talk about value.
“I think it’s probably only our industry that actually talks about value, I think largely everybody else talks about price,” said Mancill.
The conversations around drug pricing lack the necessary subtlety that is owed to patients.
“In the U.S., it seems like we are more at the beginning of the journey of looking at the value of medicine versus pure price,” said Mancill. “And I think we have a responsibility to patients and patient groups to make sure that we’re defining at that moment when a product is initially launched, the value that it’s bringing to those key stakeholders, patients, caregivers, providers, and healthcare systems because nobody else will do that for us.”
