Policy Solutions to Lower Prescription Drug Costs

Patients win when market-based competition from FDA-approved generics and biosimilars deliver savings at the pharmacy counter. But those savings are increasingly at risk due to anti-competitive tactics, misguided policies and sustainability challenges that block patient access to lower-cost medicines. Meaningful action is needed to lower prescription drug costs and AAM’s Prescription for Savings outlines several solutions to secure our medicines for patients.

To this end, we recommend these seven policy solutions:

• Preserve the Tools That Drive Competition and Savings
  The first step: Do no harm. $373 billion in savings was provided in 2021 due to access to lower-cost generic and biosimilar medicines.¹ Developers of generic and biosimilar medicines rely on 180-day exclusivity for new generics and the ability to accelerate competition through patent settlement agreements and the “skinny label” pathway. Proposals such as the BLOCKING Act and so-called “pay for delay” legislation would reduce competition and threaten continued patient savings.
• Modernize Medicare Part D
  The Medicare Part D benefit should be modernized to address the perverse incentives that currently favor high-cost brand-name drugs. Patients would benefit from increased access to lower-cost generics and biosimilars through the establishment of an out-of-pocket cap, by increasing the share that plans pay in the catastrophic phase and with policies that ensure rebates and statutory discounts do not disadvantage competition from low-cost medicines.
• Reduce Cost-Sharing for Seniors
  Generic and biosimilar medicines can only provide significant savings for patients if they are covered on the appropriate Medicare Part D formulary tier. Ensuring coverage of newly available generic and biosimilar medicines, reducing patient cost-sharing through proper formulary tier coverage and creating a new specialty tier for biosimilars can significantly encourage generic and biosimilar adoption. AAM supports the Ensuring Access to Lower-Cost Medicines for Seniors Act.²
• Increase Patient Access to Biosimilars
  Biosimilar medicines could save patients and taxpayers more than $54 billion in the next 10 years, providing 1.2 million patients with access to lower-cost medicines. But significant barriers to competition exist. Three policies would help increase biosimilar adoption: 1.) Enact a modest increase to Medicare Part B reimbursement (ASP+8%); 2.) Establish a Medicare shared-savings demonstration program; and 3.) Reduce cost-sharing for patients in Medicare Part B. AAM and its Biosimilars Council support the BIOSIM Act, the Increasing Access to Biosimilars Act and the ACCESS Act.³
• Eliminate the Penalty on Generics in Medicaid
  Manufacturers of affordable generic medicines are now paying millions of dollars in penalties on prescription drugs that have not been subject to a price increase. These unpredictable, onerous penalties – totaling $1.6 billion over 10 years – make it challenging to continue production of low-margin generics and threaten continued patient access to life-saving medicines. Repealing the Medicaid Generics Penalty alleviates the harmful and unintended consequences of this policy on patients. AAM supports the Protecting Access to Affordable Medicines Act.⁴
• Enact New Tax and Other Financial Incentives to Enhance U.S.-Based Manufacturing
  AAM released the Blueprint to Enhance the Security of the U.S. Pharmaceutical Supply Chain to build on the U.S.-based manufacturing presence that exists today and the resiliency demonstrated in responding to the unprecedented challenges resulting from the global COVID-19 pandemic.⁵ The blueprint outlines a six-element framework of concrete actions – including tax credits, public-private partnerships and regulatory efficiencies – to ensure patients have access to a secure and consistent supply of critical medicines. AAM supports the Enhancing the Security of the U.S. Pharmaceutical Supply Chain Act.⁶
• Address Patent Abuse
  Anti-competitive tactics to prolong a brand-name drug’s monopoly run afoul of the balance between access and innovation created as part of Hatch-Waxman (1984) and the BPCIA (2010). Congress should consider providing a date certain for generic and biosimilar entry, accelerating the biosimilars “patent dance” and strengthening the Inter-Partes Review (IPR) process.

Together, these policies could save patients and taxpayers as much as $20 billion over the next 10 years through increased competition, lower out-of-pocket costs and reduced spending on prescription drugs.

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Billions in patient savings are possible with the Prescription for Savings. Now is the time to deliver those savings to patients.

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1. AAM, “The U.S. Generic and Biosimilar Medicines Savings Report,” October 2021.
2. The Ensuring Access to Lower-Cost Medicines Act (H.R. 4913) was introduced by Rep. David McKinley (R-WV) and Rep. Ann Kuster (D-NH) in the 116^th Congress. Similar policies were offered as an amendment by Sen. Robert Menendez (D-NJ), Sen. James Lankford (R-OK), Sen. Ben Cardin (D-MD) and Sen. Steve Daines (R-MT) to Grassley-Wyden (S. 2543).
3. The BIOSIM Act (H.R. 4455) was introduced by Rep. Kurt Schrader (D-OR) and Rep. Greg Gianforte (R-MT) in the 116^th Congress. The Increasing Access to Biosimilars Act (S. 4134/H.R. 6179) was introduced by Sen. John Cornyn (R-TX), Sen. Michael Bennet (D-CO), Rep. Tony Cardenas (D-CA), Rep. Richard Hudson (R-NC), Rep. Angie Craig (D-MN) and Rep. Brian Fitzpatrick (R-PA). The ACCESS Act was introduced by Rep. Scott Peters (D-CA), Rep. Peter King (R-NY) and Rep. Anthony Brindisi (D-NY).
4. The Protecting Access to Affordable Medicines Act (H.R. 8529) was introduced by Rep. G.K. Butterfield (D-NC), Rep. Billy Long (R-MO) and Rep. Tony Cardenas (D-CA) in the 116^th Congress.
5. AAM, “A Blueprint for Enhancing the Security of the U.S. Pharmaceutical Supply Chain,” April 2020.
6. The Enhancing the Security of the U.S. Pharmaceutical Supply Chain Act (H.R. 8987) was introduced by Rep. John Joyce (R-PA) in the 116^th Congress.