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Drugmakers tout 'golden age' as they brace for Trump action on prices

The lobbying group representing the world's biggest drugmakers touted a "golden age for medicine" as the industry braced for U.S. President Donald Trump to unveil his plan to lower drug costs.

New treatments are being developed while drug prices are rising by less than the inflation rate, Pharmaceutical Research and Manufacturers of America, or PhRMA, President and CEO Stephen Ubl said May 10 at a summit in New York sponsored by the Financial Times.

PhRMA members, which include Pfizer Inc., Sanofi and Merck & Co. Inc., are going to have concerns about the president's plan, Ubl said at the FT US Healthcare & Life Sciences Summit, hours before senior administration officials briefed reporters on the speech, which Trump will give May 11.

"I expect a mixed bag," Ubl said.

Pharmaceutical companies have been pointing fingers at pharmacy benefit managers the middlemen who negotiate drug prices for their insurance customers, in the debate over rising costs. PBMs get rebates from drugmakers in exchange for putting the companies' medicines on the preferred list of products covered by the insurance plan. That gives PBMs an incentive to promote higher list prices, so they can reap more in rebates.

Critics of the rebates have said too much of the rebate money goes to the companies rather than to consumers.

Trump administration officials in the May 10 briefing hinted that the PBM industry would be targeted under the president's plan. U.S. Centers for Medicare and Medicaid Services Administrator Seema Verma criticized PBMs in a speech May 7, while U.S. Food and Drug Administration Commissioner Scott Gottlieb in public remarks given on May 3 had raised the idea of re-examining the federal anti-kickback laws that provide safe harbor over the drug rebate deals biopharmaceutical manufacturers strike with payers.

A 'convoluted' system

Ubl said he did not favor eliminating the rebates entirely, but supported fixing the "convoluted" system by helping customers share in the savings.

"Probably the most impactful short-term solution would be to provide immediate out of pocket benefit for beneficiaries," he said.

Mylan NV CEO Heather Bresch had criticized the impact of middlemen when the company came under fire for raising the price of EpiPen allergy medication six-fold in 2016. Speaking at the May 10 FT conference, she stopped short of calling on specific action against PMBs but urged more transparency over the drug supply chain.

"If it took our product to shed light on what's been the problem about this system, so be it," she said.

Speaking later at the FT US Healthcare & Life Sciences Summit, Gottlieb was mum on what Trump will propose.

Gottlieb did not repeat his May 3 comments at the Food and Drug Law Institute's annual meeting, where he suggested allowing more federal oversight of the rebates PBMs negotiate between drug manufacturers and payers.

He quipped at the New York conference: "There are two rules in Washington. If you want a friend, get a dog. The second is, 'Don't upstage the president.'"

Biosimilar blues

Gottlieb, however, said the agency wants to do something about the harm rebates cause in hampering the success of biosimilars, the biologically equivalent versions of complex medicines.

In a 20-minute question and answer session, Gottlieb said he's been "disappointed generally about the market for biosimilars." The new drugs have been hurt by rebates struck by incumbent biologics with payers.

That follows May 1 comments by Pfizer Chairman and CEO Ian Read, who called on administration officials to act to improve the market for biosimilars such as Pfizer's Inflectra.

Gottlieb did not go into details, but in an opinion piece published June 6, 2017, in the Journal of the American Medical Association, Yale University researchers said biologic manufacturers give rebates as large as 50% to PBMs in return for getting a preference by payers. But if a competing biosimilar manufacturer offers a larger rebate, the biologic company can revoke its rebate doubling the payers' costs.

Biosimilars would be better able to compete if payers more often forced prescribers to switch to the cheaper alternative. But for that to happen, biosimilars need to win interoperable status, an FDA classification that they are expected to produce the same clinical results as a biologic. So the FDA is working to get the classification more "efficiently," Gottlieb said.