Prescription drug situation less than ideal for consumers

Jeff Stier of the Consumer Choice Center has mixed opinions.

“Senator Braun’s is an attempt to solve or address the problem of PBMs, pharmacy benefit managers who are not passing along price reductions instituted by the pharmaceuticals along to the consumers, so there is a real problem there,” Stier begins. “I as a freemarketer am never pleased to see legislation that bans behavior between two companies, so if a PBM gets rebates from drug companies, that may be how they operate their business.”

In what Stier describes as his ideal world, the consumer could choose whether to engage with that business model. 

“However, we don’t live in a healthcare environment that’s free market; it’s extremely regulated,” he continues. “It’s kind of like a ball of string with knots in it, and I think this proposal addresses one of the really ugly knots, but I think more needs to be done to untangle it so that we have something that serves consumers, that advances public health, that looks more like a free market.”

FDA chief’s resignation casts cloud over vaping crackdown

Dr. Gottlieb didn’t protect the public health by preventing youth initiation of e-cigarettes, and he didn’t do enough to help adult smokers quit,” said Jeff Stier, a senior fellow at the Consumer Choice Center, part of the coalition formed by Americans for Tax Reform. “The next FDA commissioner should follow the science and do everything possible to prevent youth initiation of e-cigarettes, while at the same time helping adult smokers switch.”

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FDA surprise: Commissioner Scott Gottlieb, aggressive regulator against vaping, resigns

Free-market groups and vaping industry interests have been critical of the FDA efforts under Gottlieb. Jeff Stier is a senior fellow at the free-market think tank Consumer Choice Center.

“We’ve been complaining and pointing out how the administration’s approach to e-cigarettes is not consistent with what president promised on limited regulation,” he said. “What Gottlieb was threatening was over-regulation.”

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The Department of Health and Human Services and vaping: A tale of bootleggers and Baptists

Consumer Choice Center senior fellow Jeff Stier said virtually the same thing to a Washington Post reporter late last year.

“The administration promised less regulation — without sacrificing protections,” said Stier, in response to Gottlieb’s release of the 2018 tobacco blueprint. “So if the FDA fails to meet both objectives — by announcing a heavy-handed regulatory plan — President Trump should realize that the current leadership at the FDA is not equipped to implement the administration’s policy agenda,” he added, alluding to the FDA’s push to heavily regulate the vaping industry as means to protect the public interest from the ostensible youth vaping epidemic.

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Here’s an idea for controlling drug prices: Restore market forces

Trump administration officials keep searching for solutions to rising prescription drug prices, which are increasing faster than inflation. “Drug makers and companies are not living up to their commitments on pricing. Not being fair to the consumer, or to our Country!” President Trump tweeted on Jan. 5.

Most of the administration’s suggested remedies have been threats or the imposition of various types of price controls. On Thursday, Jan. 31, Department of Health and Human Services Secretary Alex Azar said the department would propose a rule effectively ending the widespread practice of rebates, which the administration calls “hidden kickbacks,” to middlemen, or pharmacy benefit managers.

An administration that claims to be conservative should know better than to go down the path of innovation-stifling government intervention. Officials should also be savvy enough to know that responsible regulatory reform is a better way to foster pharmaceutical innovation, drive prices down, and help patients.

We suggest two ways to do that.

The first would be to correct a glitch in patent laws. The Hatch-Waxman Act of 1984 established an effective balance between the interests of brand-name and generic drug manufacturers. It created the abbreviated new drug application process that requires generic manufacturers to demonstrate only that the generic is “bioequivalent” to an approved brand drug and granted brand-name drugs certain periods of market exclusivity and patent term restoration.

That trade-off worked well. But in 2011, when technology patent trolls, who buy up patents but don’t intend actually to make a product, were wreaking havoc in the tech world, Congress attempted to protect true innovators by creating a new patent adjudication process called inter partes review, whereby patents could be challenged at the Patent Trial and Appeal Board. Congress didn’t intend IPR to disrupt Hatch-Waxman protections; rather, it intended to create a streamlined process to challenge technology patents, an area not governed by Hatch-Waxman.

But because IPR can also be used by challengers of drug patents, the process inadvertently created a form of double jeopardy, allowing pharmaceutical patent challengers to try their hand in two separate venues: both the federal courts and in IPR. The use of both adjudication forums not only raises fairness questions, but it also drives up the cost of branded medicines through unnecessary legal costs and greater uncertainty about the patent life of a drug.

To address that problem, last year, Sen. Orrin Hatch, R-Utah, introduced the Hatch-Waxman Integrity Act. Although it would not harmonize standards between venues or prevent drug patent challengers from using IPR, as might have been wise to do when IPR was created, it would require challengers to pick one legal venue and stick to it, thereby restoring the balance between promoting innovation and fostering generics. Congress should take up and pass the bill now.

Our second suggestion to lower prices is congressional authorization of drug-approval reciprocity among select foreign counterparts, giving patients rapid access to drugs that already have been proven to work safely in countries whose testing and review regimens are similar to our own. It would immediately put more drugs in the U.S. marketplace, providing additional choices for physicians and for institutions’ formularies.

The availability of more options means more competition, which would put downward pressure on prices.

Reciprocity would also alleviate shortages of critical drugs in the U.S., another driver of increased prices. An analysis by STAT News, published on Jan. 1, found a 27 percent increase in new drug shortages in 2018. According to an academic study published last year, “[t]hese shortages cause an estimated $230 million in additional costs each year because of the rising prices of drugs under shortage and the higher costs of substitute drugs.”

Reciprocity of approvals would make numerous needed alternative drugs available. It could have been in place decades ago, if only the Food and Drug Administration had met its long-standing commitment to pursue it through the International Conference on Harmonization of Technical Requirements for Registration of Pharmaceuticals for Human Use.

Congress must step in, both to pass the Hatch-Waxman Integrity Act and to establish reciprocity of approvals. Market forces are more effective than bureaucrats’ price controls.

Henry I. Miller, a physician and molecular biologist, is a senior fellow at the Pacific Research Institute. He was the founding director of the FDA’s Office of Biotechnology. Mr. Stier is a senior fellow at the Consumer Choice Center.

Originally published at https://www.washingtonexaminer.com/opinion/op-eds/heres-an-idea-for-controlling-drug-prices-restore-market-forces

A Patently Reasonable Approach to Addressing Pharmaceutical Prices

We seem to be at an impasse when it comes to getting the prices of prescription drugs under control for patients while at the same time fostering innovation. This need not be the case.

The left and the right have their own ideological approaches, none of which will advance given current political reality. Progress will only come in the form of bipartisan, good-government reforms that make the system more fair and predictable.

Both parties can work together to lower drug prices while protecting innovation. We can achieve this through rational approaches, including more transparency around pharmacy benefit managers; the continued streamlining of approvals for generic biologics (also known as biosimilars); and maintaining the delicate balance between incentivizing innovation while fostering lower prices through the entry of generic drugs to the market.

At the heart of most calls for lower drug prices is some form of government intervention requiring innovators to charge less for the medicine that their investments financed. Like waving a magic wand, some would like the government to simply mandate lower prices. But to think that such a move wouldn’t stifle innovation in the already expensive and risky field of drug research and development would require, well, magical thinking.

The financial driver of pharmaceutical R&D investment is the promise that if the drug receives Food and Drug Administration approval, a manufacturer will be able to market it exclusively for a period of time at the price it chooses, without generic competition. After the patent expires, generic drugs serve to reduce drug prices dramatically.

As Sen. Orrin Hatch’s remarkable career in the Senate came to a close at the end of the year, he introduced legislation, the Hatch-Waxman Integrity Act, which will protect the delicate balance created in his 1984 Hatch-Waxman Act that paved the way for a robust marketplace for generics while still protecting innovation through strong patent rights.

In 2011, when technology patent trolls were wreaking havoc in the tech world, Congress, in an effort to protect true innovators, created a patent adjudication process called inter partes review, where patents could be challenged by the Patent Trial and Appeal Board.

When creating IPR, Congress didn’t intend to upset the Hatch-Waxman apple cart. It intended to create a streamlined process to challenge technology patents, an area not governed by Hatch-Waxman.

But because IPR can also be used by drug patent challengers, the process inadvertently created a form of double jeopardy, allowing pharmaceutical patent challengers to try their hand in two separate venues: both the federal court, as well as in PTAB’s IPR. The use of both adjudication forums not only raises fairness questions, it drives up the cost of branded medicines through unnecessary legal costs and greater uncertainty about the patent life of a drug.

Since 2011, not only have pharmaceutical innovators had to defend their patent in two different venues, a scenario not intended under the delicate balance created by Hatch-Waxman, but the legal standards in each forum differ significantly. For instance, in federal court, there is a presumption that a patent is valid, whereas in IPR, there’s a presumption a patent is not valid.

The Hatch-Waxman Integrity Act introduced recently k wouldn’t synthesize standards between venues, nor would it prevent drug patent challengers from using IPR (as might have been wise to do when IPR was created). However, it would require challengers to pick their legal venue — and stick to it.

The proposal would restore the delicate balance between promoting innovation and fostering generics. As Hatch explained on Dec. 11th, this proposal is necessary to ensure “that newer, alternative procedures for challenging drug patents do not give one side an unintended advantage.”

Tweaks of this type are ideologically neutral and, as such, fail to satisfy partisans on both sides who seek to use the issue for political gain. But if the success of the original Hatch-Waxman Act is any indicator, it is just what the doctor ordered.

Jeff Stier is a senior fellow at the Consumer Choice Center.

Are ‘middle men’ the culprit?

ONE NEWS NOW: “One of the real hidden costs that we’ve been seeing [in drug prices] is the role that the pharmacy benefit mangers (PBMs) play,” says Jeff Stier, senior fellow at the Consumer Choice Center. “Those are the middle men who negotiate between the drug companies – the companies that innovate, that make the drugs we so badly need – and our insurance companies.”

Having such “go-betweens” may sound like a great thing to have, but following two recent mergers, Stier says all major PBMs are now part of the health insurance industry.

That causes Stier to question whether PBMs are playing a crucial role in containing medical costs for patients. “Or, are they so conflicted – because they take a share of rebates offered by pharmaceutical companies – that they are incentivized to keep prices high?” he wonders.

But to answer that, Stier says, will require more transparency through the entire supply chain to show whether consumers are, in fact, benefiting from negotiations.

“There are changes we can do to find some common ground,” he shares, “and common ground, I think, would be necessary to actually lower the price of drugs without stifling innovation.”

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Both parties can work together to lower drug prices

Healthcare was a key issue for voters in the split-decision midterm elections. So are we in for more partisan divide and no progress? Not necessarily. We simply need to reframe the debate to find common ground.

The Democrat-controlled House won’t consider Obamacare repeal, and the Republican Senate won’t consider Medicare for all. But there are ways to make constructive changes without relying on ideologically charged policies which can’t advance in this environment.

There’s widespread agreement that patients should pay less for prescription drugs. Even as innovative drugs prevent or slow the progression of disease and reduce expenses such as hospital costs, patients and politicians alike are clamoring for lower drug prices.

Many on the Left seek to wave a magic wand and lower prices through government intervention with little regard to how this would discourage life-saving and money-saving innovation. Last month, even the Trump administration proposed dusting off an old and innovation-killing approach which would base some prices paid by Medicare on what other countries pay.

Meanwhile, legislators on the Right who ignore the prices their constituents pay for drugs risk losing their own congressional healthcare plan after their next election. Yet addressing the issue doesn’t require abandoning principles.

While there’s no one magic bullet that would make prescription drugs more affordable for patients, there has been increased scrutiny of the role of middle men known as pharmacy benefit managers. PBMs themselves have rapidly evolving incentives. No longer are they simply independent price-negotiators. Following two recent mergers, all major PBMs are now part of the health insurance industry.

J.C. Scott, the new president of the Pharmaceutical Care Management Association, the PBM industry’s trade group, recently told Politico’s Prescription Pulse that his top priority was simply making sure that people understand what pharmacy benefit managers do.

So what do they do? When PBMs negotiate on behalf of insurance companies, are they playing a crucial role in containing medical costs for patients? Or are they so conflicted, because they take a share of rebates offered by pharmaceutical companies, that they are incentivized to keep prices high?

To know, we’ll need more transparency through the entire supply chain, to show whether consumers are in fact benefiting from PBM’s negotiations.

Lawmakers across the country have begun addressing the lack of transparency around PBMs and its effects on patients. Sens. Elizabeth Warren, D-Mass, and Tina Smith, D-Minn., sent lettersto nine PBMs to determine how they are approaching drug pricing rebates. This probe is accompanying more than 90 bills nationwide that are focused on PBMs and their opaque role in the drug supply chain.

Time will tell if patients will actually see the savings that PBMs supposedly generate. The three largest PBMs, all linked to insurers, collectively control nearly 80 percent of the market, meaning that millions of Americans are affected by the decisions they make in negotiating prices for various drugs. Will pharmaceutical price-reductions lead to lower prices for patients? We’ll need transparency from PBMs and health insurers to understand how a reduction in what pharmaceutical companies charge for a drug translates into lower costs for patients at the pharmacy.

PBMs’ defenders maintain that drug prices would be even higher without their role as go-betweens. The recent dramatic price cuts for some drugs put that idea to the test. PBMs can prove their value — or lack thereof — by moving quickly to pass these price reductions along to patients.

Surely, drug companies seeking to remove the targets from their backs in exchange for lowering drug prices will be watching the PBMs’ next moves very closely. So should consumers.

Jeff Stier is a senior fellow at the Consumer Choice Center

Originally published at https://www.washingtonexaminer.com/opinion/op-eds/both-parties-can-work-together-to-lower-drug-prices

FDA’s menthol ban and vaping restrictions will have consequences

CONTACT:
Jeff Stier
Senior Fellow
Consumer Choice Center
[email protected]

FDA’s menthol ban and vaping restrictions will have consequences

WASHINGTON, D.C. – Last week, FDA Commissioner Scott Gottlieb announced severe sales and flavor restrictions on vaping products and introduced a new ban on menthol flavors in combustible tobacco products.

Reacting to the news, Consumer Choice Center senior fellow Jeff Stier said the plan is riddled with flaws.

“Banning menthol cigarettes will lead to increased youth smoking, especially in minority communities, where a ban would spark illegal markets reminiscent of the days of alcohol prohibition,” said Stier.

Writing in USA Today, he pointed out that various civil rights and police organizations have come out united against the policy, stating that is is both discriminatory toward minority communities and would eat up precious time and resources for police officers.

“When Congress gave the FDA authority to regulate recreational lower-risk nicotine products, it was with the expectation that the FDA would be able to both discourage youth use and help adults quit smoking. Sadly, to date, the FDA has accomplished little on either front,” said Stier.

“These failures don’t justify a misplaced “crackdown” on e-cigarettes and responsible sellers. They require an aggressive effort to stop the bad actors. Accomplishing that now will require a new FDA policy. And clearly, a new commissioner,” he added.

“The FDA should instead concentrate on two primary goals: Enforce already-existing rules that ban the sale of e-cigarettes to minors, and, as recommended by the American Cancer Society, support adult smokers who attempt to quit with e-cigarettes.”

***CCC Senior Fellow Jeff Stier is available to speak with accredited media on consumer regulations and consumer choice issues. Please send media inquiries HERE.***

The CCC represents consumers in over 100 countries across the globe. We closely monitor regulatory trends in Ottawa, Washington, Brussels, Geneva and other hotspots of regulation and inform and activate consumers to fight for #ConsumerChoice. Learn more at consumerchoicecenter.org.

Menthol ban will make a bad situation worse

The Food and Drug Administration’s naive plan to ban menthol cigarettes will lead to countless unintended consequences, including increased youth smoking, especially in minority communities, where a ban would spark illegal markets reminiscent of the days of alcohol prohibition.

Kids could easily buy loose cigarettes stored in sealed baggies with unwrapped menthol cough drops. The FDA has failed to enforce its own rules. Consider the agency’s inability to prevent youth use of e-cigarettes, despite an outright federal ban.

One unintended consequence is telling: The ban unites some African-American civil rights leaders and top law enforcement officer groups.

The Rev. Al Sharpton and Ben Chavis, former executive director of the NAACP, harshly criticized the idea last year, claiming that it would “affect black communities more than other communities” and keep police from “solving violent crime and ensuring public safety.”

OUR VIEW: There’s more than just smoke to FDA proposals

Citing a National Research Council report on America’s criminal justice system, they blame policy, not increased crime, for the incarceration crisis. A menthol ban would make a bad situation worse.

The Alabama State Trooper Association, the Organization of Black Law Enforcement Executives and other police groups have warned that a ban would create criminal enterprises.

It would also be ineffective. Jeff Washington, a 52-year-old who started smoking menthol Newports when he joined the Army in 1983, told The Wall Street Journal that if menthols were banned, “I’d start smoking Marlboros.”

Rather, Washington should use e-cigarettes. But the FDA, which failed to prevent youth from buying e-cigarettes, is making it harder for him to switch.

President Donald Trump should ask FDA Commissioner Scott Gottlieb, in an exit interview, why the agency couldn’t achieve a central promise of his presidency: Improve our lives not with more regulation but with less of it, wisely implemented.

Jeff Stier is a senior fellow at the Consumer Choice Center.

Originally published at https://eu.usatoday.com/story/opinion/2018/11/15/menthol-ban-makes-bad-situation-worse-editorials-debates/2018265002/