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/

FDA Wants To Ban Menthol Cigarettes, Restrict Sales Of E-Cigs

MEDIA POST: Jeff Stier, a senior fellow at the Consumer Choice Center, calls the proposed menthol ban “naive” in an op-ed for USA Today. Stier, who is billed as “a voice for consumers who believe paternalists don’t have a monopoly on public health,” says an outright ban will not only be “ineffective” but also will lead to “countless unintended consequences, including increased youth smoking, especially in minority communities.”

Stier writes: “Kids could easily buy loose cigarettes stored in sealed baggies with unwrapped menthol cough drops.”

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Opinion: What is Scott Gottlieb Smoking?

The FDA’s just-unveiled Draconian restrictions on vaping products are an example of good PR but bad public-health policy. And regulators know better.

When he headed the FDA, Dr. Frank Young used to admonish his minions that there were times when common sense should modulate established policies and rules. That can be done in federal agencies via “enforcement discretion,” a tool that regulators use to carry out their mandate in light of sometimes ambiguous laws and regulations.

Other officials have not been so wise.

Take Young’s successor at the FDA, David Kessler, who chose a ludicrous case calculated to get him on the evening news in a virile demonstration that he was tough at enforcing the law.

Was the issue defective heart valves, a contaminated vaccine or perhaps pathogenic bacteria in lettuce? No — Kessler directed armed federal marshals to confiscate and dump 15,000 gallons of Citrus Hill orange juice — solely because it was labeled “fresh.” It was reconstituted from concentrated juice, you see, and the FDA asserted that it is inaccurate to call orange juice “fresh” when made from concentrate.

On CBS’ “60 Minutes,” Kessler expressed his indignation: “[The juice] was made from concentrate. My grandmother could have told you, I mean, it wasn’t fresh. It wasn’t very hard [to tell the difference].” Duh. If it was so obvious, why not simply let consumers decide whether they like the product enough to buy it again?

The FDA’s failure of common sense is evident again in newly announced sweeping restrictions on e-cigarettes, popular not only among teenagers but adult smokers who use them as an invaluable tool for quitting tobacco-containing cigarettes.

The crackdown, which FDA Commissioner Scott Gottlieb says is intended to prevent a new generation of nicotine addicts, means that only tobacco, mint and menthol e-cigarette flavors can be sold at most traditional retail outlets, such as convenience stores and gas stations. Other sweet- or fruit-flavored varieties — all favorites of former adult smokers — can now only be sold at age-restricted stores or through online merchants that use age-verification checks.

Like the dumping of perfectly good, wholesome orange juice, the Gottlieb Plan doesn’t make much sense.

First, let’s stipulate that e-cigarettes are not entirely safe and that in a perfect world, they would not be used by kids. At the same time, as Commissioner Gottlieb himself has conceded, conventional cigarettes that expose mucous membranes and the lungs to combustion products are vastly more dangerous than e-cigarettes.

Many adults who have not been able to quit smoking using methods such as nicotine-containing gum or patches have been able to stop, with the help of a wide variety of these far less harmful, non-combustible vaping alternatives.

The FDA should 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.

Unfortunately, the new restrictions represent a dramatic and surprising reversal from July 2017, when the FDA announced a new “comprehensive regulatory plan” for “tobacco products,” including e-cigarettes, which embraced the idea of tobacco harm-reduction.

Commissioner Gottlieb said at the time that the plan demonstrated “a greater awareness that nicotine — while highly addictive — is delivered through products that represent a continuum of risk and is most harmful when delivered through smoke particles in combustible cigarettes.”

In other words, we should be more concerned about the smoke delivery system than we are about nicotine itself, even though, ideally, kids should never use nicotine of any kind.

Gottlieb continued, “Envisioning a world where cigarettes would no longer create or sustain addiction, and where adults who still need or want nicotine could get it from alternative and less harmful sources, needs to be the cornerstone of our efforts — and we believe it’s vital that we pursue this common ground.”

But capitulating to intense pressure from activists who seek nothing other than complete nicotine abstinence from adults, that cornerstone has crumbled. Instead, Gottlieb is now pitting the proper goal of preventing youth use against the other proper goal of helping adult smokers quit. But these objectives are not and should not be seen as mutually exclusive.

The news reports and the public opinion the FDA is largely relying upon to justify this about-face have been generated by puritanical pressure groups who want non-medicinal nicotine products off the market entirely.

Neither evidence nor common sense seems to influence those groups that are hell-bent on removing e-cigarettes from the market. Consider, for example, the latest creepy video from a mysterious group that calls itself “The Truth,” which features puppets, and which seems targeted at kids, journalists, and politicians

The text under the video states that vaping “makes you 4x more likely to start smoking cigarettes.” But the latest study, conducted by Rand, concludes otherwise: “EC use among youth is prospectively associated with progression toward greater cigarette use.”

There’s less to that statement than meets the eye. Are kids who engage in risky behaviors such as vaping also more likely to start smoking? Absolutely. Does vaping “make,” or cause, young people to start smoking? That’s not what the evidence says, but The Truth presents it that way.

It turns out that reporters were the real puppets, uncritically responding to and repeating activists’ unsupported assertions. This, in turn, has led to distorted public opinion which, the FDA now concedes, contributed to the just-announced Gottlieb Plan.

The FDA often touts itself as a science-based agency, immune to pressure from the public, politicians, and special interests.  Maybe this is the Gottlieb Exception.

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.

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.

Jeff Stier (@JeffaStier) is a policy adviser to the Heartland Institute and a senior fellow at the Consumer Choice Center. Henry I. Miller, a physician and molecular biologist, is a senior fellow at the Pacific Research Institute. He was the founding director of the Office of Biotechnology at the FDA.