The executive order signed Friday includes measures to bolster health-care industry competition in the interest of lowering drug prices. Among its proposals are a push for the Food and Drug Administration to work with states to import prescription drugs from Canada and a call for the Federal Trade Commission to crack down on brand drugmakers paying generic manufacturers to delay putting their cheaper products on the market.
“Once implemented, these initiatives will result in concrete improvements to people’s lives,” according to a White House fact sheet on the executive order.
Roadblocks remain for both efforts to get off the ground, analysts say.
For Canadian drug imports, legal experts say a lack of buy-in from Big Pharma and Canadian leaders could derail the efforts. Meanwhile, the FTC hasn’t made much practical progress in the area of “pay-for-delay” settlements despite making the area a priority for focus.
Despite that, Biden is betting his administration will be able to make the policies work.
The executive order is a “signal that the administration is taking seriously the need for a national competition policy and beginning to take steps to effectuate one,” said Randy Stutz, vice president of legal advocacy at the American Antitrust Institute.
Questions on Importing Drugs
Drug importation isn’t a sustainable fix for high U.S. drug prices, policy analysts warn, even if the new administration has a better relationship with Canada.
“While it is possible that the relationship between Canada and U.S. has improved with the change in leadership, it still isn’t clear that Canada would be willing to or capable of supporting a large importation program,” Stacie Dusetzina, an associate professor of health policy at the Vanderbilt University School of Medicine, said.
Canada’s population is much smaller than that of the U.S. When the Trump administration released a drug importation policy in 2019, the Canadian government pushed back, saying it wouldn’t ship massive amounts of medications over the border.
Drug companies also still decide how much of their product to ship to certain countries and aren’t likely to ship enough drugs to Canada to support both U.S. and Canadian needs. Consequently, without the pharmaceutical buy-in, drug importation likely won’t work.
“We support common sense solutions that would lower out-of-pocket costs for patients that don’t risk the health and safety of patients or undermine future innovation,” PhRMA CEO Steve Ubl said in a Friday statement in response to Biden’s order.
“We are eager to work with the Biden Administration to pursue policies that protect access, choice and innovation.” Americans already benefit from “the world’s most competitive market for prescription medicines,” he added, with 90% of prescriptions filled as cheap generic drugs.
The Pharmaceutical Research and Manufacturers of America and the Biotechnology Innovation Organization issued statements in 2019 calling a Trump administration drug importation plan dangerous, politically motivated, and ultimately ineffective. PhRMA also sued the federal government in 2020 over its importation policy. That litigation is ongoing.
“It would make more sense to directly negotiate for our own lower prices in the U.S.,” Dusetzina said. House Democrats are pushing for direct negotiation, but so far negotiation bills have stalled. Republicans worry direct negotiations will cut off encouragement to create innovative products.
Meanwhile, states are getting antsy to start importing drugs themselves. Florida has a plan in place and says Floridians could start importing drugs 90 days after the Food and Drug Administration gives its approval.
“It is disappointing that the FDA has not given a timeline to review state importation proposals,” Christina Pushaw, press secretary for Florida Gov. Ron DeSantis (R), said. “Governor DeSantis hopes that the Biden Administration will act immediately to approve Florida’s plan that provides safe and effective drugs to drive down our state’s prescription costs and ultimately benefit Floridians in need.”
Brand drugmakers holding back generic competition was one of Trump FDA Commissioner Scott Gottlieb’s biggest talking points.
Now, Biden is calling on the FTC to ban pharmaceutical companies producing name-brand drugs from paying generic manufacturers to refrain from entering the marketplace.
Legal experts on so-called “pay-for-delay” agreements say the executive order is a step in the right direction to help curb climbing drug prices, emphasizing the importance of generic competition in bringing more affordable medicines to market.
“High drug prices are an issue for so many Americans today, and pay-for-delay settlements are particularly egregious,” said Michael Carrier, a Rutgers University Law professor. The executive order is “an indication that pay-for-delay settlements are a continuing concern, and the Biden administration recognizes that.”
Curbing those agreements is an idea gaining steam across the government.
Democratic lawmakers in May called on the FTC to investigate whether
Interest in blocking pay-for-delay agreements has emerged at the state level as well. In January 2020 California’s AB824 went into effect, making it easier to cut down on agreements to delay generic entry.
Yet Big Pharma has other moves for maintaining market exclusivity, Carrier said, noting petitions to the FDA, denial of information to generic companies, anticompetitive mergers, and patent practices as examples.
Whether the executive order has teeth rests with the FTC, Carrier said. “It’s up to the FTC to issue rules,” he said.