Importance The increasing cost of prescription drugs in the United States has become a source of concern for patients, prescribers, payers, and policy makers. Objectives To review the origins and effects of high drug prices in the US market and to consider policy options that could contain the cost of prescription drugs. Evidence We reviewed the peer-reviewed medical and health policy literature from January 2005 to July 2016 for articles addressing the sources of drug prices in the United States, the justifications and consequences of high prices, and possible solutions. Findings Per capita prescription drug spending in the United States exceeds that in all other countries, largely driven by brand-name drug prices that have been increasing in recent years at rates far beyond the consumer price index. In 2013, per capita spending on prescription drugs was $858 compared with an average of $400 for 19 other industrialized nations. In the United States, prescription medications now comprise an estimated 17% of overall personal health care services. The most important factor that allows manufacturers to set high drug prices is market exclusivity, protected by monopoly rights awarded upon Food and Drug Administration approval and by patents. The availability of generic drugs after this exclusivity period is the main means of reducing prices in the United States, but access to them may be delayed by numerous business and legal strategies. The primary counterweight against excessive pricing during market exclusivity is the negotiating power of the payer, which is currently constrained by several factors, including the requirement that most government drug payment plans cover nearly all products. Another key contributor to drug spending is physician prescribing choices when comparable alternatives are available at different costs. Although prices are often justified by the high cost of drug development, there is no evidence of an association between research and development costs and prices; rather, prescription drugs are priced in the United States primarily on the basis of what the market will bear. Conclusions and Relevance High drug prices are the result of the approach the United States has taken to granting government-protected monopolies to drug manufacturers, combined with coverage requirements imposed on government-funded drug benefits. The most realistic short-term strategies to address high prices include enforcing more stringent requirements for the award and extension of exclusivity rights; enhancing competition by ensuring timely generic drug availability; providing greater opportunities for meaningful price negotiation by governmental payers; generating more evidence about comparative cost-effectiveness of therapeutic alternatives; and more effectively educating patients, prescribers, payers, and policy makers about these choices.

https://jamanetwork.com/journals/jama/articlepdf/2545691/jsc160015.pdf

The High Cost of Prescription Drugs in the United States: Origins and Prospects for Reform

Importance US law requires testing of new drugs before approval to ensure that they provide a well-defined benefit that is commensurate with their risks. A major challenge for the US Food and Drug Administration (FDA) is to achieve an appropriate balance between rigorous testing and the need for timely approval of drugs that have benefits that outweigh their risks. Objective To describe the evolution of laws and standards affecting drug testing, the use of new approval programs and standards, expansions of the role and authority of the FDA, and changes in the number of drugs approved from the 1980s to 2018. Evidence Sources of evidence included principal federal laws and FDA regulations (1962-2018) and FDA databases of approved new drugs (1984-2018), generic drugs (1970-2018), biologics (1984-2018), and vaccines (1998-2018); special development and approval programs (Orphan drug [1984-2018], Fast-Track [1988-2018], Priority Review and its predecessors [1984-2018], Accelerated Approval [1992-2018], and Breakthrough Therapy [2012-2018]); expanded access (2010-2017) and Risk Evaluation and Mitigation Strategies (2008-2018); and user fees paid to the FDA by industry (1993-2018). Findings From 1983 to 2018, legislation and regulatory initiatives have substantially changed drug approval at the FDA. The mean annual number of new drug approvals, including biologics, was 34 from 1990-1999, 25 from 2000-2009, and 41 from 2010-2018. New biologic product approvals increased from a median of 2.5 from 1990-1999, to 5 from 2000-2013, to 12 from 2014-2018. The median annual number of generic drugs approved was 136 from 1970 to the enactment of the Hatch-Waxman Act in 1984; 284 from 1985 to the enactment of the Generic Drug User Fee Act in 2012; and 588 from 2013-2018. Prescription drug user fee funding expanded from new drugs and biologics in 1992 to generic and biosimilar drugs in 2012. The amount of Prescription Drug User Fee Act fees collected from industry increased from an annual mean of $66 million in 1993-1997 to $820 million in 2013-2017, and in 2018, user fees accounted for approximately 80% of the salaries of review personnel responsible for the approval of new drugs. The proportion of drugs approved with an Orphan Drug Act designation increased from 18% (55/304) in 1984-1995, to 22% (82/379) in 1996-2007, to 41% (154/380) in 2008-2018. Use of Accelerated Approval, Fast-Track, and Priority Review for new drugs has increased over time, with 81% (48/59) of new drugs benefiting from at least 1 such expedited program in 2018. The proportion of new approvals supported by at least 2 pivotal trials decreased from 80.6% in 1995-1997 to 52.8% in 2015-2017, based on 124 and 106 approvals, respectively, while the median number of patients studied did not change significantly (774 vs 816). FDA drug review times declined from more than 3 years in 1983 to less than 1 year in 2017, but total time from the authorization of clinical testing to approval has remained at approximately 8 years over that period. Conclusions and Relevance Over the last 4 decades, the approval and regulation processes for pharmaceutical agents have evolved and increased in complexity as special programs have been added and as the use of surrogate measures has been encouraged. The FDA funding needed to implement and manage these programs has been addressed by expanding industry-paid user fees. The FDA has increasingly accepted less data and more surrogate measures, and has shortened its review times.

FDA Approval and Regulation of Pharmaceuticals, 1983-2018.

The high prices of brand-name prescription drugs are a growing source of controversy in the United States. Manufacturers of brand-name drugs can command high prices because they are protected from generic competition by two types of government-granted monopoly rights. The first are patents on the drugs that generally define the basic period of brand-name-only sales. The second is awarded at the time of US Food and Drug Administration (FDA) approval and usually defines the minimum time until a generic can be sold. The initial patents last for 20 years and may be extended to account for time spent in clinical trials and regulatory review; other laws prevent approval of other manufacturers’ versions of new drugs for about 6 to 7 years, and for new biologics for 12 years. Overall, most new drugs receive about 12 to 16 years of market exclusivity from both kinds of monopoly protection combined. We reviewed the peer-reviewed medical and health policy literature to identify studies that described the different types of patent protection and regulatory exclusivities that shield brand-name prescription drugs from competition and thus help to sustain high drug prices. We also identified potential policy reforms intended to modify exclusivity periods to address public health needs by balancing drug affordability and industry revenue. The goal of policy in this area should be to ensure that drug market exclusivity periods provide for fair return on investment but do not indefinitely block availability of lower-cost generic drugs.

https://jamanetwork.com/HttpHandlers/ArticlePdfHandler.ashx?journal=intemed&articleId=2653014&pdfFileName=jamainternal_kesselheim_2017_sc_170006.pdf

Determinants of Market Exclusivity for Prescription Drugs in the United States

Drug repurposing (i.e., finding novel uses for existing drugs) is essential for maximizing medicines’ therapeutic utility, but obtaining regulatory approval for new indications is costly. Policymakers have therefore created temporary indication-specific market exclusivities to incentivize drug innovators to run new clinical investigations. The effectiveness of these exclusivities is poorly understood. To determine whether generic entry impacts the probability of new indication additions. For a cohort of all new small-molecule drugs approved by the FDA between July 1997 and May 2020, we tracked new indications added for the subset of drugs that experienced generic entry during the observation period and then analyzed how the probability of a new indication changed with the number of years since/to generic entry. Of the 197 new drugs that subsequently experienced generic entry, only 64 (32%) had at least one new indication added. The probability of a new indication addition peaked above 4% between 7 and 8 years prior to generic entry and then to dropped to near zero 15 years after FDA approval. We show that the limited duration of exclusivity reduces the number of secondary indications significantly. Status quo for most drug innovators is creating novel one-indication products. Despite indication-specific exclusivities, the imminence of generic entry still has a detectable impact on reducing the chances of new indication additions. There is much room for improvement when it comes to incentivizing clinical investigations for new uses and unlocking existing medicines’ full therapeutic potential.

/pdf/repurposing-existing-drugs-for-new-uses-a-cohort-study-of-kzomqfl0v5.pdf

Repurposing existing drugs for new uses: a cohort study of the frequency of FDA-granted new indication exclusivities since 1997

A Method for Approximating Future Entry of Generic Drugs

Objective: To provide updated evidence on US trends in: market exclusivity periods (MEPs, time between brand-name drug launch and first generic competitors) for new molecular entities (NMEs); likelihood, timing and number of Hatch-Waxman Act Paragraph IV patent challenges; and generic drug penetration.Methods: This study used IMS Health National Sales PerspectivesTM US data to calculate MEPs for the 288 NMEs experiencing initial generic entry between January 1995 and December 2014, the number of generic competitors for 12 months afterward (by level of annual sales prior to generic entry), and generic penetration rates. The likelihood, timing and number of Paragraph IV challengers were calculated using data from Abbreviated New Drug Approval (ANDA) letters, the FDA website, public information searches, and ParagraphFour.com.Results: For drugs experiencing initial generic entry in 2013–2014, the MEP was 12.5 years for drugs with sales greater than $250 million (in 2008 dollars) in the year prior to ...

/pdf/updated-trends-in-us-brand-name-and-generic-drug-competition-4dztdvrhhh.pdf

Updated trends in US brand-name and generic drug competition

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Updated trends in US brand-name and generic drug competition