The quest to cut overly burdensome government regulations as a means to spark economic activity is a cause to which most lawmakers claim to be pledged.
Fighting “red tape” is an easy applause line and can make a politician taking on our frighteningly large federal bureaucracy feel as heroic as a Jedi fighter taking on the Death Star. Context, however, still matters.
“Red tape,” to most, means those especially unnecessary, restrictive and cumbersome rules whose burdens far outweigh their benefits. Nobody would consider the countless regulations involved in, for example, building a landfill near a drinking water supply to be “red tape” but highly necessary and sensible.
Unfortunately, the deceptively titled Biosimilar Red Tape Elimination Act arising from the Senate HELP committee, is devoid of context and seeks to blur the line between “red tape” and sensible healthcare regulations.
Dig deeper, and you will find that the bill would scrap the current system for determining whether a biosimilar pharmaceutical product can be licensed as an interchangeable biosimilar for reference products. This means that the biosimilar can be used as a suitable and often lower-cost substitute for a patient in place of the original prescribed drug. The Food and Drug Administration has the authority to determine safety and efficacy before licenses are granted.
By eliminating the FDA’s risk determination and simply granting all biosimilars licenses, the agency will be throwing important consumer protections out the window. The proper checks allow the FDA to flag risks for threats like immune reactions and confirm that the biosimilar in question would work as effectively as the substituted product.
This kind of overhaul of the system is simply not needed, especially considering the risks. The FDA already has the authority to grant interchangeability designations without going through hurdles like switching studies, so long as they determine there is no risk to consumers. The current dynamic maintains an appropriate balance of safety and efficiency. In this way, the legislation is a solution in search of a problem, and it ignores the factors affecting healthcare quality and access.
For example, the middlemen that wield an increasingly concerning level of power in our healthcare system are sliding under the radar in the debate around this legislation. The bill ignores the largest Pharmacy Benefit Managers (PBMs) that use their market share to drive up prices and increase their own profits. The three largest PBMs control nearly 80 percent of the market and act as a chokepoint in the marketplace, manipulating which drugs patients have access to and at what cost.
This corrosive influence is important when it comes to biosimilars. PBMs operate under a perverse incentive structure. They often push medications with higher list prices because they can leverage larger rebates from manufacturers.
Unsurprisingly, PBMs line their own pockets with the profits rather than pass the savings on to patients. This is borne out in the data — PBMs collect nearly $200 billion annually from negotiated rebates.
Because of this, PBMs have little reason to promote cheaper options on formularies and let market competition work its magic. Instead, they continue to push the most expensive options and are even creating their own lines of biosimilars to further expand their reach and power.
The proposed legislation would clear the way for PBMs to force these products on consumers by eliminating the need for FDA interchangeability designations in a clear attempt to put profit above patient safety. With this advantage, these large conglomerates will continue to eat up the market and snuff out competition.
The stakes for American patients and consumers are high. Healthcare costs continue to strain families’ finances, especially for those who live paycheck to paycheck.
The Biosimilar Red Tape Elimination Act would strip away necessary consumer protections while making no progress in reining rising costs. Instead, large healthcare conglomerates will continue to grow at patients’ expense. Members of Congress must reject this proposal and refocus their attention on genuine solutions.
