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Sarpatwari, Ameet

Recent reports have highlighted dramatic price increases for several older generic drugs, including a number of essential products used to treat deadly infectious diseases. Although most of these medicines have been widely available at reasonable prices for decades, some manufacturers have seized on unique features of the pharmaceutical marketplace to seek substantial profits. In this Perspective, we examine limitations in current price regulation among public and private payors and consider several reforms that could address the problem of expensive generic drugs through improved competition.

In the past decade, the federal government has frequently investigated and prosecuted pharmaceutical manufacturers for illegal promotion of drugs for indications not approved by the Food and Drug Administration (FDA) (“off-label” uses). State governments can choose to coordinate with the federal investigation, or pursue their own independent state investigations. One of the largest-ever off-label prosecutions relates to the atypical antipsychotic drug olanzapine (Zyprexa). In a series of settlements between 2008 and 2010, Eli Lilly paid $1.4 billion to the federal government and over $290 million to state governments. We examined the effect of these settlements on off-label prescribing of this medication, taking advantage of geographical differences in states’ involvement in the investigations and the timing of the settlements. However, we did not find a reduction in off-label prescribing; rather, there were no prescribing changes among states that joined the federal investigation, those that pursued independent state investigations, and states that pursued no investigations at all. Since the settlements of state investigations of off-label prescribing do not appear to significantly impact prescribing rates, policymakers should consider alternate ways of reducing the prevalence of non-evidence-based off-label use to complement their ongoing investigations.

Aaron Kesselheim and colleagues examine potential strategies to promote greater prescribing of generic drugs and follow-on biologics

The 2011 German Pharmaceutical Market Restructuring Act (“AMNOG”) subjected branded, non-rare disease drugs to price regulation based on an assessment of their clinical benefit. Assessment outcomes range from “major added benefit” to “less benefit than the appropriate comparator,” and impact price negotiations beyond the first year on the market. Using data on drugs that entered the market from 2012 to 2016, we evaluated benefit assessment findings, subsequent drug exits, and their correlates. We considered 171 drug-indication pairs, corresponding to 138 different drugs. Of these, 66 drug-indication pairs (55 different drugs) were found to have any additional benefit. Almost all drugs with any positive benefit assessment (98%) remained on the market, while drugs without a positive benefit assessment were over ten times more likely to exit (25% vs. 2%). U.S. policymakers considering how to address rapidly increasing drug costs may draw valuable lessons from the German experience.

Ameet Sarpatwari and Aaron Kesselheim explore whether stripping branded drugs of trademark protection would improve the efficiency and fairness of health care.