Your work is central to ensuring that Americans get the high-quality care they need and the better health they deserve. Your work is central to ensuring that Americans can choose, in consultation with their doctor, the care that’s right for them. And your work is central to delivering lower costs—especially lower out-of-pocket costs to protect patients’ pocketbooks and ensure they can afford to take their medicines as directed.
Hello, everyone, and thank you for inviting me to address all of you today. It’s an honor to address so many leaders of America’s generic drug and biosimilars industry, especially at this important time for American healthcare.
First, I want to commend you for the work that you have done to help protect American lives and lives of people around the world during the pandemic. While we continue to face concerning trends in case counts around the country, we have made tremendous progress.
We know a great deal more now than we did at the beginning of the crisis about how to treat COVID-19. That includes tools like corticosteroids, many of which are low-cost generics that have, in all likelihood, saved thousands of American lives.
This week, we received more encouraging news: the release of incredibly exciting early data from Pfizer’s vaccine trial. As we move toward the rollout of safe and effective vaccines and continue to learn more about the virus, access to the medicines you make remains absolutely vital.
You’ve also helped ensure that Americans’ access to drugs for all purposes has remained reliable. At the beginning of this crisis, there were real worries about stresses on our supply chains. But with your help, these supply chains have proven resilient, and we look forward to further strengthening our pharmaceutical supply chains, including here in the United States, in the years to come.
Even as we’ve battled the pandemic, we have not let up in executing on the President’s vision for healthcare: an affordable, patient-centered system; one that treats you like a person, not a number; and delivers better care, more choice, and lower costs.
As all of you know, affordable access to prescription drugs, and the work you do toward that goal, is absolutely central to each part of that vision. Your work is central to ensuring that Americans get the high-quality care they need and the better health they deserve. Your work is central to ensuring that Americans can choose, in consultation with their doctor, the care that’s right for them. And your work is central to delivering lower costs—especially lower out-of-pocket costs to protect patients’ pocketbooks and ensure they can afford to take their medicines as directed.
Working with all of you is absolutely key to delivering those outcomes for every American. Thankfully, with your help, we’ve been able to deliver results.
Since we released the President’s drug pricing blueprint in May 2018, the official government measurement of drug price inflation has been flat. That measure saw its largest drop in nearly 50 years from June 2018 to June 2019.
I don’t think that’s because of the goodness of drug companies’ hearts—in fact, having worked at a drug company myself, I can more or less assure you it’s not.
In significant part, that’s because of the market discipline that your companies provide and because of the various ways we’re unleashing that here at HHS.
Under President Trump, I believe we’ve seen more efforts to promote competition in prescription drug markets from HHS and our colleagues at FDA than we’ve seen since the passage of Hatch-Waxman in the 1980s.
The results speak for themselves: We’ve set records for approvals of generic drugs in 2017, 2018, and 2019, while also accelerating approvals of biosimilars.
The savings that these drugs deliver are massive. As AAM’s annual report notes, in 2019, savings from generic drugs in the United States totaled $313 billion—including $96 billion of savings in Medicare and $48.5 billion in Medicaid.
We’ve also taken steps to drive not just faster generic and biosimilar approvals, but also faster adoption of these options. We’ve allowed Part D plans to accelerate substitutions of generic drugs for brand drugs, and we’ve given Medicare Advantage plans new tools to negotiate lower prices that they’ve already used to substitute lower-cost biosimilars.
But we’re not done yet. As just one example, a 2018 HHS report found that Medicare Part D plans spend about $9 billion on brand-name drugs that have a generic alternative. By our calculations, choosing generics in these situations would mean $3 billion in total savings for Part D, including $1.1 billion in out-of-pocket savings.
I would love for Medicare not to be spending that money—and I’d be even more pleased for American patients to be enjoying those savings, too.
That’s why, this summer, the President issued clear directives to HHS with his executive orders on drug pricing: First, eliminate kickbacks to middlemen, and second, end foreign freeriding.
As all of you know, today’s broken rebate system is a significant impediment to generic adoption, the main driver of higher list prices on brand drugs, and maybe the single biggest reason why Americans so often face sticker shock at the pharmacy counter.
That’s why we’re working to finalize that rule—and deliver American patients what might be the most consequential reform to how their drugs are priced at the pharmacy counter, ever.
We’re also working to propose rules around Part B drugs that have the potential to be equally significant for American drug costs—especially with regard to rapidly rising expenditures on biologics.
Today, biologics represent almost 40 percent of prescription drug spending. Adoption of biosimilars has been slower than we’d like, in part because the Part B system actually encourages prescribing more expensive options.
If we can bring to the biologics market just a fraction of the savings that generic drugs have brought to American patients, that will be a transformative shift—and with your help, I believe we can make it happen.
This year has been an incredibly trying time for so many Americans and for our healthcare system. But it has only added to our resolve that Americans have access to the healthcare they need, at a cost they can afford.
Even as we battle the pandemic, we will continue fighting to get American patients access to affordable prescription drugs, and we look forward to continued partnership with all of you in making that happen.
Thank you for all you do for American patients, and thank you again for inviting me to address you today.
