We at HHS, and everyone in American healthcare, have deep admiration for what the Senator did over the course of his career to improve the health and well-being of Americans, including the work he did in designing the Children’s Health Insurance Program and Medicare Part D. With both programs, Senator Hatch showed that smart policy can help deliver better healthcare for Americans—and that government policy needs to be attentive to the changing nature of American healthcare.
As Prepared for Delivery
Thank you, Senator Hatch, for that introduction. Good afternoon, everyone, and thank you for having me here today.
It's an honor to join all of you for this gathering, and it is an honor to be invited here by Senator Hatch and the Hatch Foundation. Senator Hatch has been a steady and influential presence throughout my career in Washington and in healthcare.
Each of the three times I have appeared before the Senate to be confirmed for jobs at HHS, he introduced me before the Senate Finance Committee, and in all of my time at HHS, he has been a wise counsel and a thoughtful counterpart.
In fact, this is now the second time I've had the pleasure of speaking to a Hatch Foundation gathering, with the first being just before Senator Hatch's retirement.
Many senators may worry that leaving office means they can no longer call on the perspective of Cabinet secretaries whenever they wish, but something about Senator Hatch seems to have left his power to do so undiminished.
We at HHS, and everyone in American healthcare, have deep admiration for what the Senator did over the course of his career to improve the health and well-being of Americans, including the work he did in designing the Children's Health Insurance Program and Medicare Part D. With both programs, Senator Hatch showed that smart policy can help deliver better healthcare for Americans—and that government policy needs to be attentive to the changing nature of American healthcare.
That is why it's fitting to be here to talk about this topic: updating our policies to deliver Americans affordable access to the new wave of expensive medicines, through broader use of biosimilars.
Before I turn to that topic in particular, I want to provide a brief update on another vitally important healthcare issue: the 2019 novel coronavirus outbreak and the Trump Administration's response.
President Trump has made the safety, security, and health of the American people his top priority from day one of our response to the outbreak.
Our hearts go out to people affected by this virus and our gratitude goes out to everyone who has helped respond so far.
The President's bold actions to restrict travel and impose historic federal quarantines bought incredibly valuable time for our healthcare system to prepare for the virus and for the possibility that we need to mitigate its spread here.
At this time, the risk to most Americans from COVID-19 remains low. But that risk can be higher for those who may have exposure to confirmed cases and for those who have traveled to affected areas.
In addition, we now know from the progression of the disease that older people and people with severe underlying health conditions are at higher risk of serious illness or death.
Conditions that raise the risk can include lung disease, cancer, heart disease, stroke, renal disease, liver disease, diabetes, and immunocompromising conditions.
The CDC has put out guidance to remind people who fall into these groups, and families who live with them, that they should be taking particular actions to prepare and protect themselves.
Generally, older adults and people of all ages with these severe underlying health conditions should be taking specific steps to limit their risk.
On top of avoiding contact with people who are sick, washing their hands often, and paying attention for particular symptoms, they should also avoid crowds and places where people gather together in groups, especially in poorly ventilated spaces.
The CDC will be working to spread this information to these populations at particular risk.
This public health awareness work is just one piece of the Trump Administration's unprecedented whole-of-government approach to protect the American people.
At the end of January, he established the White House Coronavirus Task Force, with me as Chairman.
In recent weeks, he has added Vice President Pence to lead the overall, whole-of-government response, as well as Ambassador Debbie Birx, a career global health diplomat and infectious disease expert, to serve as White House Coordinator for the response.
HHS and the White House have been aggressively reaching out to governors and other state and local officials, as well as private industry and provider groups, to ensure we are well-prepared.
We've been in especially close contact with officials in Washington State regarding the outbreak there, to provide them with the expertise they may need.
As you know, on Friday, President Trump signed a supplemental funding bill that provided around $8 billion for the COVID-19 response.
The legislation includes more than $3 billion to support development of vaccines, diagnostics, and therapeutics, through both the National Institutes of Health and through our Biomedical Advanced Research and Development Authority, or BARDA. It includes nearly $1 billion for medical supplies, healthcare preparedness, and surge capacity, including the purchase of supplies for the Strategic National Stockpile, which exists to meet emergency shortages of medical countermeasures.
There is more than $2 billion in funding for public health preparedness at CDC, including nearly $1 billion to support state and local governments. Finally, there is $300 million in funding to support the affordability of an eventual vaccine.
I want to give you a sense of how that work is already proceeding on each of these fronts right now.
Late last month, the NIH launched the first U.S. clinical trial for an investigational antiviral for the virus, at the University of Nebraska Medical Center, and other trials are ongoing around the world.
Meanwhile, while we're still in the early stages of development, we hope to have an effective vaccine in as little as a year to a year and a half.
We've also been extremely focused on expanding our testing capacity. By the end of this past week, 1.1 million tests had been shipped out, to public health laboratories and private labs, made by the CDC and by a private manufacturer. By the end of last week, another 400,000 tests had become available to fill orders.
This private manufacturer, and a number of other private manufacturers, are ramping up production of their tests such that they will have produced an additional 4 million tests by the end of this week.
We're also aware that the outbreak will likely have some impact on the medical product supply chain, so we've been paying close attention to that issue.
FDA has been proactively reaching out to hundreds of manufacturers of FDA-regulated products to gather information about the supply chain, has identified one shortage so far, and is prepared to use the full range of tools they have to mitigate shortages.
If you are involved in running a healthcare organization yourself, please ensure that your organization is continuing to review the plans you have, lean in on preparedness, and be ready to execute on any necessary actions.
I want to encourage your organizations, as needed, to be in touch with us through our Office of Intergovernmental and External Affairs.
Now, I want to turn to your planned topic today: the future of biosimilars as a path to savings for the American healthcare system.
Focusing on this issue shows that all of you recognize a trend that still may not get as much attention as it should: the dramatic growth of expensive biologic drugs as a share not just of drug spending, but of healthcare spending, period.
Today, biologic drugs represent almost 40 percent of prescription drug spending, and that number has been steadily increasing. According to one estimate from 2018, we spend on net $125 billion a year on biologic drugs.
America's biologic spending alone is as large as the entire economy of Puerto Rico.
And yet, the share of that biologic spending that goes to biosimilars is depressingly small: according to the same 2018 estimates, just $1.9 billion a year. Today, in fact, only one biosimilar product has more market share than the reference product. Now, these are discouraging numbers—but there are clear reasons for hope.
First, in many ways, we've been here before. It took a great deal of time, provider education, and gradual cultural acceptance for generic drugs to have the dominant market share they have today in the United States.
When we surmount these barriers for biosimilars, the benefits will be huge: Imagine doing to 40 percent of the pharmaceutical market just some fraction of what generics have already done to the other 60 percent.
Second, we know biosimilars can succeed because so many other wealthy countries have made them work. Countries that take an essentially command-and-control approach to health spending have already seen significant savings.
According to the Biosimilars Forum, 90 percent of global biosimilar sales happen in Europe, even though the U.S. accounts for 60 percent of global biologic sales.
We deliver faster access to new, lifesaving therapies than European health systems do, but delivering the true benefits of those innovations also means equally aggressive work on pro-competitive measures to drive down costs.
We're setting our sights high. To deliver those kinds of benefits, the goal is and has to be pharmacy-level interchangeability, once the data and science support it.
Real progress is being made all the time—and there is a great deal of benefit we can deliver before we get to the FDA's standard of interchangeability.
In 2019, we saw a historic year for biosimilar approvals, with 10 products approved, up from seven in 2018 and five in 2017.
We also saw more biosimilars enter the market, including products for cancer, Crohn's disease, and arthritis.
Efficient review and earlier marketing of approved biosimilars have been the direct results of actions by FDA under its Biosimilars Action Plan.
In November, FDA released a draft guidance to help support development of biosimilar and interchangeable insulin products—one of the most common biologic products and a significant cost for many Americans with diabetes.
Further, in February, FDA finalized its rule around the definition of a biological product, which is intended to clarify the statutory framework under which these products are regulated.
We also have the upcoming March 23 transition of certain biological products, which had been approved as drugs but now will be defined as biologics, to regulation under the Public Health Service Act.
This is an opportunity for more competition and lower costs because it will create the first-ever application pathway for products that are proposed as biosimilar to or interchangeable with these transitioning products. FDA also recently updated the Purple Book, making it easily searchable for the first time.
We also know that it's not just the regulation, but also economics and payment incentives, that are holding back biosimilars.
We've sought out every possible avenue we have to fix that.
In 2017, CMS began giving each biosimilar product its own payment code within Medicare Part B, and in 2018, we began allowing Medicare Advantage plans to have beneficiaries start on a biosimilar product before trying the reference product.
We've already seen major insurers plans put these tools to use, reducing costs for the taxpayer and, importantly, reducing out-of-pocket costs for patients.
We're also looking beyond payments and regulation. FDA recently finalized new policies to make it harder for brand drug companies to use citizen's petitions to prevent biosimilars and generics from coming to market in the time frame that the law intended.
Then, this past month, the FDA and the Federal Trade Commission signed a joint statement agreeing to take a number of pro-competitive steps.
That includes deterring behavior that impedes access to samples needed for biosimilar development, taking appropriate action against false or misleading communications about biologics, and having the FTC review patent settlement agreements involving biologics for antitrust violations.
We're pleased that the FTC is strongly committed to promoting competition and fairness for consumers in this space, and we look forward to working closely with them on action where appropriate.
Lastly, we're also very optimistic that Congress will act on the historic opportunity it has to boost competition and lower costs by passing bipartisan drug pricing reform.
The last time Congress was this close to making a meaningful dent in Americans' drug costs, they did it—by passing Medicare Part D, in no small part thanks to Senator Hatch's leadership.
While the Grassley-Wyden legislation supported by President Trump does focus mostly on Part D drugs, it also would include a number of changes expected to increase biosimilar uptake.
It would increase Medicare Part B's reimbursement for biosimilars to ASP plus 8 for five years, which we think could help speed us over some adoption hurdles.
It would also require us to add a measurement of access to biosimilars to the star rating system for Medicare Advantage products, a topic that we've raised in requests for information from CMS.
What I've laid out for you are a number of important actions we've taken and are considering to get to where we all want to be: a truly competitive market for biosimilars that delivers American patients and American taxpayers lower costs.
I want to encourage all of you to come to us with more ideas that you have. Our door is always open, and President Trump is always open to ideas that can lower Americans' drug costs while keeping patients at the center.
I believe, when you combine the President and his administration's commitment, with the clear consensus around the importance of biosimilars from Congress and healthcare payers, that we are nearing an inflection point. Americans are demanding lower drug costs, and lower healthcare costs, period.
They have a President who is intent on delivering that, and who is unafraid to take on powerful interests to make it happen.
But we cannot succeed without sustained attention on these stubborn challenges, and that's where all of you come in.
So thank you for the work that all of you are doing to bring down drug costs for Americans who need it most, and thank you again for having me here today.
