Experts discuss the value of IP at Senate Judiciary Committee hearing

The Senate Judiciary Committee recently hosted a hearing to examine competition in the prescription drug marketplace, with an emphasis on intellectual property (IP) protections.

IP protections play a vital role in incentivizing the development of lifesaving biopharmaceutical products, driving competition and lowering costs for patients at the pharmacy counter. These protections give companies the certainty they need to make the long-term and risky investments required to bring new medicines to patients for conditions ranging from HIV to cancer to Sickle Cell.

PhRMA’s Vice President for Policy and Research, Jocelyn Ulrich, testified on behalf of America’s biopharmaceutical researchers and manufacturers, highlighting the benefits of America’s innovation ecosystem, real barriers to competition in the marketplace and commonsense solutions to drive future innovation and reduce costs for patients.

Here’s four things to know from the hearing:

1. IP protections help save lives and save money across the health care system.

Innovative medicines are a crucial part of the solution to our most pressing health care challenges, as they dramatically reduce disease burden while helping to avoid other costly medical care by keeping patients healthy and out of the hospital. Importantly, unlike other parts of the health care system, new medicines also provide long-term value as they pave the way for low-cost generics and biosimilars, which continue to improve health while keeping spending on prescription medicines a small share (14%) of overall health care spending.

2. IP protections are a catalyst — not a barrier — to robust competition in the market.

Medicines improve patient outcomes and help to reduce overall health care costs while paving the way for lower-cost generics and biosimilars that bring long-term value to patients and the health care system. Today, 90% of prescriptions are filled with generics and biosimilars, offsetting most of the health care spending on new brand drugs. Net prices for brand medicines are projected to decline by up to 4% annually through 2028.

3. Anti-competitive tactics by pharmacy benefit managers (PBMs) deny access to low-cost medicines.

A growing share of PBM compensation is tied to the list prices of medicines, which experts note can distort the market by incentivizing PBMs to prefer medicines with higher list prices and large rebates over lower cost alternatives. Slow uptake of lower cost generic and biosimilar alternatives is directly related to the incentives for PBMs and their affiliated specialty pharmacies to prefer medicines with higher list prices, which can increase both profits for PBMs and costs for patients. Newly available biosimilars for a leading biologic to treat autoimmune conditions initially struggled to gain market share due to lack of coverage by the big three PBMs which control 80% of the market. According to a recent report from IQVIA, biosimilar versions only accounted for 1% of the market at the end of last year. As the report noted, PBMs and PBM-owned specialty pharmacies have strong financial incentives to encourage uptake of the versions that are most profitable for them.

4. America’s biopharmaceutical research companies support policies that foster innovation, competition and lower out-of-pocket costs for patients.

PhRMA supports policies that foster a robust, competitive market for medicines, including brand to brand competition and generic and biosimilar medicines, while providing needed incentives for continued biopharmaceutical innovation. Instead of focusing on proposals that undermine the competitive marketplace for medicines and disincentivize innovation, we encourage a focus on addressing market distortions and pragmatic solutions.

For more information on the indispensable role of intellectual property protections in biomedical innovation, you can read more here.