The Bipartisan Policy Center has plans to host three educational forums over the next several months, focused on the national conversation on affordable prescriptions. The purpose of these forums is to inform the conversation, and to help provide an understanding of how private sector decisions and public sector policies impact the prices of drugs and their costs to the healthcare system.
The first of these scheduled forums addressed how drugs are priced and re-priced, who gets what rebate, and how payer actions affect patient access. Dr. Jack Hoadley, a research professor at the McCourt School of Public Policy at Georgetown University, offered the opening remarks, and a panel discussion with Kirsten Axelsen, the Vice President in Worldwide Policy at Pfizer; Mary Dwight, the Senior Vice President for Policy and Patient Assistance Programs at the Cystic Fibrosis Foundation; Tom Moriarty, the Executive Vice President, Chief Health Strategy Officer, and General Counsel of CVSHealth; Dr. Edmund Pezalla, the Vice President and National Medical Director for Pharmaceutical Policy and Strategy at Aetna; and Dr. Wayne Riley, the President of the American College of Physicians.
Opening Remarks
Dr. Hoadley began his opening remarks with a graph of drug spending growth from the 1970s through a projected 2024 amount. He noted that spending growth had remained flat for a period of time, but growth has recently increased fairly quickly and that growth is projected to be high going into the future. He attributed the rise in drug spending, at least in part, to single-source, high-cost drugs, and the likely continuance of rising drug prices can be attributed to specialty drugs in the current pipeline.
Dr. Hoadley believes that drug prices are impacted by the way drugs are paid for. Historically, he said, drugs were not a benefit covered by insurance, and even if they were, the patient could expect to pay upfront for the prescription and hope to be reimbursed by their insurance company. As times changes, and drugs became a covered cost, the price of drugs went up and beneficiary out-of-pocket costs went down.
Dr. Hoadley used his opening remarks to encourage stakeholders to consider the many possible definitions of “price”: ranging from list prices, prices as calculated by large institutional payers, or prices after manufacturer discounts. He also encouraged a review of prices from both the supply side, and the demand side, as well as a more transparent process as to how prices are set.
Panel Discussion
Drug Pricing
Ms. Axelson stated that while the list price is easy to understand and identify, a drug’s true price should consider several factors, including: the value of the drug according to the health plan, the portion of the drug cost the patient will be responsible for, the availability of patient assistance programs, discounts offered, and the availability of hardship exemptions. She also noted that drug pricing becomes more realistic and accurate over time as clinical information becomes available.
Rebates
Related to drug pricing is the subject of rebates. Mr. Moriarty suggested that competition is key and that historically, price competition has resulted in better quality and more access. He also noted that tier placement of a medication had an impact on the rebate received and that oftentimes, the majority of the rebate goes to the plan sponsor who is underwriting the benefit.
Prescribing Practice
Price has an impact on prescribing habits of physicians, too, as noted by Dr. Riley. He noted that one way to drive down prescription costs is to prescribe generic medications more often. However, he also mentioned that some generics are beginning to get extraordinarily expensive as well, concerned that high generic drug prices could lead to a lack of patient adherence and ultimately, patient outcomes.
Transparency
Transparency has been a huge issue and each panelist brought a different perspective to the discussion. For example, Ms. Dwight discussed patient registries, which would allow insight into which treatments are effective for specific individual patients, and which ones tend to be more effective across the board. Ms. Axelsen mentioned that she felt drug pricing is “very transparent” since list prices are available and most companies publish their research and development costs. She believes that when looking at medical services in the healthcare system, drug pricing actually stands out as one of the most transparent. She mentioned that it is oftentimes hard for companies to be even more transparent than they already are since there are regulatory hurdles that are preventing manufacturers from sharing specific information about the medication outside of what can be gathered from clinical trials that support the drug’s approval.
Conclusion
As mentioned, there are several more educational forums to come from the Bipartisan Policy Center over the next several months. There will be one on May 10, 2016, on the way existing federal statutes and regulations impact pharmaceutical innovation, market competition, and costs. The final one is scheduled fro June 16, 2016, which will focus on how pharmaceuticals fit into value-based payment and whether or not there are models for financing breakthrough treatments. These topics are all timely and relevant, and we encourage our readers to stay abreast of discussions revolving around the hot topic of drug pricing.