The Department of Health and Human Services recent Forum on Prescription Drug Prices, where they encouraged stakeholders (including consumers, providers, employers, manufacturers, health insurance issuers, and representatives from state and federal government) to “share information and discuss ideas” on addressing prescription drug costs while maintaining an innovative marketplace. HHS tried to tamper expectations, repeating time and time again that the gathering would not provide any hints to administration plans to make prescription drugs more affordable, but instead would be used to foster conversation among important, diversified, groups.
While officials acknowledge that rising drug and healthcare costs are multi-faceted problems with no single solution and have yet to lay out a timetable or make an announcement on the next steps the administration plans to take to lower prescription drug costs, there was a general consensus on the issue that it could be addressed via regulation or legislation.
Solutions were discussed all day long, and included suggestions such as: allowing the government to negotiate directly with pharmaceutical companies on behalf of Medicare; requiring greater transparency about how drug makers set their prices; and shifting towards value-based health plans that reward efficiency. Panels throughout the day were designed to foster a common base of knowledge about drug spending, development and innovative approaches that are being tried to control costs and improve access.
Throughout the forum, transparency and increased competition were key issues raised. Some stakeholders felt that further increased transparency in drug pricing is the solution, where others argued that increased competition is what is needed.
Acting Administrator of the Centers for Medicare and Medicaid Services (CMS), Andy Slavitt, pointed to price increases of both specialty drugs and generic medications as problems in need of a solution. While he does understand the desire to “foster a health care system that leads in innovation, delivers affordable, high quality medicines, and results in healthier people with access to the care they need,” he was quick to criticize “the prices of generics available for years [that] have increased substantially [in price] without any additional health benefits for patients.”
Mr. Slavitt also criticized specialty drugs, calling them “a small fraction of prescriptions but nearly a third of all costs.” He did note that the “therapies are expensive to develop,” and called for “discussions and solutions that allow us to bear the cost of development fairly and reasonably and not have it threaten access to the very people the drugs are developed for.”
Industry Response
Pharmaceutical Research and Manufacturers of America (PhRMA) responded by saying that while conversations on cost might be imminent, and they even welcome the opportunity to participate in those discussions, those conversations need to “look at spending across the health care system to find solutions that ensure access to high quality, patient-centered care, and continue to encourage development of innovative, life-changing medicines.”
PhRMA also warns stakeholders that increasingly high cost sharing and restrictions on access are creating barriers for patients, and that hospitals, not prescription drugs, are the primary driver of insurance premium increases.
Christi Shaw, president of Novartis Pharmaceuticals Corporation, highlighted the importance of innovation by comparing the limited treatments available when her mother was previously diagnosed with breast cancer to the wide range of therapies that has kept her sister alive since she was diagnosed with bone marrow cancer, stating “[s]o we get to spend another Thanksgiving with her. We need to make sure patients can access innovation.”
Merck CEO Kenneth Frazier was questioned about the recent showing of pharmaceutical companies who are exhibiting greed. Frazier pushed back, saying that while some drug makers have taken advantage of vulnerable market situations and have charged exorbitant costs, they are in the minority. “We believe great drugs can change the world. We don’t believe profiteering can change the world.”
Frazier also reminded attendees that one of the challenges the industry faces is the restrictions placed on the tools it can use to speak of benefits or risks that are not approved to be included in the drug’s label. “Sometimes in order to have a good sense of what the benefits/risks are, we have to look beyond the label, but we’re restricted by FDA regulations.”
Conclusion
Overall, the administration seems to believe that the current system, where drugs are priced depending on who is paying for them, winds up “obscuring” the true cost of the drug. Therefore, we can expect to hear many more calls for increased transparency of information available about drug pricing and value.
While the issue of drug pricing is quite the newsmaker, the industry continues to emphasize that drug spending makes up just ten percent of health spending overall and the continued growth is expected to rise in line with other health spending. By continuing to point out the same “bad actors” without looking at the bigger picture of what is causing health insurance costs to rise, opportunities are being missed.