Health­care lead­ers back feds step­ping in to re­strain drug prices

Modern Healthcare - - NEWS - By Steven Ross John­son

Nearly seven-eighths of the coun­try’s top health­care lead­ers fa­vor the gov­ern­ment tak­ing a big­ger role in curb­ing the ris­ing cost of prescription drugs, while nearly all say that the two-year runup in drug prices has hurt their bot­tom lines.

A whop­ping 90% of CEOs re­spond­ing to Mod­ern Health­care’s lat­est CEO Power Panel sur­vey said ris­ing drug costs were un­der­min­ing their fi­nances. Nearly half (45%) said the im­pact was “very neg­a­tive.”

To deal with the is­sue, a sur­pris­ing 86% of sur­vey re­spon­dents sup­ported giv­ing the fed­eral gov­ern­ment the author­ity to ne­go­ti­ate drug prices on be­half of Medi­care and Med­i­caid ben­e­fi­cia­ries.

“His­tor­i­cally I’m not a big fan of gov­ern­ment in­ter­ven­tion in busi­ness,” said Matthew Aug, CEO of Cox HealthPlans, a Spring­field, Mo.-based in­surer and af­fil­i­ate of in­te­grated health net­work Cox Health. “But I think some in­ter­ven­tion on the part of gov­ern­ment— whether it is on price-set­ting or price in­creases—I think could definitely help peo­ple out.”

“It’s one of those is­sues that are really frus­trat­ing be­cause we can’t get our arms around it,” added Randy Oos­tra, CEO of north­west Ohio-based health sys­tem ProMed­ica. “Staffing we can ad­dress, as well as other is­sues. But drug costs are one of those ar­eas that seem un­stop­pable, unap­proach­able, and really, we’re some­what at a loss on how to ad­dress some of it.”

The CEO Power Panel in­cludes the lead­ers of 100 hos­pi­tal sys­tems, in­sur­ance com­pa­nies, large physi­cian prac­tices, trade groups and not-for-prof­its.

The early Novem­ber sur­vey gen­er­ated re­sponses from 80 health­care lead­ers.

Sev­eral re­cent polls have sug­gested drug prices are now the gen­eral pub­lic’s No. 1 health­care con­cern. Most me­dia scru­tiny has fo­cused on new, spe­cialty brand-name med­i­ca­tions like Gilead Sci­ences’ hep­ati­tis C treat­ment So­valdi, which was ini­tially priced at $1,000 a pill, and on­col­ogy drugs that have come on the mar­ket at prices well above $100,000 per pa­tient per year.

“There is a con­ta­gion of pub­lic con­cern that could re­sult in a shift in con­gres­sional at­ti­tudes to­ward drugs and drug pric­ing,” said Dr. David Blu­men­thal, pres­i­dent of the Com­mon­wealth Fund.

But a more press­ing is­sue for many health­care lead­ers are the high prices be­ing placed on generic med­i­ca­tions, in­clud­ing some that were long avail­able at much lower costs. In the past, wider use of gener­ics of­fered the sav­ings that helped off­set the high costs of brand-name ther­a­pies.

“We’re all used to the new brand-name drugs be­ing priced out of this world,” said Dr. Joseph Vasile, CEO of the Greater Rochester (N.Y.) In­de­pen­dent Prac­tice As­so­ci­a­tion, a 1,225-mem­ber physi­cian group. “But now all of a sud­den in that safe haven—the gener­ics—the prices are sky­rock­et­ing, too. So it’s like you’re get­ting hit from all dif­fer­ent fronts.”

For many health providers and in­sur­ers, the ris­ing cost of gener­ics cou­pled with the high prices on new spe­cialty med­i­ca­tions means drug spend­ing is tak­ing an

“The in­creas­ing pric­ing in branded phar­ma­ceu­ti­cals and in some of the gener­ics com­bined with a long ap­proval process to get new gener­ics in the mar­ket have been cre­at­ing cost prob­lems for our health sys­tems.”

Susan De­Vore, CEO of Premier

“His­tor­i­cally I’m not a big fan of gov­ern­ment in­ter­ven­tion in busi­ness. But I think some in­ter­ven­tion on the part of gov­ern­ment—whether it is on price-set­ting or price in­creases— I think could definitely help peo­ple out.”

Matthew Aug, CEO of Cox HealthPlans

in­creas­ing share of their over­all bud­gets. “The in­creas­ing pric­ing in branded phar­ma­ceu­ti­cals and in some of the gener­ics com­bined with a long ap­proval process to get new gener­ics in the mar­ket have been cre­at­ing cost prob­lems for our health sys­tems,” said Susan De­Vore, CEO of Premier.

But un­like most re­spon­dents, De­Vore op­poses reg­u­la­tory in­ter­ven­tions such as price con­trols, in­stead fa­vor­ing gov­ern­ment ac­tion to cre­ate a more com­pet­i­tive en­vi­ron­ment by al­low­ing more drug­mak­ers to get more prod­ucts onto the mar­ket at a faster rate. “Com­pet­i­tive fric­tion is really im­por­tant to try to keep the cost of pharma as con­tained as pos­si­ble,” she said.

To jus­tify the higher prices, drug­mak­ers or their supporters fre­quently claim the prices re­flect high re­search and de­vel­op­ment costs. Most ex­per­i­men­tal drugs never make it to the mar­ket.

But nearly 6 in 10 CEOs re­jected that ar­gu­ment, al­though a third of the group felt R&D costs “some­times” jus­ti­fied such prices. Many lead­ers said the com­pa­nies ought to be re­quired to re­veal how much it ac­tu­ally costs to de­velop a drug.

The na­tion’s top health­care lead­ers also re­jected the ar­gu­ment that the prices com­pa­nies set on new drugs are based on the clin­i­cal value they bring to pa­tients and the health­care sys­tem. More than three-quar­ters of Power Panel CEO re­spon­dents (76%) felt prices ei­ther did not re­flect or rarely re­flected their clin­i­cal value, while only 10% said they did.

The CEOs in­di­cated many are mov­ing to re­vamp how they make de­ci­sions when pur­chas­ing drugs. An over­whelm­ing 84% sup­port us­ing clin­i­cal path­ways, or stan­dard­ized, ev­i­dence-based prac­tices, to re­duce doc­tors’ reliance on high-cost drugs that of­fer lim­ited clin­i­cal value.

For the most part, physi­cians are cur­rently re­spon­si­ble for de­ter­min­ing drug uti­liza­tion pat­terns. But a plu­ral­ity of re­spon­dents (42%) said physi­cians in com­bi­na­tion with hos­pi­tals and health sys­tems should be pri­mar­ily re­spon­si­ble for as­sess­ing the clin­i­cal value of prescription drugs. A whop­ping 83% sup­ported val­ue­based pric­ing, which links drug re­im­burse­ment to ev­i­dence of clin­i­cal value.

But as a way of ad­dress­ing one of the hot-but­ton top­ics of the cur­rent pres­i­den­tial cam­paign—high drug prices—health­care lead­ers re­jected al­low­ing peo­ple and sys­tems to pur­chase drugs abroad. Only 32% of Power Panel re­spon­dents sup­ported that step.

Paul Kusserow, CEO of lead­ing home health­care ser­vices provider Amedisys, is in that mi­nor­ity. “If there is ac­cess and af­ford­abil­ity else­where and it’s a free mar­ket, con­sumers should be able to work the free mar­ket and op­ti­mize the use of their dol­lar,” he said.

“We’re all used to the new brand-name drugs be­ing priced out of this world. But now all of a sud­den in that safe haven—the gener­ics—the prices are sky­rock­et­ing, too, so it’s like you’re get­ting hit from all dif­fer­ent fronts.”

Dr. Joseph Vasile, CEO of the Greater Rochester In­de­pen­dent Prac­tice As­so­ci­a­tion

“If there is ac­cess and af­ford­abil­ity else­where and it’s a free mar­ket, con­sumers should be able to work the free mar­ket and op­ti­mize the use of their dol­lar.”

Paul Kusserow, CEO of Amedisys

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