No quick fix for Rx price spikes

Modern Healthcare - - NEWS - By Har­ris Meyer

Pa­tients are com­plain­ing their drugs are un­af­ford­able. In­sur­ers are protest­ing that spe­cialty drug costs are forc­ing them to jack up pre­mi­ums. State Med­i­caid direc­tors say spik­ing phar­macy costs are forc­ing them to make painful cov­er­age trade-offs.

Congress has been grilling drug com­pany ex­ec­u­tives over their big price hikes. Demo­cratic pres­i­den­tial nom­i­nee Hil­lary Clin­ton has pro­posed un­prece­dented fed­eral re­view of price hikes. Both Clin­ton and GOP nom­i­nee Don­ald Trump fa­vor let­ting con­sumers buy cheaper drugs from for­eign coun­tries. Both also have said Medi­care should ne­go­ti­ate prices with drug­mak­ers, though Trump’s cam­paign web­site doesn’t men­tion this.

But de­spite the grow­ing po­lit­i­cal furor, the odds of sig­nif­i­cant fed­eral ac­tion on drug costs this year or next are slim, ex­perts say.

That may sur­prise vot­ers, given the tor­rents of rhetoric and prom­ises from politi­cians. Yet the is­sue of how to make drugs more af­ford­able for in­di­vid­ual pa­tients and so­ci­ety is so com­plex and sen­si­tive—and drug in­dus­try op­po­si­tion so for­mi­da­ble—that a com­pre­hen­sive, po­lit­i­cally vi­able ap­proach to solv­ing the prob­lem has yet to emerge.

The im­passe has left pa­tients, in­sur­ers and health­care provider groups push­ing for im­me­di­ate re­lief from the most egre­gious price spikes, like My­lan’s 550% list price in­creases over eight years on EpiPen ep­i­neph­rine auto-in­jec­tors, a must-have prod­uct for coun­ter­act­ing al­ler­gic re­ac­tions.

Some are hop­ing the EpiPen brouhaha will mark a tip­ping point in the de­bate. “This affects fam­i­lies and chil­dren, and it’s a po­ten­tially life-threat­en­ing sit­u­a­tion,” said John Rother, CEO of the Na­tional Coali­tion on Health Care and head of the Cam­paign for Sus­tain­able Rx Pric­ing, a broad coali­tion of groups ad­vo­cat­ing mar­ket-based ap­proaches to curb­ing drug costs. “It’s a sim­pler prob­lem to un­der­stand than the is­sues raised by other drugs.”

Pub­lic opin­ion clearly backs quick ac­tion. A Kaiser Fam­ily Foun­da­tion sur­vey last month found 77% of Amer­i­cans say pre­scrip­tion drug costs are un­rea­son­able, with 82% back­ing giv­ing Medi­care the power to ne­go­ti­ate drug prices.

And the mount­ing pub­lic pres­sure has pro­duced some re­sults. One drug­maker, Al­ler­gan, re­cently promised to vol­un­tar­ily limit price hikes on its prod­ucts to once a year and keep them to sin­gle-digit per­cent­age in­creases.

But those are the ex­cep­tions—not the rule. Other drug com­pa­nies are shift­ing the blame to in­sur­ers, ar­gu­ing that health plans are push­ing ex­ces­sive costs on mem­bers through high de­ductibles and co­pay­ments.

Mak­ing pol­icy ac­tion tricky is that ris­ing prices for generic, brand-name and bi­o­logic prod­ucts each have dif­fer­ent causes, and each requires a dif­fer­ent set of poli­cies to bring un­der con­trol. And each cat­e­gory has its own set of stake­hold­ers ready to thwart de­ci­sive ac­tion that would bring down prices.

With brand-name drugs, many stake­hold­ers have bought into the idea that lower prices will re­duce the fi­nan- cial in­cen­tives for de­vel­op­ing new break­through prod­ucts. With bi­o­log­ics, pa­tient and physi­cian groups worry that po­ten­tially cheaper biosim­i­lars may not have the same ef­fi­cacy as the brand-name bi­o­log­ics they re­place.

There has been a greater will­ing­ness to tar­get prof­i­teer­ing on generic and older branded prod­ucts, where triple-digit price in­creases seem ab­surd on their face. But ris­ing prices for gener­ics have been trig­gered by a va­ri­ety of fac­tors, in­clud­ing a short­age of pro­duc­ers for harder-to-man­u­fac­ture in­jecta­bles. That leaves the re­main­ing man­u­fac­tur­ers with hard-to-counter mar­ket power.

Ide­ol­ogy also gets in the way. Even af­ter the elec­tion, it is un­likely Repub­li­cans and Democrats will reach an agree­ment on drug-cost leg­is­la­tion. That’s par­tic­u­larly true for Demo­cratic plans to give Medi­care the power to ne­go­ti­ate prices for the Part D drug ben­e­fit pro­gram. There’s at best an out­side chance they could come to­gether on nar­row mea­sures to en­hance com­pe­ti­tion in the generic mar­ket.

The pow­er­ful drug in­dus­try tra­di­tion­ally has been able to fend off gov­ern­ment ef­forts to counter price hikes. It suc­cess­fully lob­bied Congress in 2003 to bar Medi­care from ne­go­ti­at­ing prices in the new Part D pro­gram. The in­dus­try has been aided by op­po­si­tion from physi­cian and pa­tient ad­vo­cacy groups, who fear that cost-ben­e­fit cal­cu­la­tions will be used to cut them off from high-priced but ef­fec­tive medicines.

In­deed, fierce crit­i­cism from doctors and pa­tients has the CMS tak­ing a sec­ond look at its re­cent pro­posed rule to re­duce Medi­care Part B pay­ments to doctors who ad­min­is­ter ex­pen­sive drugs in their of­fices, the most com­mon mode for can­cer chemo­ther­apy drugs. Shift­ing to a lower mark-up and a higher fa­cil­ity fee was seen as a way to nudge them to use cheaper, equally ef­fec­tive al­ter­na­tives.

“Prospects for leg­isla­tive change are not high and are prob­a­bly a lit­tle ways off,” said Dr. Aaron Kes­sel­heim of Har­vard Med­i­cal School, who co-au­thored a re­cent JAMA ar­ti­cle sur­vey­ing var­i­ous re­form pro­pos­als. “But maybe things are start­ing to change in a way that might pro­vide an open­ing for some re­form.”

“It’s hit­ting the point where the drug cost is­sue has got ev­ery­one’s at­ten­tion, but I’m not sure what the coali­tion would be that would sup­port heavy-handed gov­ern­ment in­ter­ven­tion,” said Chip Kahn, CEO of the Fed­er­a­tion of Amer­i­can Hospi­tals, which is par­tic­i­pat­ing in the Cam­paign for Sus­tain­able Rx Pric­ing.

Out­side the leg­isla­tive arena, there is grow­ing sup­port for the idea that drug prices should be based on the value they pro­vide for pa­tients. A few pri­vate in­sur­ers and drug com­pa­nies are ex­per­i­ment­ing with out­comes-based ar­range­ments.

But these pri­vate-mar­ket ini­tia­tives are mov­ing slowly be­cause stake­hold­ers are far from reach­ing a con­sen­sus on how value should be cal­cu­lated. That was demon­strated by re­cent drug in­dus­try at­tacks on ef­forts by the not-for-profit In­sti­tute for Clin­i­cal and Eco­nomic Re­view to as­sess whether par­tic­u­lar drugs are worth the price.

“No one knows the an­swer to the ques­tion of value,” said Dr. Joshua Of­man, a se­nior vice pres­i­dent at Am­gen, dur­ing an Amer­i­can En­ter­prise In­sti­tute panel dis­cus­sion on

“It’s hit­ting the point where the drug cost is­sue has got ev­ery­one’s at­ten­tion, but I’m not sure what the coali­tion would be that would sup­port heavy-handed gov­ern­ment in­ter­ven­tion.” Chip Kahn, CEO of the Fed­er­a­tion of Amer­i­can Hospi­tals

drug pric­ing last month.

That panel fea­tured a con­tentious ex­change be­tween Of­man and two prom­i­nent ad­vo­cates of value-based pric­ing, ICER CEO Dr. Steven Pear­son and Dr. Peter Bach, direc­tor of the Cen­ter for Health Pol­icy and Out­comes at Me­mo­rial Sloan Ket­ter­ing Can­cer Cen­ter, New York. “We showed you our num­bers; you show us your num­bers,” Pear­son said. “Let’s all wres­tle with that in pub­lic.”

At stake in the bat­tle is a U.S. drug mar­ket worth more than $350 bil­lion a year. Pre­scrip­tion drug costs now ac­count for about 17% of to­tal U.S. health­care spending and were the fastest ris­ing com­po­nent of that spending over the past year.

List prices for pre­scrip­tion drugs rose more than 12% in 2015, al­though net prices rose only 2.8%, ac­cord­ing to IMS Health. This year, most large drug com­pa­nies re­ported that price in­creases boosted their rev­enue. Per capita spending in the Medi­care Part D pro­gram rose 11.6% last year, more than in the past due partly to price spikes for brand-name drugs, ac­cord­ing to the Medi­care trustees’ re­port.

De­spite all the talk about the need for ac­tion, when some­one pro­poses or im­ple­ments even rel­a­tively mod­est mea­sures to ad­dress drug costs, there’s of­ten a fu­ri­ous back­lash. One mul­ti­ple myeloma pa­tient wrote in an op-ed re­spond­ing to ICER’s crit­i­cal eval­u­a­tion of the prices of drugs to treat his can­cer condition: “I’m hor­ri­fied by ICER’s cost-cut­ting pro­pos­als, which … would cost the lives of 44,000 myeloma pa­tients over the next five years. I don’t in­tend to be in that num­ber.”

Emo­tional crit­i­cisms like this sug­gest that the Amer­i­can pub­lic may be un­pre­pared for ex­plicit ef­forts to eval­u­ate whether a drug or other type of treat­ment is worth the cost—un­like in other ad­vanced coun­tries such as Great Bri­tain that openly weigh costs ver­sus ben­e­fits in mak­ing cov­er­age de­ci­sions. “This is a no-go zone,” lamented Yev­geniy Fey­man, a health pol­icy re­searcher at the con­ser­va­tive-lean­ing Man­hat­tan In­sti­tute. “Ev­ery­one im­me­di­ately jumps to ra­tioning and death panels.”

De­spite the sen­si­tiv­ity of the is­sue, Demo­cratic stan­dard­bearer Clin­ton has of­fered an ambitious pack­age of mea­sures to re­duce drug costs. A bi­par­ti­san group of sen­a­tors has of­fered leg­is­la­tion to make it eas­ier to bring generic prod­ucts

“This is a no-go zone. Ev­ery­one im­me­di­ately jumps to ra­tioning and death panels.”

Yev­geniy Fey­man, health pol­icy re­searcher at the Man­hat­tan In­sti­tute

“Ev­ery­one should be able to agree that drug com­pa­nies shouldn’t use reg­u­la­tory pro­cesses as a way to de­lay com­pe­ti­tion and keep pre­scrip­tion drug prices high.”

Sen. Amy Klobuchar of Min­nesota

to the mar­ket. A sep­a­rate bi­par­ti­san Se­nate group in­tro­duced a bill to re­quire drug­mak­ers to tell HHS in ad­vance why a price in­crease of more than 10% is jus­ti­fied.

Ma­jor stake­hold­ers also are weigh­ing in. The Cam­paign for Sus­tain­able Rx Pric­ing, which in­cludes providers, in­sur­ers, em­ploy­ers and con­sumer groups, has out­lined mea­sures to boost price trans­parency, com­pe­ti­tion and value-based pric­ing. But even such mar­ket-based ap­proaches may need fed­eral leg­is­la­tion to pro­vide fund­ing and es­tab­lish a data in­fra­struc­ture, Rother said.

Drug in­dus­try trade groups, aware that their pub­lic im­age has been tar­nished, are rolling out ma­jor pub­lic re­la­tions cam­paigns. They are also mas­sively boost­ing their lob­by­ing to shoot down un­wanted leg­is­la­tion and reg­u­la­tion.

The Biotech­nol­ogy In­no­va­tion Or­ga­ni­za­tion re­cently un­veiled an “In­no­va­tion Saves” ad cam­paign fea­tur­ing pa­tients who have been helped by its mem­bers’ prod­ucts. The Phar­ma­ceu­ti­cal Re­search and Man­u­fac­tur­ers of Amer­ica trade group, ac­cord­ing to Politico, is plan­ning to spend hun­dreds of mil­lions of dol­lars on a post-elec­tion ad cam­paign.

“We’re un­der pres­sure and scru­tiny like never be­fore,” Jim Green­wood, BIO’s CEO, told Bloomberg. “We want to make the point that these drugs, whether they’re ex­pen­sive or not, do save lives.” At the same time, he blasted in­sur­ers for hurt­ing con­sumers with high de­ductibles and coin­sur­ance, and ripped phar­macy ben­e­fit man­agers for prof­i­teer­ing.

Given pharma’s clout in Wash­ing­ton, some drug price war­riors are turn­ing to the states. Cal­i­for­nia and Ohio vot­ers will de­cide bal­lot ini­tia­tives in Novem­ber that would re­quire state gov­ern­ment pro­grams to pay no more for pre­scrip­tion drugs than the prices paid by the U.S. Veter­ans Af­fairs Depart­ment, which ne­go­ti­ates rates and cur­rently gets a 24% dis­count off av­er­age man­u­fac­turer prices.

Pharma groups are spending tens of mil­lions of dol­lars to de­feat those bal­lot mea­sures, ar­gu­ing they would hurt pa­tient ac­cess to in­no­va­tive drugs. In­de­pen­dent ob­servers cau­tion that forc­ing drug­mak­ers to of­fer big dis­counts to state pro­grams could lead them to raise prices for pri­vate­sec­tor cus­tomers.

Elsewhere, Ver­mont re­cently passed a law re­quir­ing drug­mak­ers to jus­tify price hikes, while Mary­land, Penn- syl­va­nia and other states are con­sid­er­ing var­i­ous price trans­parency mea­sures.

Those fa­vor­ing ac­tion to curb drug costs hope pub­lic out­rage trig­gered by the re­cent EpiPen con­tro­versy con­tin­ues to boil. Spurred by wide­spread anger over price hikes, Hil­lary Clin­ton last month pro­posed a fed­eral re­view process to de­ter­mine if “out­lier” price in­creases for longestab­lished pre­scrip­tion drugs are jus­ti­fied. When the in­creases were deemed not mer­ited, the gov­ern­ment could buy and pro­vide alternative ther­a­pies to pa­tients, al­low tem­po­rary im­por­ta­tion of lower-priced drugs from for­eign coun­tries and fine the drug com­pa­nies in­volved.

Pharma groups and con­gres­sional GOP lead­ers quickly sig­naled their strong op­po­si­tion to Clin­ton’s pro­posal. “The Clin­ton ap­proach to health­care drives you to a one-payer sys­tem, and drives you to ra­tioning, drives you to a place where most con­sumers don’t want to go,” Ian Read, CEO of Pfizer, told in­vestors last month.

Clin­ton and other Democrats also have pro­posed let­ting HHS ne­go­ti­ate Part D prices. Ex­perts warn, how­ever, that this would have lit­tle im­pact un­less Congress also au­tho­rized the agency to ex­clude cer­tain drugs from the Medi­care drug for­mu­lary, as the VA does.

As an alternative, Repub­li­can lead­ers are tout­ing leg­is­la­tion that will speed Food and Drug Ad­min­is­tra­tion ap­proval of new drugs and de­vices; it was passed by the House and is pend­ing in the Se­nate. “The most im­por­tant way to keep prices down is … to pass the 21st Cen­tury Cures bill, which will move new treat­ments and drugs through the reg­u­la­tory … process more rapidly and re­duce their cost,” Repub­li­can Sen. La­mar Alexan­der, chair­man of the Se­nate HELP Com­mit­tee, told Morn­ing Con­sult.

But most ex­perts say that leg­is­la­tion would have lit­tle down­ward im­pact on drug costs, with some say­ing it could ac­tu­ally in­crease costs by ex­pand­ing the num­ber of me-too and marginally ef­fec­tive prod­ucts on the mar­ket. “Can­didly, most Repub­li­cans would ac­knowl­edge it doesn’t do much on drug prices other than en­cour­ag­ing more com­pe­ti­tion,” the Man­hat­tan In­sti­tute’s Fey­man said.

There may be bet­ter prospects for bi­par­ti­san bills to boost com­pe­ti­tion in the generic mar­ket. Repub­li­can Sen. Chuck Grass­ley of Iowa and sev­eral Se­nate Democrats re­cently in­tro­duced a bill to make it eas­ier for generic pro­duc­ers to gain ac­cess to brand-name prod­ucts to con­duct test­ing of generic ver­sions prior to the branded prod­uct’s patent ex­pi­ra­tion.

“Ev­ery­one should be able to agree that drug com­pa­nies shouldn’t use reg­u­la­tory pro­cesses as a way to de­lay com­pe­ti­tion and keep pre­scrip­tion drug prices high,” said Demo­cratic Sen. Amy Klobuchar of Min­nesota, who cospon­sored the bill with Grass­ley.

Grass­ley and Klobuchar also co-spon­sored a bill to make it il­le­gal for brand-name and generic man­u­fac­tur­ers to en­ter into pur­ported pay­off agree­ments to de­lay the introduction of generic prod­ucts.

While strength­en­ing generic com­pe­ti­tion could be the low-hang­ing fruit in tack­ling drug costs, ICER’s Pear­son cau­tioned that in phar­macy pol­icy and pol­i­tics, noth­ing is ever sim­ple. “Even the no-brain­ers end up be­ing more com­pli­cated than we think they are,” he said.

GETTY IM­AGES

Source: Mod­ern Health­care re­port­ing; JAMA

Pro­posed poli­cies for low­er­ing drug prices

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