A gathering storm for US drug price controls

The concern by both government and private payers for healthcare, as well as among healthcare providers themselves, over drug pricing is percolating again. Whether it’s a recurring element of presidential campaign politics (that could recede after the election cycle winds down) or a new wave of dissatisfaction remains to be seen.

Last week, the Center for American Progress (CAP; Washington), a progressive public-policy group, issued a report, “Enough is Enough: The Time Has Come to Address Sky-High Drug Prices,” driven by a desire to “lower costs, improve public health, and jumpstart innovation.” The policy recommendations include:

• Provide transparency on R&D costs.
• Categorize new drugs by their comparative effectiveness. Using a private, independent organization, categorize new drugs by whether they provide no added benefit, minor added benefit, or significant added benefit compared with existing drugs.
• Develop voluntary recommendations of payment ranges to inform negotiations between payers and drug companies by using a private, independent organization.
• Level the playing field for private-sector negotiations by aggregating the purchasing power of pharmacy benefit managers and payers.
• Provide cost-sharing information for specific drugs to consumers and physicians and allow insurers to have more flexibility in designing their drug formularies.

The full report is available at CAP’s website.

Comparative-effectiveness resources such as those being highlighted by CAP are becoming available as well: The Institute for Clinical and Economic Review (ICER), a Boston research group, has been publicizing “analysis of cost effectiveness and potential budget impact” of newly introduced drugs: most recently, it found that the PCSK9 anti-cholesterol drugs, newly approved by FDA, are “worth” $2,177 annually, compared to the $14,000 range for which they are being initially marketed. Aided by a multimillion-dollar grant from a private foundation, ICER plans to issue its economic analysis timed with the expected launch of expensive, new drugs and devices over the next two years.

“We need prices that make sense,” said ICER president Steven Pearson, MD, in a statement. “Right now, it’s often a black box: we don’t know if we are getting good value with new drugs at these higher prices. With the [foundation] support, ICER hopes to create a path toward a future in which prices better mirror how much better a new drug actually is in improving patients’ lives. This will help reward innovation that makes a difference for patients while making the overall costs of drugs in the health care system a better value.”

PhRMA, the industry’s trade and lobbying group, continually stresses the value of R&D spending the industry makes and the cost savings to healthcare brought about by pharmaceutical intervention. The evolving emphasis on comparative effectiveness and value-based medical care, however, are changing the terms of the debate.

Sept. 23 update:

Presidential candidate Hillary Clinton issued a briefing, together with a speech on Sept. 22, giving details on how she would realign pharma research and reimbursement policies if elected. (Although both her campaign and commentary about it refer to a “plan,” at the moment, this plan is nothing more than a 1,700-word “factsheet;” welcome to campaign-speak!) It picks up some common themes around pharmaceutical price control, such as allowing CMS to negotiate Medicare drug prices, to allow importation of drugs from certain countries abroad (subject to “careful standards” from FDA and others), and expediting approvals of both generics and biosimilars. But it also includes some new ideas: having pharma companies pay rebates if their R&D budgets aren’t sufficiently high; and putting a cap on patients’ out-of-pocket drug copayments (which would impact insurers more than manufacturers). It had been reported that Clinton would promote a ban on direct-to-consumer advertising, but actually, she proposes ending the writeoff as a business expense of such advertising, which would cool but not freeze that activity. The statement tosses around the “billions” that would be saved, either by consumers or by government, on healthcare costs, but there’s no actual accounting of the potential savings.