The question is no longer if government officials will crack down on drug prices but when and how. This week, President Trump reportedly held meetings with advisors about the issue, and California governor Gavin Newsom's first act in office was to require the state's massive Medicaid program to negotiate drug prices. Plus, a new study in Health Affairs found that price hikes for existing brand-name drugs are largely to blame for the rise in drug spending. As the pricing debate has intensified, a small but vocal number of industry leaders have called for changes to how drugs are paid for. The longstanding #pharma position has often focused on the costs brought by pharmacy benefit managers and other "middlemen" into the system. At #JPMWeek, bluebird bio CEO Nick Leschly called for an installment-based payment model for gene therapies. This comes after years of pharma interest in deals between drugmakers and insurers that tie payment to patient outcomes. More recently, Dr. Peter Bach has proposed Netflix subscription-style payments for hepatitis-C drugs. What's your take? Will these industry-initiated models lower drug costs? Should medications that cure diseases be paid for differently than ones that treat chronic illnesses? #LinkedInHealthCare #JPM19 #JPMHC19
So much complexity — I dont think we understand the full scope of drug pricing and access challenges. The problems extend well beyond fair pricing for important new drugs! Neither regulations nor the market really work, even for generics, where we have insufficient numbers of competitors per drug to prevent pricing abuses and drug shortages.
New payment methods are already being rolled out… Louisiana just signed on to a subscription model to pay for hepatitis C drugs. https://www.washingtonpost.com/health/2019/01/10/louisiana-adopts-netflix-model-pay-hepatitis-c-drugs/?utm_term=.d8725dd741a9 If this proves itself to be a viable approach, payers may find it difficult to not provide rare disease patients access to breakthrough products with long-term benefits.
Some quick ideas: 1) Eliminate volume-based pricing in pharma and maintain a public list price. This would cut out the need for expensive middlemen (at the PBMs and in pharma) and enable the independent pharmacies that also typically produce better health outcomes to remain competitive with larger pharmacy organizations, some of which are more interested in getting reliable foot-traffic for their convenience stores than they are in producing good health outcomes. 2) For CMS-negotiated drug prices, accept the average price of other developed nations unless it can be proven that at least 80% of the R&D for that drug's development was done in the U.S. 3) Follow the lead of most other developed nations and put an economic value on the results delivered by drugs that is based on the quantity/quality of life that is provided. Base this on real world claims data as opposed to pharma-sponsored clinical trials. Put this information into the EHR in a meaningful way and the hundreds of billions that pharma spends on marketing becomes unnecessary. 4) As a tradeoff, extend patent life for mfgs who deliver good value to account for the increased time/expense of bringing these drugs to market
This is upon pharma/Biotech industry - they have messed it up for themselves. We need to keep it simple and not point fingers. If patient or payers on their behalf can get 100% transparency in the process, we need to know about every penny and be able to compare cost and benefits. Then market and social forces would help bring prices down without government involvement. Government could be very effective in enforcing existing laws so that companies are not able to extend their patent protection even by a day. Finally, let Medicare negotiate price for drugs including open up foreign competition.
When applying constructal law one realizes that the future of drug prices will go the same way as almost everything else--towards making them affordable to ever larger and larger markets. It's not governments. It's new players capitalizing on making generic drugs available to more and more people globally, and ultimately radically and dramatically changing the industry's very make up.
The drug component of the mess that is US healthcare is prime for disruption.
As long as the US has a fragmented healthcare delivery system, drug prices will be a major factor in driving healthcare costs. In my opinion, it's immoral and unethical to make life-saving medication, especially long established generics, pricey. Doing so endangers human life for no sound reason.
I’m a fan of P4P but we need to evolve the concept of “best price”.
Managing Director at Gilmartin Group LLC
5 年The headline, explanation and solution example are very different issues. Medicaid already pays the lowest price for drugs available, primarily because the federal govt largely funds medicaid through the states. The mechanism that establishes the price is convoluted and unlikely an easy fix in CA. Every president since Clinton has tried to address this issue only to find out how difficult the legal requirements are, which embed a lot of cost, making it hard to change. The bluebird example, and other gene therapies, are not anything like the existing price issue with current treatments . Gene therapy is a limited duration therapy with life long effect. The issue is how much does someone pay for a treatment that is short but has a very long therapeutic benefit? Does bluebird charge 1M up front or 20K/year for 50yrs? What if the patient changes insurance carriers? what happens if they go on medicaid? or become eligible for medicare? GILD and ABBV HCV drugs cured a disease and had significant benefits for patients. the drugs lowered the number of liver transplants, hospitalizations, other drug expenses for that patient population...GILD was vilified for charging 90K, 1k/pill, but the economic benefit to the system was far greater.