The Elephant in the Room: Drug Prices
Have you noticed that everyone’s finally talking about drug prices? In May, President Trump and Health and Human Services (HHS) Secretary Alex Azar released several plans, ideas and a 39-page “blueprint” with more than 100 questions about how to lower U.S. drug prices. The government identified four problems and four kinds of solutions. There are some good ideas here, and some possibly bad, but you can be sure that in some way, rheumatology will be changed by this process.
The four central problems (per the Trump administration):
- High list prices;
- Government programs overpaying due to lack of negotiation tools (Secretary Azar says he’s not interested in price fixing or restricting access to particular drugs);
- High out-of-pocket costs; and
- Foreign free-riding.
The four solutions:
- Improved competition;
- Better negotiation;
- Incentives for lower list prices; and
- Lowering out-of-pocket costs.
The ACR began responding to these questions in advance of the release of the blueprint and request for information (RFI). The ACR’s coalition letter to the administration in March was co-signed by several other medical groups. The College has published a set of principles for drug price reform that support ways to improve patient access to high-quality medicines. By mid-July, the ACR will respond formally to the administration’s RFI. Here’s an initial analysis of what’s good, possibly bad, and what’s new about Trump’s proposals:
- The good: Forcing payers to pass negotiated drug cost savings on to patients; prohibiting plans from gagging pharmacists to prevent them from telling patients when it’s cheaper to pay cash than use insurance; promoting transparency with pharmacy benefit manager (PBM) middlemen and reducing their market consolidation; and promoting biosimilar development through REMS and other reforms.
- The possibly bad: Inserting step therapy and other utilization management techniques into Medicare Part B by moving some Part B (physician-administered) drugs into the Part D system, restricting Medicare drug formularies by allowing payers to approve one drug (instead of two) per class and recreating a competitive acquisition program for Part B drugs that was previously unworkable.
- What’s new: The Trump administration seems to be getting serious here. If you don’t think rheumatology will be affected by this administration’s plans, well, are you sitting down? Read this tweet string, in which I highlighted and responded to a talk radio transcript of Trump’s top health official, Secretary Azar, promoting transparency reform by describing misleading scenarios in which rheumatologists profit by secretly prescribing more expensive, less effective drugs. Our mission is clear: clarify how valuable the rheumatology profession and its medicines are to our patients, and promote reforms that improve, not reduce, Americans’ access to high-quality drugs. We’re already communicating this message to top policymakers at the HHS, we’re banding together with other groups, and we’ll need your input. Stay tuned.
Biosimilars
Are you prescribing biosimilars yet? Biosimilars are the No. 1 issue of our profession right now. The best way to reduce drug prices for rheumatology biologics may well be to spur safe, effective biosimilars into the U.S. market ASAP. I would humbly submit that the one thing we and our patients can do right now about drug prices is to become more comfortable with biosimilars. (Read the ACR’s educational white paper.) Still, the largest hurdle for biosimilars may be the middlemen in the drug distribution system. FDA Commissioner Scott Gottlieb, MD, worries the PBM business model will prevent biosimilars from getting on formularies, because less expensive drugs might not provide PBMs with high enough rebates, and thus, fewer biosimilars would get to market to compete on price.
