Advancing Legislation on Drug Pricing - Is There a Path Forward?

Reforming the Medicare Part D Benefit Design: Financial Implications for Beneficiaries, Private Plans, Drug Manufacturers, and the Federal Government

CONTEXT

Reforming the Medicare Part D program-which provides prescription drug coverage to 49 million beneficiaries-has emerged as a key policy priority.

METHODS

The authors evaluate prescription drug claims from a 100% sample of Medicare Part D beneficiaries to evaluate the current spending distribution across different payers for different types of beneficiaries across different benefit phases. They then model how these estimates would change under a proposal to redesign the Medicare Part D standard benefit.

FINDINGS

Spending patterns differ for beneficiaries who do and do not qualify for low-income subsidies. Part D plans face limited liability for total spending under the current standard benefit design, amounting to 36% of total spending for beneficiaries who do not receive low-income subsidies and 28% of total spending for those who do. Proposed reforms would increase plan liability and significantly change the distribution of liability across plans, drug manufacturers, and the federal government.

CONCLUSIONS

Though the original goal of the Part D program was to create a market of competing private plans that provide prescription drug coverage to Medicare beneficiaries, the standard benefit design that was included in the original legislation reflected significant political compromises. Reforming the standard benefit design to give plans more skin in the game could significantly affect competition in the market, with differential impact across drug classes and types of beneficiaries.

The Rhetorical Transformations and Policy Failures of Prescription Drug Pricing Reform under the Trump Administration

Throughout his four years in office, President Trump made prescription drug pricing a focus of his policy agenda. President Trump not only used strong language to criticize the pharmaceutical industry and its practices but also introduced ambitious reform policies that had previously lacked acceptance among Republican policy makers. President Trump appears to have been successful in developing a new populist form of rhetoric that Republicans can use in support of novel drug pricing reforms such as the ones his administration considered. From a policy perspective, however, the Trump administration failed to implement any of their more ambitious reform ideas. This article considers three of the Trump administration's signature policies-state-sponsored prescription drug importation, Medicare Part B international reference pricing, and reforms to the Medicare Part D rebate system-and explores how they represent both the political ambitions and policy failures of the Trump administration. The fate of the Trump administration's prescription drug proposals also reveals lessons about innovation and access, which will be important to ongoing drug pricing reform efforts.

Drug Prices and Value of Oncology Drugs in Italy

OBJECTIVE

The main objective of this study was to evaluate the potential role of efficacy data and other information available at the time of price and reimbursement (P&R) decision-making process within the definition of oncology treatment costs in Italy.

METHODS

The study included all P&R dossiers submitted to the Italian Medicines Agency between July 2015 and December 2017. It prospectively collected the data of the P&R process starting from dossier submission up to the Italian Health Service reimbursement decision. The cost of treatment per patient was estimated using both the list price ("gross cost") and the confidential net price ("net cost") of drug packages and applied to the median duration of treatment. A 2-sample stage Heckman decomposition model was used to evaluate the potential role of efficacy data and other information available at the time of P&R decision making on the gross and net cost.

RESULTS

A total of 37 oncology drugs related to 58 therapeutic indications were analyzed. The multivariate model showed that the variation of progression-free survival is the only variable predictor statistically associated with treatment cost, but this effect was observed only when confidential net prices were used (P=.026).

CONCLUSIONS

Considering the perspective of a developed country having a public healthcare service with a central reimbursement negotiation is determined a relevant reduction in the treatment cost purchased by public payers. This is a useful approach to guarantee the affordability of innovative oncology drugs and to contain public expenditures on healthcare. Furthermore, the negotiation of confidential discounts and agreement clauses in managed entry agreements seemed to reward oncology drugs displaying an added therapeutic benefit.

Correlation Between Changes in Brand-Name Drug Prices and Patient Out-of-Pocket Costs

IMPORTANCE

List prices set by manufacturers for brand-name prescription drugs in the US have been increasing faster than inflation, although confidential manufacturer rebates offset some of these increases. Most commercially insured patients pay at least some out-of-pocket costs for prescription drugs, and higher patient spending is associated with lower adherence and worse health outcomes.

OBJECTIVE

To examine whether price changes for brand-name drugs are correlated with changes in patient out-of-pocket spending and whether this association varies by insurance benefit design.

DESIGN, SETTING, AND PARTICIPANTS

A cohort study of 79 brand-name drugs with available pricing data from January 2015 to December 2017 was conducted, with data obtained from a national commercial insurance claims database.

EXPOSURES

Change in the list prices set by manufacturers and estimated net prices after rebates among non-Medicaid payers.

MAIN OUTCOMES AND MEASURES

Change in median out-of-pocket spending among all patients and stratified by insurance pharmacy benefit design, including high-deductible insurance plans and plans with any amount of deductibles or coinsurance.

RESULTS

Among 79 drugs, median increases were 16.7% (interquartile range [IQR], 13.6%-21.1%) for list prices, 5.4% (IQR, -3.9% to 11.7%) for net prices, and 3.5% (IQR, 1.4%-9.1%) for out-of-pocket spending from 2015 to 2017. Changes in list prices were correlated with changes in net prices (r = 0.34; P = .002). Overall, changes in out-of-pocket spending were not correlated with changes in list prices (r = 0.14; P = .22) or net prices (r = 0.04; P = .71). Among 53.7% of patients who paid any drug deductible or coinsurance, median out-of-pocket spending increased by 15.0%, and changes were moderately correlated with changes in list prices (r = 0.38; P = .001) but not net prices (r = 0.06; P = .62).

CONCLUSIONS AND RELEVANCE

Some commercially insured patients who pay only prescription drug copayments appear to be insulated from increases in drug prices. However, more than half of patients pay deductibles or coinsurance and may experience substantial increases in out-of-pocket spending when drug prices increase. Among these patients, there was no evidence that manufacturer rebates to insurers are associated with patients' out-of-pocket spending. Policies to rein in unregulated annual increases in list prices for brand-name drugs may have important consequences for patient out-of-pocket spending.

Impact of a commercial accountable care organization on prescription drugs

OBJECTIVE

To determine the long-run impact of a commercial accountable care organization (ACO) on prescription drug spending, utilization, and related quality of care.

DATA SOURCES/STUDY SETTING

California Public Employees' Retirement System (CalPERS) health maintenance organization (HMO) member enrollment data and pharmacy benefit claims, including both retail and mail-order generic and brand-name prescription drugs.

STUDY DESIGN

We applied a longitudinal retrospective cohort study design and propensity-weighted difference-in-differences regression models. We examined the relative changes in outcome measures between two ACO cohorts and one non-ACO cohort before and after the ACO implementation in 2010. The ACO directed provider prescribing patterns toward generic substitution for brand-name prescription drugs to maximize shared savings in pharmacy spending.

DATA COLLECTION/EXTRACTION METHODS

The study sample included members continuously enrolled in a CalPERS commercial HMO from 2008 through 2014 in the Sacramento area.

PRINCIPAL FINDINGS

The cohort differences in baseline characteristics of 40 483 study participants were insignificant after propensity-weighting adjustment. The ACO enrollees had no significant differential changes in either all or most of the five years of the ACO operation for the following measures: (1) average total spending and (2) average total scripts filled and days supplied on either generic or brand-name prescription drugs, or the two combined; (3) average generic shares of total prescription drug spending, scripts filled or days supplied; (4) annual rates of 10 outpatient process quality of care metrics for medication prescribing or adherence.

CONCLUSIONS

Participation in the commercial ACO was associated with negligible differential changes in prescription drug spending, utilization, and related quality of care measures. Capped financial risk-sharing and increased generics substitution for brand names are not enough to produce tangible performance improvement in ACOs. Measures to increase provider financial risk-sharing shares and lower brand-name drug prices are needed.

60 Years after Kefauver: Household income required to buy prescription drugs in the United States and abroad

BACKGROUND

Assessing drug prices relative to income in the US compared to other Organization for Economic Co-Operation and Development (OECD) countries provides context for policymakers seeking to improve access and affordability.

METHODS

Using current drug p. rice and income data, we recreate a historical analysis presented in 1960 to the Senate Subcommittee on Antitrust and Monopoly led by Sen. Estes Kefauver. We identified frequently prescribed generic and brand name drugs for US and international comparison by drug price category (low-price generics, mid-price brands, and high-price specialty brands) as a function of income. We further extend our analysis to consider US prices relative to the current Federal Poverty Level (FPL).

RESULTS

For the low-price drugs, all fell below 1% of all of the US income levels presented. Mid-price drugs were below 10% of income for those at the US median household income level but approached 30% of income for those at the FPL. High-price drugs varied greatly, reaching over 600% FPL for one product.

CONCLUSIONS

Americans receive bargain prices on par with international comparators for many low-priced generics drugs. For commonly used mid-priced drugs or high-priced specialty products, whether or not drug prices are considered a bargain in the US compared to international markets may depend on individual income. External reference pricing policies may help inform the negotiation for some drug prices, but affordability may still be limited for lower wage earners.

Rising Drug Costs for Neurologic Diseases

The cost of prescription drugs in the United States is rising like never before and has led to an inflection point where clinicians must consider the potential financial damage to the patient and to society related to the more expensive drugs available. Many of the highest-priced drugs are approved as orphan drugs, a legally defined status providing additional benefits to pharmaceutical companies that is intended to incentivize therapeutic development for rare diseases. The Orphan Drug Act has been a great success since it was enacted in 1983, resulting in the development of many innovative, life-changing, and even lifesaving drugs; however, high drug prices place patients at risk for personal bankruptcy, prescription abandonment, and higher rates of hospitalization. These negative consequences have become more widespread and severe because some companies exploit pricing via the market exclusivity granted to them under the provisions of the Orphan Drug Act. As more and more companies develop these drugs, the cost to society increases as does the capacity to tolerate unjustified prices. The societal effects of drug pricing must be considered through the prism of opportunity costs; that is, what benefit is lost by choosing to spend on one thing instead of another. Clinical- and economic-based analyses from independent groups such as the Institute for Clinical and Economic Review can help physicians understand the value of drugs (ie, the benefits relative to cost). When prescribing a high-priced medication, clinicians should discuss the drug's value and the associated opportunity cost with patients and have an open discussion about patients' ability to financially tolerate the treatment.

Closing the Part D Coverage Gap and Out-of-Pocket Costs for Multiple Sclerosis Drugs

Objective

To determine whether closing the Part D coverage gap (donut hole) between 2010 and 2019 lowered patients' out-of-pocket costs for disease-modifying therapies (DMTs) for multiple sclerosis (MS).

Methods

Using nationwide Medicare Formulary and Drug Pricing Files, we analyzed Part D drug benefit design and DMT prices in 2010, 2016, and 2019. We calculated average monthly list prices for DMTs available in each year (4 DMTs in 2010, 11 DMTs in 2016, and 14 DMTs in 2019). We projected patients' annual out-of-pocket cost for each DMT alone under a standard Part D plan in that year. We estimated potential savings attributable to closing the coverage gap between 2010 and 2019 (beneficiaries' cost sharing dropped from 100% to 25%) under 3 scenarios: no increase in price, an inflation-indexed price increase (3% annually), and the observed price increase.

Results

Median monthly DMT prices rose from $2,804 to $5,987 to $7,009 over the years 2010, 2016, and 2019, respectively. Median projected annual out-of-pocket costs rose from $5,916 to $6,229 to $6,618. With unchanged or inflation-indexed DMT price changes, closing the coverage gap would have reduced annual out-of-pocket costs by $2,260 (38% reduction) and $1,744 (29% reduction), respectively. Despite having the lowest monthly price, generic glatiramer acetate had among the highest out-of-pocket costs ($6,731 to $6,939 a year) in 2019.

Conclusions

Medicare Part D beneficiaries can pay thousands of dollars yearly out of pocket for DMTs. Closing the Part D coverage gap did not reduce out-of-pocket costs for patients because of simultaneous increases in DMT prices.

Socioeconomic and Demographic Characteristics of US Adults Who Purchase Prescription Drugs From Other Countries

IMPORTANCE

Little is known about the current use of imported drugs and the factors associated with individual purchase of medications outside the US.

OBJECTIVE

To evaluate the proportion of the US adult population that purchases medications in other countries and the patient factors associated with the behavior.

DESIGN, SETTING, AND PARTICIPANTS

This retrospective cross-sectional study used data from the 2015-2017 National Health Interview Survey. The study sample included 61 238 individuals 18 years or older who reported use of prescribed medication by a physician or other practitioner. Data analysis was performed in November 2019.

MAIN OUTCOMES AND MEASURES

Self-reported experience of purchasing prescription drugs from countries outside the US in the past 12 months. Internet use behaviors for health care included searches for health information and filling of a prescription online. Medication-taking behaviors included skipping or delaying filling a prescription and using alternative therapies to save money. Survey design-adjusted analysis was used to estimate and compare characteristics between those who purchased medications outside the US and those did not. Multivariable logistic regression was fitted to examine the association of medication purchases with internet use and medication-taking behavior factors.

RESULTS

Among 61 238 US adults taking prescription medications (mean [SD] age, 50.5 [18.5] years; 56.5% female; 70.8% white), the estimated prevalence of purchasing of medication outside the US was 1.5% (95% CI, 1.4%-1.7%; 2.3 million US individuals). Those who purchased medications outside the US were more likely to be older (age >64 years; adjusted odds ratio [aOR], 1.68; 95% CI, 1.24-2.29), to be from Hispanic (aOR, 1.70; 95% CI, 1.23-2.35) or immigrant populations (aOR, 3.20; 95% CI, 2.44-4.20), and to have higher educational attainment (bachelor's degree; aOR, 1.79; 95% CI, 1.27-2.54), lower family income (low income; aOR, 1.41; 95% CI, 1.06-1.87), and lack of insurance (aOR, 3.14; 95% CI, 2.33-4.21). Data analyses indicated that online health information-seeking behavior (aOR, 1.62; 95% CI, 1.33-1.98) or use of an online pharmacy (aOR, 2.30; 95% CI, 1.83-2.90) was associated with a greater likelihood of medication purchases outside the US. Individuals who skipped medications (aOR, 3.86; 95% CI, 3.05-4.88) or delayed filling a prescription (aOR, 4.04, 95% CI, 3.23-5.06) also had higher odds of purchasing medication outside the US.

CONCLUSIONS AND RELEVANCE

The findings suggest that patients are not using prescription purchases outside the US to meet their medication needs. However, monitoring to promote safe administration of medications imported into the US should be continued.

Value and affordability of CAR T-cell therapy in the United States

In the United States the increasing number of Food and Drug Administration (FDA)-approved, innovative, and potentially effective commercial cancer therapies pose a significant financial burden on public and private payers. Chimeric antigen receptor (CAR) T cells are prototypical of this challenge. In 2017 and 2018, tisagenlecleucel (Kymriah, Novartis) and axicabtagene ciloleucel (Yescarta, Kite) were approved by the FDA for use after showing groundbreaking results in relapsed/refractory B-cell malignancies. In 2020 and 2021, four further submissions to the FDA are expected for CAR T-cell therapies for indolent and aggressive B-cell malignancies and plasma cell myeloma. Yet, with marketed prices of over $350,000 per infusion for the two FDA-approved therapies and similar price tags expected for the coming products, serious concerns are raised over value and affordability. In this review we summarize recent, peer-reviewed cost-effectiveness studies of tisagenlecleucel and axicabtagene ciloleucel in the United States; discuss key issues concerning the health plan budget impact of CAR T-cell therapy; and review policy, payment and scientific approaches that may improve the value and affordability of CAR T-cell therapy.