Doctors and cancer clinics are up in arms about a new Medicare reimbursement scheme that would cut their mark-ups on oncology drugs. But the Centers for Medicare and Medicaid Services has even bigger plans for cancer-drug payments.

Pay-for-performance deals and indication-specific reimbursements are on a list of 6 programs CMS plans to try alongside the cuts targeted at physicians and hospitals. It’s a rare example of Medicare plucking new ideas from the private sector, even before they’ve been widely adopted in the biopharma industry.

In fact, CMS says it looked to private payers for “value-based purchasing tools,” and wants to use strategies similar to those used by commercial health plans, pharmacy benefits managers, hospitals and other benefits managers.

Beginning as early as January 2017, the agency would experiment with the sort of value-based reimbursement plans that Novartis ($NVS) and Amgen ($AMGN) are using on their brand-new heart drugs Entresto and Repatha. CMS says it will be seeking “risk-sharing” deals with drugmakers to link drug payments with patient outcomes.

CMS also wants to test indication-based pricing, which vary reimbursement amounts according to a drug’s effectiveness in a given type of cancer. Drug-pricing critic Peter Bach, of Memorial Sloan Kettering’s Center for Health Policy and Outcomes, has proposed indication-specific payments, and pharmacy benefits manager Express Scripts ($ESRX) is testing out the approach with some of its clients this year.

Tyrone’s Comment:  How are the “refunds” appropriated? Is it a shared savings or fee-for-service arrangement between the PBM and plan sponsor? Or is the PBM simply doing its job and shouldn’t be rewarded for it? These are questions every plan sponsor should be asking now. Value-based and indication-specific pricing are here to stay and soon, if not already, will become standard operating procedure.

Like private payers, CMS notes that a cancer therapy “might be used to treat one condition with high levels of success but an unrelated condition with less effectiveness, or for a longer duration of time. The goal is to pay for what works for patients.”

To see if the “purchasing tools” work to bring down drug costs, CMS wants to do a couple of head-to-head comparisons, according to the Federal Register notice. One would pit the current reimbursement model of average sales price plus 6% against the same mark-up level, subject to value-based deals. The other would test the new mark-up of 2.5% with flat fee drug payments against 2.5% with value-based deals.

The agency says it’s looking for input from the pharma industry on performance-based approaches. Right now, CMS says it doesn’t know how much money it might save, but “we intend to achieve savings.”

Meanwhile, pharma and private payers will be pushing their own performance-based deals and keeping track of the results. Novartis has been in the forefront of value-based pricing, focusing on its heart failure drug Entresto. In clinical trials, the med helped keep patients out of the hospital–saving those costs–and the Swiss drugmaker figures it can score points with payers, and potentially, higher sales, by linking Entresto’s reimbursements with results.

At first, payers weren’t convinced. But last month, the company said it had inked value-based deals with Cigna ($CI) and Aetna ($AET). Cigna says its payments to Novartis will depend on Entresto’s results, with dollar amounts linked to hospitalization rates.

Continue Reading >>

In health care, Americans demand choice. Insurers must strike a balance between respecting that demand and encouraging their members to opt for the most cost-effective care. That challenge is especially tough when designing pharmacy benefits — heavy direct-to-consumer advertising is driving up demand, and costs are rising at unsustainable rates. Nearly all payers use tiered drug formularies to move patients toward the most cost-effective drugs while still offering broad choice to people who are willing to pay.

A growing body of research shows that pharmacy-benefit design influences whether patients with chronic medical conditions start and adhere to their essential medication regimens — which, of course, affects the long-term value of those prescriptions. The bottom line for benefits managers and payers: Not all pharmacy-benefit choices are created equal.

Let Patients Choose the Access Channel

Patients have strong preferences about how they get their medications. When enrolled in a pharmacy benefit that offered a 90-day supply of prescriptions via mail service or a retail pharmacy (with no difference in out-of-pocket costs), each mode of access was selected by about half of patients in a large retrospective study. And evidence shows that giving patients such flexibility improves their rates of adherence to essential therapies.

In one study, comparing patients in a mandatory mail-order plan with patients who could choose to fill their prescriptions at either mail or retail pharmacies (with the same copay), the 90-day adherence rate was 30% better for the patients who had a choice. Results are similar specifically for adherence to specialty medications: Patients who could choose between a specialty mail-order pharmacy and a retail pharmacy, rather than being limited only to the mail-order option, had a 17.5% higher rate of filling a second prescription and an 11.4% higher rate of overall adherence.

Should Patients Choose the Medication, Too?

In a national survey, more than 70% of Americans indicated that generic medications are as effective as, cost less, and offer better value than branded medications. However, although 56% of the survey respondents believed that more people should use generics, only 38% preferred to take generics themselves. This apparent inconsistency may explain why patients choose options that are more
expensive, both for the payer and for their own wallets, without a clear clinical rationale.

In tiered benefit plans, which charge higher copays for name-brand medications, prescribing those medications leads to higher costs and poorer health. For instance, prescriptions for name-brand drugs are three to four times more likely to be abandoned right at the pharmacy when patients experience “sticker shock” and then leave without the drug in hand. And if patients or physicians request that a branded medication be “dispensed as written,” with no option to substitute a generic, patients are 37% more likely to fail to fill the initial script, and more than twice as likely not to fill subsequent prescriptions. In addition, patients with chronic conditions (e.g., hypertension, diabetes, hypercholesterolemia) had significantly higher adherence rates to generic drugs than to nonpreferred brand-name drugs (59% vs. 52%).

Among patients with heart disease, choosing a generic led to better adherence and fewer adverse clinical outcomes. In short, when broad choice of medications allows patients to select higher-cost therapies, clinical outcomes suffer — because patients are less likely to actually bring the medications home and take them as prescribed.

Continue Reading > > 

Why is this document important?  Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs and MCOs pursuant to healthcare reform. 

The costs shared below are what our pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to “reference pricing.” Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.

Step #1:  Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month.

Step #2:  In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list.

Step #3:  Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement.  It’s impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions.

Step #4:  Now take it one step further. Check what your organization has paid, for prescription drugs, against our pharmacy cost then determine if a problem exists. When there is a 5% or more price differential (paid versus actual cost) we consider this a problem.

Multiple price differential discoveries means that your organization or client is likely overpaying. REPEAT these steps once per month.

— Tip —

Always include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to determine if better pricing is available in the marketplace compared to what the client is currently receiving.

When better pricing is discovered the contract language should stipulate the client be indemnified. Do not allow the PBM to limit the market check language to a similar size client, benefit design and/or drug utilization. In this case, the market check language is effectually meaningless.

To rein in rising specialty drug costs, employers most often use prior authorization, step therapy and cost-sharing strategies, but more are also experimenting with formulary exclusions and value-based pricing models, a new report shows.

One of the fastest growing areas of health care costs, specialty drug spending increased 26.5% in 2014 to $124.1 billion and accounted for one-third of total spending on medicine, up from less than a quarter of the total in 2010, according to an April 2015 report by IMS Health Inc.

Specialty drug spending is expected to increase further as costly drugs, many of which treat cancer, enter the market, experts say. According to Express Scripts Holding Co., cancer drugs comprise more than a third of the more than 7,000 drugs awaiting U.S. Food and Drug Administration approval.

When it comes to prescription drug benefit plan design, employers are most concerned with managing the specialty drug trend, at 84%, and reducing inappropriate utilization, at 52%, according to the report released this week by the Plano, Texas-based Pharmacy Benefit Management Institute and sponsored by Walgreen Co. The report is based on a survey of 341 employers.

[Source: Hot Topics in Health Care Pharmacy Benefits, Mercer]

The report showed that last year 93% of employers used prior authorization for specialty drugs, down slightly from 97% in 2014; 79% used clinical care management, down from 88%; and 78% used step therapy programs, down from 83%. Additionally, 69% of employers in 2015 limited specialty drug prescriptions to a 30-day supply, down from 72% the previous year.

Employers are also experimenting with newer strategies, including formulary exclusions, specialty drug cost-sharing tiers and value-based pricing models.

With the introduction of the expensive hepatitis C drugs, such as Sovaldi and Harvoni, formulary exclusions for specialty drugs “have become much more front and center,” Sharon Glave Frazee, Plano-based vice president of research and education with PBMI, said in an interview Tuesday at the organization’s 2016 Drug Benefit Conference in Palm Springs, California.

Forty-eight percent of employers reported using formulary exclusions, which means certain drugs are excluded from coverage under the benefit plan, according to the survey. Of those that use them, 46% said they are considering increasing the number of excluded medications. Of the 39% of employers who said they do not use formulary exclusions, 32% said they are considering implementing them, the survey showed.

Meanwhile, more than half of employers — 57% — reported using a separate cost-sharing tier for specialty drugs, the report showed. That’s down from 62% in 2014 and up from 41% in 2013, according to a separate PBMI report. Of the 41% who did not report using a separate tier for specialty medications, 31% planned to do so in the next few years.

Interest in value-based pricing models is also increasing, with 82% of surveyed employers somewhat or very interested in such models.

“If you pay for a lot of drugs that have very little long-term value, it dilutes what’s available for everybody else,” Ms. Frazee said of value-based and indication-based pricing models, which ties pricing to a drug’s effectiveness. “It’s a public health perspective, essentially. You are trying to get the most good for the most people out of a limited pool of dollars.”

“When Sovaldi first came out, nobody was ready, and so you saw people panicking … because they didn’t have the dollars to pay for that,” she said. “The PBMs, the health plans, the consultants and the brokers have really learned from the lesson there” and now budget and make plan design changes in advance “to make sure it has as little of a negative impact on you and on your members” as possible.

By Shelley Livingston

The same strategy that Martin Shkreli used to get away with a 5,000-percent price increase on an old drug is used by many other drugmakers to maintain sky-high prices on billions of dollars’ worth of medications.

Before the price hike that made him infamous, the former CEO of Turing Pharmaceuticals had to ensure that no competitor would be able to launch a cheaper version of Daraprim, the 60-year-old anti-infection pill that is no longer under patent.

Shkreli had the perfect weapon: a tightly-controlled distribution system which would make it virtually impossible for a competitor to obtain enough Daraprim to develop their own version.

Many larger drugmakers have also turned drug distribution into a powerful tool against competition. The strategy takes advantage of a simple fact: If generic drugmakers can’t get their hands on the original product, they cannot perform the tests needed to develop a generic version. Typically generic drugmakers purchase drugs in bulk from third-party suppliers. But when the original drugmaker controls the drug’s distribution, they can simply refuse to sell.

The effect on patients is higher prices for drugs that would otherwise be available as low-cost generics. Doctors say these tactics continue to stand in the way of patients’ access. “The most effective way to improve access and lower prices is to ensure that generic drugs get to market as quickly as possible,” says Dr. Ameet Sarpatwari, of Harvard Medical School, who has studied the issue.

At least 40 drugs worth an estimated $5.4 billion are sheltered from competition by distribution hurdles, according to a study commissioned by the Generic Pharmaceutical Association, an industry trade group.

The Food and Drug Administration is aware of the misuse of distribution programs. The agency said in a statement it has received 100 letters from companies that say they have been blocked from obtaining drugs for testing purposes. The agency’s own regulations prohibit drugmakers from using certain types of distribution plans to block generic access, but the agency does not penalize companies for the practice.

Daraprim is an example of a drug that has no major safety risks and was previously available through various wholesalers and distributors. But last June — three months before its sale to Turing — Daraprim was moved into a closed distribution program, allowing the manufacturer to refuse sales to competitors.

The effect for patients was jarring. The drug — which treats an infection mainly found in people with HIV and cancer — had previously been available through local pharmacies. Now it is distributed through a specialty division of Walgreen’s, which sells the drug at Turing’s list price of $750 per pill. In the months after the price hike, some patients faced co-pays as high as $16,000 when trying to fill a prescription.

“Mr. Shkreli set up a very complicated system to ensure profits and patients have really suffered,” says Sean Dickson, of the National Alliance of State and Territorial AIDS Directors. Turing says it has improved access to Daraprim, including making it available through a patient assistance program for those that can’t afford it.

Drugmakers argue that closed distribution simply protects their interests, making sure drugs are shipped and handled appropriately. But generic drugmakers say the tactics threaten their business model. “It undermines the whole generic drug approval process,” said Steve Giuli, an executive with generics firm Apotex Corp.

Apotex has repeatedly tried to purchase two specialty cancer drugs sold by drugmaker Celgene. Together the drugs, Thalomid and Revlimid, account for $5.2 billion in sales, more than two-thirds of Celgene’s revenue for 2014. That’s despite the fact that Thalomid is a 1950s-era drug whose key ingredient is no longer under patent. Because the drug can cause severe birth defects, it is subject to a rigorous distribution program controlled by Celgene.

“They will never freely sell you the product, even if you negotiate with them for weeks, months, and perhaps years to satisfy all of their onerous concerns,” says Omar Jabri, another Apotex executive. A Celgene spokesman did not return calls and emails seeking comment on the risk-management program.

In one case, New Jersey-based Celgene went on the offensive, suing Barr Laboratories for attempting to introduce a generic version of Thalomid. Celgene said Barr’s effort would infringe on its intellectual property, since it had patented Thalomid’s risk-management plan.

When generic drugmaker Lannett sued Celgene in 2012, alleging that the company’s tactics illegally blocked competition, the companies reached an out-of-court settlement. Details of the agreement were not disclosed but Thalomid remains unavailable as a generic. Meanwhile, the FDA has remained on the sidelines. Click here to read more.

Why is this document important?  Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs and MCOs pursuant to healthcare reform. 

The costs shared below are what our pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to “reference pricing.” Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.

Step #1:  Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month.

Step #2:  In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list.

Step #3:  Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement.  It’s impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions.

Step #4:  Now take it one step further. Check what your organization has paid, for prescription drugs, against our pharmacy cost then determine if a problem exists. When there is a 5% or more price differential (paid versus actual cost) we consider this a problem.

Multiple price differential discoveries means that your organization or client is likely overpaying. REPEAT these steps once per month.

— Tip —

Always include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to determine if better pricing is available in the marketplace compared to what the client is currently receiving.

When better pricing is discovered the contract language should stipulate the client be indemnified. Do not allow the PBM to limit the market check language to a similar size client, benefit design and/or drug utilization. In this case, the market check language is effectually meaningless.

Employers that were blindsided in recent years by the cost of new specialty drugs to treat conditions such as arthritis, cancer and hepatitis C are shaking off the sticker shock and getting more aggressive about managing their pharmacy benefits.

According to a December 2015 report by Towers Watson & Co., now Willis Towers Watson, 53 percent of employers have added new coverage and usage restrictions for specialty prescription drugs, including prior authorization or limiting quantities based on clinical evidence. And another 32 percent are expected to add restrictions by 2018.

Among those companies is 84 Lumber Co. in Eighty Four, Pennsylvania, which launched a prior authorization requirement for compound drugs. Mark Mollico, vice president of human resources said in an email that his company also raised its copayments on specialty drugs and is limiting quantities to a 30-day supply.

[Click to Enlarge]

84 Lumber, which employs 4,200 people in 250 stores across 30 states, saw its specialty drug spending skyrocket by 94 percent between 2013 and 2014 because of hepatitis C medications. Mollico said specialty drug spending in 2015 accounted for 26 percent of the company’s prescription drug costs, up from 22 percent the previous year.

The 20th annual Towers Watson/National Business Group on Health Best Practices in Health Care Employer Survey also found that more employers plan to exclude certain compound medications from their benefit coverage, with 39 percent having already done so and another 24 percent expected to by 2018. Compounds are drugs that have been mixed or altered, most often by a pharmacist, to customize a medication for a specific patient. The process leads to higher costs, and the U.S. Food and Drug Administration might not approve the resulting medication, according to the report.

“In the past five years, you’ve seen almost all employers embrace prior authorization and step therapy, which is a first-line approach,” said Eric Michael, a pharmacy practice leader at Willis Towers Watson in Minneapolis. “Now you are seeing the next evolution with the exclusion of certain compound medications. You can cut costs by 30 percent this way. It’s a much more heavy-handed approach than what you were seeing five years ago, but employers’ bank accounts are only so big.”

With specialty drug costs expected to grow by 22.3 percent in 2016 compared with 3.9 percent for traditional medications, employers are finding a variety of ways to manage their specialty drug costs, according to a recent report by the NBGH.

In addition to the more common practices of requiring prior authorization under the pharmacy plan, step therapy, which requires patients to try cheaper medications before being approved for costlier options, and limiting quantities based on clinical evidence, employers are also trying other approaches. More than half are using freestanding specialty pharmacies to fill prescriptions and requiring prior authorization under the medical plan in addition to the pharmacy plan, and 35 percent are using price transparency tools for specialty drugs, according to the 2016 NBGH plan design survey report of large employers.

More aggressive tactics are necessary as employers brace for the next wave of blockbuster drugs to hit the market, according to Shari Davidson, the NBGH’s vice president. The most recent class of blockbuster drugs approved by the FDA is PCSK9 inhibitors, which are injectable drugs that treat high cholesterol. A treatment course costs more than $14,000 a year per patient, dwarfing the cost of statins, which are $4 per month, according to the NBGH.

“With each new category of drug that comes out, employers are looking to see which approach makes the most sense,” Davidson said. “Is it prior authorization? Should we work with the PBM [pharmacy benefit manager] or negotiate directly with the manufacturer? As these drugs come out, employers are trying to help employees. There are a ton of oncology drugs that are expected to come out in a year or two. This is what’s keeping benefits managers up at night.”

By Rita Pyrillis

Click to Enlarge

With the availability of expensive new specialty drugs and a rise in the use of compound drugs, employers are facing a rapid increase in prescription drug spend that makes it more difficult to control rising health care costs. In response, employers are taking specific action now and over the next three years to rein in prescription drug spending, according to experts at global professional services company Towers Watson (NASDAQ:TW).

“Although pharmacy represents approximately 20% of employer-sponsored medical benefits** costs, it is increasing at a rate that accounts for roughly half of medical cost inflation*** and should be a top priority for employers,” according to Eric Michael, U.S. central division pharmacy leader for Towers Watson. “The price, utilization and delivery of specialty prescription drugs, many of which require special handling or delivery, are a top pain point for employers. Frustrated by their lack of success in controlling these growing costs, employers are beginning to consider new aggressive approaches.” Examples of specialty drugs that are driving up cost include treatments for Hepatitis C, cancer and arthritis.

The 20th Annual Towers Watson/NBGH Best Practices in Health Care Employer Survey of 487 large U.S. employers confirms more than one-quarter (26%) of employers are addressing specialty drug cost and utilization in their medical plan today, in addition to the variety of tactics focused on the pharmacy benefit directly. This number is expected to triple in three years. Significantly, 53% of employers have added new coverage and utilization restrictions for specialty pharmacy, such as requiring prior authorization or limiting quantities based on clinical evidence; another 32% are expected to add the restrictions by 2018.

“Because of the complexity involved in delivering specialty drugs, related costs are often paid through the medical benefit, rather than the pharmacy benefit. When this is the case, employers look for data and reporting from the health plan to determine usage patterns to help them estimate their financial exposure,” added Michael.

The survey also found more employers plan to exclude inappropriate compounds from their benefit coverage, with 39% having done so and another 24% expecting to do so by 2018. According to Carmelina Rivera, U.S. west division pharmacy leader for Towers Watson, “compounds are prescribed by physicians, but prepared by pharmacists who mix or adjust drug ingredients to customize a medication for a specific patient. Given that the compounding process results in higher cost and their use may not be FDA-approved in compound form, health insurers increasingly will not cover them.

“Left unchecked, pharmacy costs will continue to soar, creating an urgent need for employers to reevaluate their pharmacy plans and benefits to include maximizing use of generic drugs, and develop clear policies on the use of specialty and compound drugs. The challenge is to prudently manage pharmacy costs while enabling employees to access effective and affordable treatment,” said Rivera.

About the Survey

The 20th Annual Towers Watson/NBGH Best Practices in Health Care Employer Survey tracks employers’ best practices and the results of their efforts to provide and manage health benefits for their workforce. The report identifies the actions of high-performing companies, as well as current trends in the health care benefit programs of U.S. employers with at least 1,000 employees. The survey was completed by 487 employers in June and July 2015. Respondents collectively employ 15.1 million full-time employees, have 12.0 million employees enrolled in their health care programs and represent all major industry sectors.

Why is this document important?  Healthcare marketers are aggressively pursuing new revenue streams to augment lower reimbursements provided under PPACA. Prescription drugs, particularly specialty, are key drivers in the growth strategies of PBMs, TPAs and MCOs pursuant to healthcare reform. 

The costs shared below are what our pharmacy actually pays; not AWP, MAC or WAC. The bottom line; payers must have access to “reference pricing.” Apply this knowledge to hold PBMs accountable and lower plan expenditures for stakeholders.

Step #1:  Obtain a price list for generic prescription drugs from your broker, TPA, ASO or PBM every month.

Step #2:  In addition, request an electronic copy of all your prescription transactions (claims) for the billing cycle which coincides with the date of your price list.

Step #3:  Compare approximately 10 to 20 prescription claims against the price list to confirm contract agreement.  It’s impractical to verify all claims, but 10 is a sample size large enough to extract some good assumptions.

Step #4:  Now take it one step further. Check what your organization has paid, for prescription drugs, against our pharmacy cost then determine if a problem exists. When there is a 5% or more price differential (paid versus actual cost) we consider this a problem.

Multiple price differential discoveries means that your organization or client is likely overpaying. REPEAT these steps once per month.

— Tip —

Always include a semi-annual market check in your PBM contract language. Market checks provide each payer the ability, during the contract, to determine if better pricing is available in the marketplace compared to what the client is currently receiving.

When better pricing is discovered the contract language should stipulate the client be indemnified. Do not allow the PBM to limit the market check language to a similar size client, benefit design and/or drug utilization. In this case, the market check language is effectually meaningless.

[Click to Enlarge]

Rising drug prices, the effect on the healthcare system, consumer push-back, and possible solutions were hotly debated during a panel at the 2016 National Health Policy Conference hosted by AcademyHealth in Washington, DC.

The discussion, High Cost Drugs: Where Regulations Meet Opportunities, was moderated by Tricia Neuman, PhD, senior vice president of the Kaiser Family Foundation (KFF) and director of the Foundation’s Program on Medicare Policy and its Project on Medicare’s Future. She was joined by 2 health economists and Lynn Quincy, director, Health Care Value Hub, a policy group at ConsumersUnion, funded by the Robert Wood Johnson Foundation.

“Drug costs are projected to rise at a fairly rapid pace, with a steep cliff,” said Neuman. Sharing research data generated by the KFF for the period 2013-2014, she said that drug prices are the fastest growing portion of health spending, with specialty medications leading the way. The Foundation’s study showed a 9-10% rise in the annual health spending on drugs, with a 10% increase in retail drugs as a share of the national health spending and 19% increase in spending by employer-based national health plans.

But what has most caught people’s attention, Newman said, is Medicare outpatient drug spending, which till 2014 was steady, but has been on the rise of late. “Sovaldi had an unanticipated impact on Medicare Part D spending rather than the projected Medicaid spending,” she said. “Agreed that the drug has long-term benefits, but we have a short-term issue at hand,” Newman added.

These high prices translate into increases in health plan deductibles and premiums. A consumer survey conducted by the Foundation found that 73% of the population deem prescription drug prices unreasonable and 74% of the surveyed population primarily blame the drug manufacturers for the high costs, ignoring the other players in the game.

The Consumer Expectation

Agreeing with the statistic, Quincy said that while consumers have faith in the value of pharmaceutical innovations, “The fact that more than 50% of Americans take prescription drugs regularly…so prices are top-of-mind for consumers.”

She listed a number of downstream effects of the high drug prices:

1. Patients do not follow the doctor’s prescription
2. Patients procrastinate seeking care
3. Patients avoid filling out or refilling prescriptions
4. Patients cut back on daily requirements to afford taking medications

Quincy offered a few solutions to help ease some of the issues:

1. Immediate financial solutions for patients. A few states are already in the process of adopting these changes:
a. Cap monthly out-of-pocket cost and avoid front-loading by spreading the overall cost of care across the entire year. This, however, does not address the underlying reason of high drug cost.

2. Increase pricing transparency. Make data available on what payers negotiate for drug prices with manufacturers, as is common practice in Europe. Price justification bills, Quincy said, are being explored around the country.

3. Increase payer’s ability to negotiate. Medicare should be allowed to negotiate on drug prices with manufacturers. She also suggested that private health payers should band together to negotiate. In case of a single manufacturer, however, state-set limits on drug prices would be the path to follow.

Quincy said that while the general population may not understand the nuances of these policies, they do expect changes that would impact the bottom line.

See more at: http://www.ajmc.com/newsroom/fight-with-or-adapt-to-the-rising-drug-prices-economists-investigate-at-the-academyhealth-policy-conference#sthash.KHMA3NUj.dpuf