Drug Pricing Debate: Panel Talks About Transparency, Legislation

Does meaningful competition currently exist in the pharmaceutical industry and is there enough transparency on price? An animated panel made up of healthcare industry representatives, a health policy professor, and a patient activist tried to answer those questions at a session called “Industry Perspectives on Where We Go From Here on Drug Pricing” at the 2018 National Health Policy Conference of America’s Health Insurance Plans in Washington, DC.

Sitting side by side on the stage were Thomas M. Moriarty, executive vice president, chief policy and external affairs officer and general counsel for CVS Health, and David Mitchell, founder and president of Patients for Affordable Drugs.

Mitchell has incurable but treatable multiple myeloma and said that he is on 11 medicines, including infusion therapy, and his treatment runs about $450,000 a year.

CVS Health owns the pharmacy benefit manager (PBM) Caremark and is set to buy the insurance company Aetna.

Joining them were Lauren Aronson, executive director of the Campaign for Sustainable RxPricing, a coalition of insurers, medical associations and others, and James C. Robinson, PhD, MPH, professor of health economics and director of the Berkeley Center for Health Technology at the University of California School for Public Health.

Moriarty said the system works well in the small molecule market and for most patients who have drug costs of $500 a year or less, but conceded that for about 5% who are on specialty drugs or biologics, the system does not work well. That’s because of regulatory issues and legal issues that the pharmaceutical industry has put into place, he said.

Since Mitchell falls into that category, he took an opposite point of view, saying that “any of us” could land in the space of those 5% with extremely high drug costs, such as himself. “People move in and out of that situation all the time,” he said.

As another example of what he called a broken system, he cited spiraling insulin costs.

Mitchell is advocating for the bipartisan CREATES Act—which stands for Creating and Restoring Equal Access to Equivalent Samples Act—intended to stimulate drug competition by facilitating the entry of new generics and biosimilars onto the market. There is a chance it may be included in the next budget omnibus bill, which must pass Congress March 23 in order to prevent another federal government shutdown.

Mitchell said he was on a drug for more than 5 years that is being kept from the marketplace by a pay-to-delay deal, the kind that was blasted by FDA Commissioner Scott Gottlieb, MD, at the AHIP conference the day before.

The moderator, Len M. Nichols, PhD, who heads the Center for Health Policy Research and Ethics at George Mason University, asked what can be done, similar to Hatch-Waxman, which opened up competition in the biologics space for biosimilar drugs.

When it comes to competition, Robinson said it exists for generics, but not for generics that are merely similar to one another. The larger issue involves the prior authorizations, step therapy, and high cost sharing that are imposed on patients. His preference would be for policymakers to move to a system of reference pricing, where a third party, such as the Institute for Clinical and Economic Review, would determine the value and cost of a medicine. If a patient sought a different drug, they would pay the full difference.

He said there needs to be pressure on the pharmaceutical industry to accept these value-based pricing benchmarks. If a drug company accepts it, then it is unethical to punish a patient taking a specialty drug with prior authorizations, step therapy, or high coinsurance, he said.

Nichols asked the panel to respond to Gottlieb’s remarks Wednesday on what he called “the evils of PBMs,” and Moriarty answered first, noting that businesspeople will always scrutinize profit and loss statements in regard to drug trends. In his company’s case, he said average co-pays and out-of-pocket costs have actually gone down.

He said CVS has the ability to push cost information through the electronic health record and to suggest lower-cost therapeutic alternatives.

Mitchell, however, said PBMs are not necessary as a middleman and said they add administrative costs that are not transparent to pharmacists, doctors or patients, and cited a National Academy of Sciences report last year calling for the government to negotiate directly with the government over drug prices.

That kicked off a heated discussion between Mitchell and Moriarty about PBM audits.

How do we move to more transparency, Nichols asked?

It starts with the price as set by the manufacturer, Aronson said, and Robinson followed by saying there must be a distinction between rebates vs discounts at the PBM level.