April 25, 2016 at 6:00 am ET
Group Calls for Value-Based Care, Transparency in Drug Industry
A coalition representing health insurers, providers, employers and consumers on Monday is set to release a set of policy proposals designed to keep prescription drug prices from rising so fast. The recommendations represent an agreement among more than 80 interest groups, but it does not include the biggest drugmaker lobby.
The proposals, put together by the Campaign for Sustainable Rx Pricing, are broken into three categories: transparency, competition and value.
“The current market for pricing drugs in the United States is broken, and it’s unsustainable for American businesses, families, and our economy,” the group says in a paper outlining the policies, provided to Morning Consult in advance.
The recommendations come amidst a growing pushback against rising drug prices in Washington. The topic has been popular on Capitol Hill, the administration, on the presidential campaign trail and within health care lobbying circles.
Members of the the coalition include big names such as the AARP, the American Hospital Association, America’s Health Insurance Plans and Walmart. The biggest name missing from the list of members is the Pharmaceutical Research and Manufacturers of America.
The coalition’s recommendations are as notable for the policies they don’t include as much as they ones they advocate. The group does not recommend allowing Medicare to negotiate drug prices or allowing drugs to be imported from abroad. While popular politically, these policies have been criticized as ineffective.
Instead, the policy recommendations drill down into the three focus areas. When it comes to transparency, the coalition is calling for more details on how drugs are priced and how the government pays for them, annual reporting on list price increases and disclosure of the cost of research and development for drugs.
Current law requires other health care groups, such as insurers and providers, to report certain data to the federal government. “This policy would simply extend transparency to the pharmaceutical sector as well,” the coalition says in its paper.
Other proposals relate to competition, claiming that parts of current law actually inhibit competition. The group wants to increased market competitiveness through the addition of generics and reduce what it dubs “evergreening” or “product hopping.” That is when a drug company extends its patent and exclusivity periods by seeking approval for a new product that is minimally different from the existing one.
The recommendations also include reducing the backlog of generic drug applications at the Food and Drug Administration and bringing competition to market more quickly through accelerated approvals and fast track designations. The group wants to target exclusivity periods to only the truly innovative products, rather than drugs that are minimally different from existing one.
“The market can work, but right now the market is broken. When companies can raise the price of a drug by 5,000% overnight or when the prices of old drugs rise to shadow the prices of comparable new drugs, that is not a healthy, functioning market,” the paper says.
The third set of policy proposals deals with value. The coalition is calling for increased funding for research on the pricing and value of drugs, a requirement that drugmakers compare the cost and outcomes of new drugs with existing drugs, and the expansion of value-based purchasing in federal programs such as Medicare and Medicaid.
Value-based pricing is a popular idea among policy wonks, and the concept is working its way through the provider and insurer groups. The coalition argues that it makes sense to extend the emphasis on value-based payment to another part of the health care sector.
“Investing in the development of information that assesses the effectiveness of different treatment options is a critical component to addressing the high price of prescription drugs. As the health care system drives to deliver higher value, there is insufficient evidence as to how new (and often expensive) drugs compare with older interventions,” the paper says.
“While other countries require data comparing various treatments to help reach a value-based price, the U.S. market allows drug manufacturers to set the price without asking manufacturers to justify the cost.”