By Carl Schmid
September 25, 2020 at 5:00 am ET
The United States needs to take serious action to lower drug prices and expand access for patients, and it should start by listening to them. Unfortunately, the Trump administration recently put forth a proposal that fails to listen to patients’ concerns and will actually do more harm than good. While the administration has come out with numerous proposals that attempt to lower drug prices, what patients need are policies that reduce how much they pay for drugs at the pharmacy counter.
In a little-known Medicaid proposal currently pending final approval, the administration has put forth two polices that would have ramifications outside of Medicaid that would increase patient costs and stifle the development of new drugs. This should be a concern to people living with HIV, viral hepatitis and other chronic and serious health conditions who rely on prescription drugs to remain healthy.
One policy proposal would allow the government to define many new and highly innovative drugs as little more than incremental “line extensions” of an existing drug. Drugs are labeled as line extensions when manufacturers make slight alterations to existing treatments. Under existing law, drug manufacturers must pay a higher Medicaid rebate for drugs based on the original drug that meet the “line extension” definition. The policy was intended to prevent manufacturers from making small changes that often have no measured health benefit but would allow them to avoid paying the higher Medicaid rebate.
If implemented, the proposed new definition of “line extension” would include innovative combination drugs that are used to treat HIV, hepatitis, cancer and, hopefully one day, other conditions such as cystic fibrosis and Parkinson’s disease. For HIV and most hepatitis drugs, they are the result of combining drugs together into a single tablet, which make it easier for patients to take. These combination drugs often combine an older existing drug with a new and better performing drug.
If finalized, this proposal would remove critical financial incentives to develop new and improved drugs that do in fact have significant clinical benefits for patients, including highly anticipated, long-acting HIV medications for both treatment and prevention. Drug manufacturers may be forced to abandon research and development efforts for these combination therapies to get around the rebate penalty. In other words, the proposed rule would lead to increased pill burden for patients, possibly reducing adherence and leading to poorer health outcomes.
The second proposal would jeopardize the availability of manufacturer cost-sharing assistance that patients depend on to afford their medications. Many patients are only able to afford their medications due to financial assistance from manufacturers. This assistance is especially helpful now as families are struggling to meet the costs of daily life because of the economic impact of COVID-19. The Medicaid proposal would threaten this financial assistance.
The proposed rule would require manufacturers to guarantee that the copay assistance coupons and discounts cards they provide go directly to patients. If not, the manufacturer would need to include the value of the cost-sharing assistance when calculating the Medicaid best price, or what they owe Medicaid. That may sound easy enough, but it is actually unfeasible. This is because insurers and their pharmacy benefit managers have instituted harmful policies that say they will take the pharmaceutical company financial assistance to help pay for a patient’s drugs, but it will not count toward the patient’s deductible or out-of-pocket cost sharing limit. This makes it impossible for drug manufacturers to know if the financial assistance they provide is going to the benefit of the patient or if the plan is pocketing the money.
If manufacturers had to include the value of copay assistance in calculating what they pay the Medicaid program, this would dramatically impact the economics of drug manufacturing. If manufacturers were to reduce their level of copay assistance as a result, it would also have a severe impact on patients, who would then have to decide whether to spend more out of pocket or abandon the drug that their doctor prescribed them.
Requiring insurers and PBMs to count copay assistance against a patient’s cost-sharing obligations would be a better policy for the administration to go with if it wants to help patients afford their drugs, but after agreeing to it, last year the government reversed course in favor of the powerful insurance and PBM lobbies.
Both proposals contained in a Medicaid rule would have unintended consequences, jeopardizing patient affordability of drugs for those with private and employer insurance and threatening new drug development. The administration failed to listen to patients on the importance of copay assistance in the past and now, I hope it does not fail to listen on these Medicaid policy proposals. Both proposals should be scrapped and never finalized.
Carl Schmid is the executive director of the HIV + Hepatitis Policy Institute and co-chairman of the Presidential Advisory Council of HIV/AIDS.
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