Value-based drug pricing: When does it work best?

“while the U.S. lags behind in adopting value-based agreements, many policymakers are realizing that value-based pricing can be an important, viable solution to the high and rising expenditures that payers lay out for prescription drugs. Developing value-based agreements has never been easier. A large number of value-based agreements are now available and can be used to help payers, manufacturers, and providers develop new ones appropriate to their specific situations. [..] Here are four scenarios for which I believe value-based pricing is appropriate. When expected outcomes for a new treatment are clear and objectively measurable. [..] Treatments with clearly defined, meaningful, … Read More

International Reference Pricing: A Lazy, Misguided, Bi-Partisan Plan To Lower US Drug Prices

“Recent legislative proposals, including US Senate Bill S.2543, US House of Representatives Bill HR 3, and various Trump Administration proposals and plans, have advanced some form of international reference pricing (IRP) to lower drug prices. As its name suggests, IRP seeks to benchmark US drug prices to prices of similar or comparable drugs in other counties. Some proposals would have the federal government develop a reference price index based on prices paid by a select group of high-income countries, and then restrict prices to a narrow range of the index. [..] American drug pricing policy rewards large capital investments and … Read More

Gilead’s Covid-19 Drug Is Mediocre. It Will Be a Blockbuster Anyway.

“the F.D.A.’s decision to grant the drug full approval — which means the company can now begin broadly marketing it to doctors and patients — has puzzled several outside experts, who say that it may not deserve the agency’s stamp of approval because it is, at best, a mediocre treatment for Covid-19 [remdesivir..]. “I think most people think that because a drug is F.D.A. approved, that means it must work,” said Dr. Aaron S. Kesselheim, a professor of medicine at Harvard Medical School who studies the drug industry. He and other researchers recently found that less than one-third of new … Read More

Coverage, Formulary Restrictions, and Out-of-Pocket Costs for Sodium-Glucose Cotransporter 2 Inhibitors and Glucagon-Like Peptide 1 Receptor Agonists in the Medicare Part D Program

“The Centers for Medicare & Medicaid Services recently announced a voluntary plan to cap out-of-pocket costs associated with insulin products in participating enhanced Part D plans. However, this model will not apply to other high-cost glucose-lowering medications such as sodium-glucose cotransporter 2 (SGLT2) inhibitors and glucagon-like peptide 1 (GLP-1) receptor agonists. These classes are increasingly used as second-line agents for patients with type 2 diabetes despite only a modest effect on glycemic control (approximately 0.8% to 1%) because of mounting evidence of cardiovascular benefits. We sought to examine contemporary coverage and out-of-pocket costs for beneficiaries filling either an SGLT2 inhibitor … Read More

PBM Rebates Do Not Cause Higher Medicare Part D Drug Prices

“The program [Medicare Part D] itself does not negotiate drug prices with pharmaceutical companies. Instead, the government partners with pharmacy benefit managers (PBMs) to leverage its market power and reduce drug prices for seniors in Part D. Insurance companies, unions, large employers, and state governments also engage PBMs in similar arrangements. By representing such a wide swath of the purchasers of prescription drugs, PBMs can use their purchasing power to negotiate lower prices from pharmaceutical companies. [..] the Department of Health and Human Services has issued a rule that would limit their ability to pass back the rebates they negotiate … Read More

Biosimilars in the United States 2020–2024: Competition, Savings and Sustainability

“This study was produced independently by the IQVIA Institute for Human Data Science as a public service, without industry or government funding. [..] In 2019, the United States spent $493 billion on medicines at ex-manufacturer invoice prices, including $211 billion on biologics, which now comprise 43% of total medicine spending. [..] The correlation between the magnitude of molecule sales and the number of biosimilar competitors attracted to the space is not as robust as expected. Rather it appears that the selection of molecules for biosimilar development may be influenced by multiple factors such as technical complexity, intellectual property issues, or … Read More

Oncology’s “Hockey Stick” Moment for the Cost of Cancer Drugs—The Climate Is About to Change

“During the active phase of treatment for a patient with cancer in Medicare’s Oncology Care Model, antineoplastic drug costs represented more than 50% of the total cost of care in 2018 and are expected to contribute nearly 70% of the total cost of active care by 2025 and more than 80% by 2030, 10 years from now. [..] Any solution that relies solely on one of the actors in the drug distribution and delivery system is doomed to failure because no one wants to be the “bad guy.” What is needed is a convener with power (likely the US federal … Read More

How to Stop the Superbugs

“Superbugs are not a unique problem to COVID-19, of course; they already kill 35,000 Americans every year. If bacteria continue evolving to outwit antibiotics, however, the World Health Organization estimates they will become the leading global cause of death by 2050. [..] The ability of biotech upstarts to earn revenue clashes with the basics of evolutionary biology. Superbugs develop as bacteria accumulate mutations over time, forming strains that elegantly evade our existing antibiotic arsenal. The more consistently a bug goes up against one of our trusted antibiotics, the more likely it is to evolve to escape it. Accordingly, to prevent … Read More

Sophisticated Purchasing of Pharmaceuticals: Learning From Other Countries

“The authors [Emanuel EJ et al. in a JAMA Internal Medicine Special Communication also published today] suggest that the United States should learn from its peers, from other developed nations that have created publicly accountable institutions for health technology assessment and drug price determination and that have reaped a return in the form of prices that are lower and better aligned with clinical value than drug prices in the United States. [..] Payers in the United States (governmental programs, self-insured employers, insurers, pharmacy benefit managers) conduct their own implicit health technology assessments but usually without the transparency or evidence focus … Read More