The Challenge of Drug Price Transparency

Transcription

1 The Challenge of Drug Price Transparency Mason Tenaglia, VP Payer & Managed Care Insights December 2016 Copyright 2016 QuintilesIMS. All rights reserved.

2 Why is there a call for price transparency? Commercial Public has expressed angst over rebates to manufacturers while patients are exposed to full costs during their deductibles Manufacturers subsidize higher exposure through the use of patient savings programs (co-pay cards) Medicare Manufacturers were stunned by rebates for EGWP patients Only low-income subsidy beneficiaries are unaffected by heightened cost exposure, leaving standard Medicare patients with high deductible and coverage gap payments Medicaid Due to statutory rebates and CPI penalties, Medicaid pays penny pricing for mature brands Under Medicaid, patient cost exposure is exceptionally low Source: QuintilesIMS Institute 1

3 The challenges of drug price transparency Should we make subsidies that are inexplicit, explicit? Manufacturer subsidies in the form of rebates and patient savings programs and their beneficiaries vary so significantly by therapeutic area, product life cycle, and patient population that transparency will have limited value to the general public. Rebates and those they subsidize vary by: Payer channel and cohort Medicare Part D, EGWP, Employer Plans, Medicaid Therapeutic Class HIV, HCV, Insulin, ICS/LABA Patient Population Acute, Chronic Life cycle Launch, Mature, Post-LOE Source: QuintilesIMS Institute 2

4 Agenda The law of drug margins and re-distribution (and how it came to be) Augustine s Law LIII? A case study on insulins The complexity of transparency Source: QuintilesIMS Institute 3

5 Is greater net price transparency required to ensure affordable access for patients? Law LIII: Net margin $ for drugs are difficult to measure and now obey the first law of thermodynamics in that they remain constant in total while WAC prices obey the second law of thermodynamics always increasing with entropy determining how they are divided Employers/Gov t (and some insurers) At Risk for Costs Manufacturers Pressure to Succeed Use formulary leverage to negotiate higher rebates PBMs/Insurers Manage Drug Trend Source: QuintilesIMS Institute Patients Cost Sensitive 4

6 Offered Commercial Plans (%) A growing share of health plans incorporate pharmacy deductibles Percent of Plans with Deductibles on Pharmacy Benefit 50% Integrated Separate +35% 46% +35% 49% 40% +31% 34% 30% 23% +13% 26% 20% 10% 0% Source: PwC Health and Well-Being Touchstone Survey, ; QuintilesIMS Institute 5

7 Prescription Cost Sharing (US$) Average co-pays are increasing as coinsurance and deductibles emerge $120 Patient Cost-Sharing and Manufacturer Buy-Down (Commercial Claims with Co-Pay Card, All Brands) $100 $80 $60 $40 $20 $0 Q Q Q Q Q Q Buy Down Initial Cost Exposure Final Out-of-Pocket Cost Source: QuintilesIMS Formulary Impact Analyzer; QuintilesIMS Institute 6

8 Volume (% TRxs) Through the years, attaining contracted access has become more challenging 100% Post-Launch Volume with Unrestricted Access* ( ) 75% 50% The implementation of Part D and its review period delayed the formulary uptake cycle COM and PRD payers are utilizing more control through restrictions and NDC blocks (ESI and CVS) 25% 0% Months Post Launch Historical Model (2005) Post-Part D (2008) Today (2015) *Unrestricted access refers to preferred and non-preferred tiers without restrictions such as prior authorization, step edit or NDC block Source: QuintilesIMS Institute 7

9 US pharma discounts are growing faster than sales, distorting gross to net ratio US Gross Sales and Discount Over Time (Credit Suisse Analyzed Universe) +90% $320 $374 $197 $194 $188 $203 $ % $266 $277 $149 $116 $78 $84 $92 $41 $45 $47 $54 21% 23% 25% 27% 30% 32% 33% 36% 40% Gross Turnover (US$Bn) Total Effective Discounts (US$Bn) Note: The Credit Suisse analyzed universe is a sample of manufacturers and amounts to approximately 84% of the IMS captured universe Source: Credit Suisse Annual US Rebate Analysis, May 2016; QuintilesIMS Institute 8

10 Net price growth slowed in 2015 to 2.8% as price concessions by manufacturers rose sharply 16% Protected Brand Invoice and Net Price Growth 14.3% 12% 9.3% 10.0% 11.5% 12.4% 8% 8.7% 9.1% 4% 4.9% 5.1% 2.8% 0% Brands Invoice Price Growth Estimated Net Price Growth Source: QuintilesIMS National Sales Perspectives; QuintilesIMS Institute 9

11 Exposure to Medicare/Medicaid (%) Government payer exposure increases risk of high rebates for brands 50% Exposure to Medicare/Medicaid vs. Rebate by Manufacturer (Credit Suisse Analyzed Universe, 2015) 40% 30% 20% 10% Vertex Biomarin Lundbeck Merck UCB Pfizer Novartis Amgen BIIB Merck BMY Gilead Eli Lilly JNJ Shire AbbVie Novo Nordisk AstraZeneca Sanofi GSK Teva 0% Regeneron 0% 25% 50% 75% Calculated Rebates (%) Note: The Credit Suisse analyzed universe is a sample of manufacturers and amounts to approximately 84% of the IMS captured universe Source: Credit Suisse Annual US Rebate Analysis, May 2016; QuintilesIMS Institute 10

12 Insulin: A Case Study The big three have simultaneously hiked their prices. From 2010 to 2015, the price of Lantus went up by 168 percent; the price of Levemir rose by 169 percent; and the price of Humulin R U-500 soared by 325 percent. [PBMs] get rebates from drug manufacturers... Industry analysts estimate that those payments, and other backroom deals, amount to as much as 50 percent of the list price of insulin. Where does this leave my patient? In the meantime, we need a fair and transparent system for setting prices... In the United States, we rely on the private sector and a free market for drug pricing. But in order for this to work, we need to regulate it better and demand greater transparency. Source: New York Times (2016); QuintilesIMS Institute 11

13 2010-Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q2 Average Cost (US$) Manufacturer s co-pay card programs offset costs for patients exposed to high amounts $160 Average Cost Exposure and Out-of-Pocket Trend (Rapid Insulin, Commercial) $140 $120 $100 $80 $60 $40 $20 $0 Avg. Cost Exposure (w/o Coupon) Avg. Cost Exposure (w/ Coupon) Avg. OOP (w/o Coupon) Avg. OOP (w/ Coupon) Source: QuintilesIMS Formulary Impact Analyzer; QuintilesIMS Institute 12

14 Difference Between Gross and Net Sales (%) 2009-Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q2 In a competitive market such as insulin, rebates have increased exceeding 50% 70% Implied Rebate Trend by Insulin Brand 60% 50% 40% 30% 20% 10% 0% Lantus Levemir Note: The implied rebate is the difference between a drug's gross sales and what's left (net sales) after various rebates and discounts to private payers and the government. Source: Bloomberg Intelligence, The Diabetes Price War Claims Casualties, September 2016; QuintilesIMS Institute 13

15 H 2016 Gross and Net Price-Per-Day (US$) Increasing prices, rebates and patient assistance result in stable (eventually declining) margins $25 Gross and Net Price-Per-Day (Long-Acting Insulin) $20 $15 $10 $5 $0 Gross Price Net Price Source: Bloomberg Intelligence, The Diabetes Price War Claims Casualties, September 2016; QuintilesIMS Institute 14

16 The challenges of drug price transparency Should we make subsidies that are inexplicit, explicit? Manufacturer subsidies in the form of rebates and patient savings programs and their beneficiaries vary so significantly by therapeutic area, product life cycle, and patient population that transparency will have limited value to the general public. Rebates and those they subsidize vary by: Payer channel and cohort Medicare Part D, EGWP, Employer Plans, Medicaid Therapeutic Class HIV, HCV, Insulin, ICS/LABA Patient Population Acute, Chronic Life cycle Launch, Mature, Post-LOE Source: QuintilesIMS Institute 15

17 Pricing and rebates for insulins behave like a steady and closed system Insulin Employers/Gov t Many at risk for costs Medicaid Penny Pricing PBMs/Insurers lower premiums Manufacturers Pressure to succeed Competition b/w mature brands Rebate paid by Manufacturer to PBMs/Insurers Lower premiums pass to Patients PBMs/Insurers Manage drug trend Co-Pay cards offset patient costs Source: QuintilesIMS Institute Patients Cost sensitive despite chronic need Patient could pay full WAC in first month (deductible) 16

18 With deductibles, Epipen patients are often responsible for the full cost of therapy Epipen Employers/Gov t Many at risk for costs Medicaid Penny Pricing PBMs/Insurers lower premiums Manufacturers One dominant therapy Rebate paid by Manufacturer to PBMs/Insurers PBMs/Insurers Manage drug trend Lower premiums pass to Patients Co-Pay cards offset patient costs Source: QuintilesIMS Institute Patients Low cost sensitivity Acute treatment Patient could pay full WAC if purchased in deductible phase 17

19 New Hep C therapies are expensive but may subsidize plan sponsors/pbms HCV Employers/Gov t Many at risk for costs Very costly for Medicaid PBMs/Insurers lower premiums Manufacturers Pressure to succeed New therapies rely on coverage Rebate paid by Manufacturer to PBMs/Insurers Lower premiums pass to Patients PBMs/Insurers Manage drug trend Increase patient access Source: QuintilesIMS Institute Patients Coverage means affordability PBMs/Insurers provide coverage through formulary 18

20 SGLT-2 brands rely on co-pay cards to ensure patient access as prices rise SGLT-2 Employers/Gov t Many at risk for costs PBMs/Insurers lower premiums Manufacturers Competing launch brands Rebate paid by Manufacturer to PBMs/Insurers PBMs/Insurers Manage drug trend Lower premiums pass to Patients Co-Pay cards offset patient costs Source: QuintilesIMS Institute Patients Cost sensitive despite chronic need Patient could pay full WAC in first month (deductible) 19

21 Contact us at quintilesimsinstitute.org 20