Value-Based Pricing and Cost-Sharing for Prescription Drugs
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1 Value-Based Pricing and Cost-Sharing for Prescription Drugs A. Mark Fendrick, MD University of Michigan Center for Value-Based Insurance Design #VBID
2 Getting to Health Care Value Shifting the health care spending debate from How much to How well Innovations to prevent and treat disease have led to impressive reductions in morbidity and mortality Regardless of these advances, cutting health care spending is the principle focus of reform discussions Value-based pricing for prescription drugs has been proposed as an approach to lowering medical expenditures Underutilization of high-value services persists across the entire spectrum of clinical care Our ability to deliver high-quality health care lags behind the rapid pace of scientific innovation
3 Star Wars Science
4 Flintstones Delivery
5 Value-Based Pricing and Cost-Sharing for Prescription Drugs Outline Assessing the value of prescription drugs Health care costs what matters Value-Based Insurance Design Aligning consumer cost-sharing with value
6 Assessing the Value of Prescription Drugs Alternatives
7 Effectiveness how well does the drug work? Cure Modify disease progression Treats symptoms only
8 Effectiveness how well does the drug work? $$$ Cure $$ Modify disease progression $ Treats symptoms only Drug Price
9 Indication for what condition is the drug used? Life threatening condition Impact life expectancy Improve quality of life
10 Indication for what condition is the drug used? $$$ Life threatening condition $$ Impact life expectancy $ Improve quality of life Drug Price
11 Alternatives are other treatment options available? Targeted treatment Only treatment option Effective lower cost option available Alternatives
12 Alternatives are other treatment options available? $$$ Targeted treatment $$ Only treatment option $ Effective lower cost option available Drug Price Alternatives
13 A Framework to Assess the Value of Prescription Drugs Higher value Cure Life threatening condition Targeted treatment Alternatives Lower value Treat symptoms only Impacts quality not length - of life Effective lower cost option available Spending more on higher value drugs is a good investment Resources to enable future innovation is important Budget impact has nothing to do with value
14 Do Healthcare Costs Matter? Healthcare Costs are Americans' Top Financial Concern % of Americans saying health care costs is most important financial problem Source: Gallup poll, June 7-11,
15 Do Health Care Costs Matter? Americans Do Not Care About Drug Prices; They Care About What It Costs Them 15
16 Access to High Value Prescription Drugs Impact of Consumer Cost-Sharing Cutting health care spending is the principle focus of reform deliberations Consumer cost sharing is a popular policy lever to achieve this goal Blunt cost sharing increases reduce the use of both high and low value services and adversely affect health, particularly among economically vulnerable individuals and those with chronic conditions 16
17 Inspiration I can t believe you had to spend a million dollars to show that if you make people pay more for something, they will buy less of it. Barbara Fendrick (my mother) 17
18 Potential Solution to Cost Related Non-Adherence of Essential Services: Value-Based Insurance Design (V-BID) Sets consumer cost-sharing level on clinical benefit not acquisition price of the service Successfully implemented by hundreds of public and private payers Bipartisan support to incorporate V-BID principles: TRICARE Demonstration (2017 NDAA) Expand Medicare Advantage V-BID Model Test to all 50 States (S 870; HR 1995) HSA-HDHP reform to allow chronic disease services to be covered on a pre-deductible basis (HR 5652; Draft Executive Order) 18
19 V-BID: Bipartisan Political and Broad Multi-Stakeholder Support HHS CBO SEIU MedPAC Brookings Institution Commonwealth Fund NBCH American Fed Teachers Families USA AHIP AARP DOD National Governor s Assoc. US Chamber of Commerce Bipartisan Policy Center Kaiser Family Foundation American Benefits Council National Coalition on Health Care Urban Institute RWJF IOM Smarter Health Care Coalition PhRMA ECRI Lewin. JAMA. 2013;310(16):
20 Assessing the Value of Prescription Drugs Aligning Consumer Cost-sharing with Value Alternatives
21 Effectiveness how well does the drug work? $$$ Cure $ $$ Modify disease progression $$ $ Treats symptoms only $$$ Drug Price Consumer Price
22 Indication for what condition is the drug used? $$$ Life threatening $ $$ Impact life expectancy $$ $ Improve quality of life $$$ Drug Price Consumer Price
23 Alternatives are other treatment options available? $$$ Targeted treatment $ $$ Only treatment option $$ $ Effective lower cost option $$$ Drug Price Consumer Price Alternatives
24 Value-Based Pricing and Cost-Sharing for Prescription Drugs Closing Thoughts High-value drugs are underutilized in many clinical situations; non-adherence to which may lead to increased total expenditures Determining the value of prescription drugs is complicated, and requires a substantial amount of clinical information Getting stakeholders to agree on a formula to calculate valuebased prices will be a slow and contentious process Once a value-based price is agreed upon for a specific clinical situation, consumer cost sharing should be minimal or eliminated In the mean time, manufacturers and purchasers need to work together to increase patients access to clinically-indicated drugs
25 Star Wars Science Meets Flintstones Delivery Precision Medicine Needs Precision Benefit Design
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