How the Blueprint Policy Statement to Lower Drug Costs and Reduce Out-of- Pocket Costs May Affect Employers

Transcription

1 How the Blueprint Policy Statement to Lower Drug Costs and Reduce Out-of- Pocket Costs May Affect Employers Presented by: Lorie Maring Phone: (404)

2 AGENDA Provide an overview of the U.S. Department of Health and Human Services Blueprint Policy Statement to Lower Drug Costs and Reduce Out-of- Pocket Costs (Blueprint Policy). Discuss the current system of prescription drug pricing, including industry members such as drug makers, insurance companies, pharmacy benefit managers (PBMs), distributors, pharmacies, etc. Describe how the Blueprint Policy may affect employers group health plans.

3 AGENDA Discuss whether employers should consider reaction to calls for price transparency, applying a substantial portion of rebates at the point of sale, having a site neutral payment policy for drug administration procedures, having PBMs act solely in the interest of the employer (or consumer) for whom they are managing pharmaceutical benefits, restricting the use of rebates, prohibiting contracted pharmacy gag clauses, and utilizing indication-based pricing or outcome-based contracts.

4 What is the Blueprint Policy? On May 11th, 2018, the Trump Administration released American Patients First: The Trump Administration Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs ( the Blueprint ), which reviews the issue of high cost drugs, presents actions the Administration has already taken, lists actions that the Administration may undertake or promote going forward, and seeks feedback on potential actions. Comments are solicited through July 16, 2018.

5 Blueprint Policy Background Brief Overview of Pharmaceutical Pricing in U.S. Pills that cost pennies to produce may cost thousands of dollars to purchase Two pills with identical ingredients, but different names, may vary in price by a factor of five In the United States, the price of the same drug may vary by two times or more compared to what it costs other countries

6 Blueprint Policy Background Pharmaceutical Profits Research and Development In 2016 top ten drug companies spent 17% of revenue on R&D Patent System High cost to develop and generally low cost to manufacture

7 Blueprint Policy Background Pharmaceutical Pricing Life Cycle Manufacturer Wholesale or Direct Purchaser Pharmacy Patient/End Consumer

8 Blueprint Policy Background Pharmacy Benefit Managers Role of PBM: Leverage market power to reduce costs of drugs at pharmacy level for insurers (fully-insured) and self-insured employers through: 1. Price negotiation 2. Formulary design PBMs may also own pharmacies that offer even deeper discounts if utilized as PBM.

9 Blueprint Policy Background Rebate Debate Discounts reduce the initial price paid at the pharmacy and often total 10% or more of price of branded drugs. Rebates earn money back after drugs have been sold and consumed and are negotiated directly by PBMs with manufacturers on brand medications. Manufacturers pay rebates to earn access to formularies as preferred drugs and to reward volume. Volume rebates are additional rebates paid by the manufacturer if a PBM sells more of their brand drug than similar alternatives. Historically PBMs charged nominal fees and kept rebates today, generally pass through rebates to insurers and employers.

10 Blueprint Policy Background

11 Blueprint Policy Background Wholesalers: McKesson, AmerisourceBergen, Cardinal Health PBMs: Optum/UHC, CVS Health, Walgreens Boots Alliance, Express Scripts Insurers: UHC, Anthem, Aetna, Humana, Cigna Drug Companies: Pfizer, Merck

12 Blueprint Policy Summary Pharmaceutical Pricing Abroad U.S. market is most valuable in terms of revenue Drug prices in foreign markets generally less In many European countries, drug approval requires both efficacy/safety and cost effectiveness (FDA does not consider cost) Low production costs and incomes in some countries (e.g. in Africa/South America) result in less need or inability to charge higher prices Many countries with socialized medicine more likely to negotiate pricing and not pay for certain drugs based on cost comparison

13 Blueprint Policy Summary HHS has identified four challenges in the American drug market: High list prices for drugs Seniors and government programs overpaying for drugs due to lack of the latest negotiation tools High and rising out-of-pocket costs for consumers Foreign governments free-riding of American investment in innovation

14 Blueprint Policy Summary HHS has proposed four key strategies for reform: Improved competition Better negotiation Incentives for lower list prices Lowering out-of-pocket costs

15 Blueprint Policy Summary HHS s blueprint encompasses two phases: 1. Actions the President may direct HHS to take immediately (without Congress), and 2. Actions HHS is actively considering, on which feedback is being solicited through July 16, 2018 (Generally requiring Congressional action).

16 Blueprint Policy Summary Increase Competition Immediate Actions Steps to prevent manufacturer gaming of regulatory processes such as Risk Evaluation and Mitigation Strategies (REMS) Measures to promote innovation and competition for biologics Developing proposals to stop Medicaid and Affordable Care Act programs from raising prices in the private market

17 Blueprint Policy Summary Increase Competition Further Opportunities Considering how to encourage sharing of samples needed for generic drug development Additional efforts to promote the use of biosimilars

18 Blueprint Policy Summary Better Negotiation Immediate Actions Experimenting with value-based purchasing in federal programs Allowing more substitution in Medicare Part D to address price increases for single-source generics Reforming Medicare Part D to give plan sponsors significantly more power when negotiating with manufacturers

19 Blueprint Policy Summary Better Negotiation Immediate Actions Sending a report to the President on whether lower prices on some Medicare Part B drugs could be negotiated for by Part D plans Leveraging the Competitive Acquisition Program in Part B. Working across the Administration to assess the problem of foreign free-riding

20 Blueprint Policy Summary Better Negotiation Further Opportunities Considering further use of value-based purchasing in federal programs, including indication-based pricing and long-term financing Removing government impediments to value-based purchasing by private payers Requiring site neutrality in payment Evaluating the accuracy and usefulness of current national drug spending data

21 Blueprint Policy Summary Incentives for Lower List Prices Immediate Actions FDA evaluation of requiring manufacturers to include list prices in advertising Updating Medicare s drug-pricing dashboard to make price increases and generic competition more transparent

22 Blueprint Policy Summary Incentives for Lower List Prices Further Opportunities Measures to restrict the use of rebates, including revisiting the safe harbor under the Anti-Kickback statute for drug rebates Additional reforms to the rebating system Using incentives to discourage manufacturer price increases for drugs used in Part B and Part D

23 Blueprint Policy Summary Incentives for Lower List Prices Further Opportunities Considering fiduciary status for Pharmacy Benefit Managers (PBMs) Reforms to the Medicaid Drug Rebate Program Reforms to the 340B drug discount program Considering changes to HHS regulations regarding drug copay discount cards

24 Blueprint Policy Summary Lowering Out of Pocket Costs Immediate Actions Prohibiting Part D contracts from preventing pharmacists telling patients when they could pay less out-of-pocket by not using insurance Improving the usefulness of the Part D Explanation of Benefits statement by including information about drug price increases and lower cost alternatives

25 Blueprint Policy Summary Lowering Out of Pocket Costs Further Opportunities More measures to inform Medicare Parts B and D beneficiaries about lower-cost alternatives Providing better annual, or more frequent, information on costs to Part D beneficiaries

26 Blueprint Policy Impact on Employers Actions for Employers??? price transparency, rebates at the point of sale, site neutral payment policy for drug administration procedures, fiduciary PBMs, restricting the use of rebates, prohibiting contracted pharmacy gag clauses, and utilizing indication-based pricing or outcome-based contracts.

27 Final Questions HRCI SHRM Presented by: Lorie Maring Phone: (404)

28 Thank You Presented by: Lorie Maring Phone: (404)