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Monday, 13 August 2018 09:25

The Battle to Cut Pharmacy Costs

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This past May, the Trump administration released its plans to reduce pharmaceutical prices on four fronts. The policy was laid out in a blueprint which describes the various fronts the Center for Medicare and Medicaid Services (CMS) and the department of Health and Human Services (HHS) propose to take to alleviate the problem. The four areas the administration proposes to target for action are increasing competition, better negotiation, creating lower list prices, and reducing patient Out-of-Pocket spending. Since all employer plans are impacted by the rising costs of prescriptions, we are encouraged to see active steps proposed to address the problem.

HHS will seek to improve competition through actions on the regulatory process

  • Prevent low or limited competition times of drugs and increase number of products on the market

  • Design measures to prevent and reduce the gaming of the regulatory process

  • Action taken by the Food and Drug Administration (FDA) who will release information on the methods pharmaceutical manufacturers are using the shared Risk Evaluation and Mitigation Strategies system (REMS) to delay or block competition from entering the market, such as generics

  • FDA to issue new policies targeting availability, adoption, and competitiveness of biosimilars to try to level the market between the branded biologics and the more affordable biosimilars

  • FDA will continue its education for clinicians, payors, and patients about the interchangeable products to increase the awareness about these new treatments

  • The overall goal is to reduce the national reliance on the branded products and move in a direction of generics and biosimilars, which are generally more cost-effective.

Through CMS, HHS will aim to improve negotiation power on behalf of Medicare and Medicaid patients

  • CMS will develop demonstration projects designed to test and encourage value-based care and lower prices

  • Developed models will hold manufacturers accountable for outcomes and align CMS’s priorities of value over volume with site-neutral payments

  • Models will also provide payors, Medicare providers, and states with new tools to manage spending on high cost therapies

  • CMS will be given discretion to change benefit design and formularies mid-year to address price increase for a sole source drug and updating the methodology to calculate Drug Plan Customer Service star ratings

  • CMS will also explore different pricing strategies for medications based on the condition they are treating

  • Finally, HHS will work with the Department of Commerce to examine the disparity between American drug prices and the prices in other developed countries

HHS may work with both the FDA and CMS to target various aspects of the pharmaceutical market

  • FDA will evaluate the inclusion of list prices in direct-to-consumer advertising

  • The aim is to increase transparency and keep patients well informed of their options

  • Alternatively, CMS will be working on projects to increase transparency with drug prices. The goal is to hold drug makers accountable for price increases, highlight drugs which haven’t had price increases, and to recognize when competition is working with an updated drug price dashboard

  • HHS will target lowering list prices is by developing proposals related to the Affordable Care Act’s Maximum Rebate Amount provision. 

HHS may act in two ways to reduce patient out of pocket spending

  • HHS is proposing to eliminate the pharmacy gag clause, where pharmacists are prohibited from telling patients when they could save money by not paying cash rather than using their insurance 

  • This will empower pharmacists to better assist their patients in getting what the best course of treatment at the lowest price

  • HHS will force Part D Plan sponsors to include additional information regarding drug prices. This information must include drug price increases and lower-cost alternatives as part of the explanations of benefits they currently provide

These steps outlined in May will hopefully get put into action as the current administration tries to combat the pharmaceutical pricing challenge facing the country today. This blueprint, as well as senior Trump administration officials appearing at meetings with top CEO’s in drug manufacturing, have led to some companies to defer (temporarily, at least) some drug price increases. We look forward to seeing some of these steps in action and will report back on any successful policies that are effectively reducing costs.

In the meantime, for more ideas on how to reduce your rising healthcare costs, be sure to contact your Account Manager.

Read 1915 times Last modified on Monday, 14 September 2020 11:34