“American Patients First.” Trump and Azar outline the blueprint to reduce prescription drug pricing. Stakeholders react.

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May 14, 2018

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SPECIAL EDITION UPDATE
 

Easy Peezy. Let’s Fix Prescription Drug Pricing in a Silo

 
 

On Friday afternoon, the Trump Administration released its much-ballyhooed blueprint to lower prescription drug prices, “American Patients First.” Health and Human Services (HHS) Secretary Alex Azar identified 4 causes for high drug prices:

  1. High drug list prices
  2. Government regulations that impede innovation and access
  3. Foreign countries that are “free-loading” from American investment in innovation
  4. High out-of-pocket costs for drugs

The blueprint responds to those challenges and outlines: a) the Administration’s stance on how and why drug pricing has become a big issue; b) actions the Administration has taken already to address drug pricing; c) actions President Trump may direct HHS to take immediately; and d) “even bolder actions to bring down prices” for which HHS is soliciting comment.

All considered actions belong to 4 key strategies for reform:

  1. Improved competition
  2. Better negotiation
  3. Incentives for lower list prices
  4. Lowering out-of-pocket costs

During his speech, President Trump criticized a number of industry players for their roles in the current pricing climate. Secretary Azar stated the majority of the actions outlined in the blueprint can be done by executive action. He stressed that the Administration plans to get to work on the blueprint right away, but he understands this is not a “one and done” process, that it will require feedback, and that it will take years to fully implement. Below is a top-line summary of the blueprint’s items for “Immediate Action” and those identified as “Further Opportunities.”

Proposals for “Immediate Action” (actions the President may direct HHS to take immediately):

  • Value-based payment arrangements in Medicare and commercial markets
  • Indication-based pricing
  • Additional analysis on moving Part B drugs to Part D
  • Updated drug pricing dashboard/improved transparency
  • 340B reforms
  • Changes to Medicare Part D’s 6 protected classes
  • New tools for plans to manage costs
  • Incentives to keep prices low
  • Incentives for increased adoption of biosimilars
  • Changes to Medicaid Best Price
  • “Ending” rebates
  • Eliminating pharmacist gag rules
  • Patent reform—Creating and Restoring Equal Access To Equivalent Samples Act of 2017 (CREATES Act)
  • Food and Drug Administration’s (FDA’s) accelerated approval for brands, generics, and over-the-counter (OTC) medicines
  • Disclosure of drug prices in prescription drug advertisements

Proposals considered “Future Opportunities” (presented in the form of 126 questions on which the Administration seeks feedback):

  • Reserving certain Part D incentives only for drug makers that stop raising prices
  • Ending the Affordable Care Act’s (ACA’s) Medicaid rebate cap, which encourages higher drug prices
  • Including pharmaceutical manufacturer copay discount cards in Medicaid best price calculations
  • Making changes to the Medicaid Drug Rebate Program rules to remove barriers to innovation and competition
  • Reducing incentives to deliver Medicare Part B drugs in the most expensive setting
  • Requiring pharmacy benefit managers (PBMs) to act in the best interests of patients
  • Paying for value in Medicare to spur development of drugs that cure illnesses rather than simply manage symptoms
  • Requiring beneficiaries to be told what their out-of-pocket costs will be prior to receiving a Part B drug or a Part D drug prescription, and whether lower-cost alternatives exist
  • Requiring “safety net” hospitals paid under Medicare Part B to use their 340B drug discounts to provide care to more low-income and vulnerable patients

Preliminary reaction to the blueprint was mixed, though not as bad as many industry stakeholders feared.

Of note, in a statement after the blueprint’s release, the Community Oncology Alliance (COA) stated:

“COA strongly supports President Trump and the Administration’s work to lower the price of prescription drugs…. While COA applauds the Administration’s efforts and new blueprint…COA is particularly dismayed that the Administration blueprint does not include a stop to the ongoing sequester cut to drug reimbursement.”


Pharmaceutical Research and Manufacturers of America (PhRMA) issued a statement which said, in part:

“These far-reaching proposals could fundamentally change how patients access medicines and realign incentives across the entire prescription drug supply chain. While some of these proposals could help make medicines more affordable for patients, others would disrupt coverage and limit patients’ access to innovative treatments.”


The Pharmaceutical Care Management Association (PCMA), the trade association for PBMs, issued mixed feedback:

“[W]e applaud the Admnistration’s efforts to cut through red tape that keeps competing drugs from coming to market.... Getting rid of rebates and other price concessions would leave patients and payers, including Medicaid and Medicare, at the mercy of drug manufacturer pricing strategies. PBMs have long encouraged manufacturers to offer payers alternative ways to reduce net costs. Simply put, the easiest way to lower costs would be for drug companies to lower their prices.”


Wall Street rewarded pharmaceutical manufacturers for the Administration not including 2 of the biggest threats in its blueprint: direct government negotiation with industry and re-importation of drugs from foreign countries. Rep. Elijah Cummings (D-MD) was not so thrilled:

“I think very expensive champagne will be popping in drug company boardrooms across the country tonight. The President is apparently abandoning his campaign promise to authorize Medicare to negotiate directly with drug companies to lower prices.”


However, given that 2 of the most influential advisors to President Trump on pharmaceutical issues, Azar and FDA Commissioner Scott Gottlieb, have strong ties to the drug industry, expecting the President to take such drastic, disruptive action was a long shot.

This morning, HHS released a formal request for comment in which it stated it is seeking “all suggestions to improve the affordability and accessibility of prescription drugs, including reflections and answers to questions not specifically asked above. Whenever possible, respondents are asked to draw their responses from objective, empirical, and actionable evidence and to cite this evidence within their responses.”

We will continue to analyze the blueprint and ongoing Administration actions. Stay tuned.

 
 

Count on Health Policy Weekly for an at-a-glance view of legislative and regulatory developments and news that impacts the healthcare industry.

 
 
 
 
 
FEATURED CONTRIBUTORS
 

EDITOR-IN-CHIEF:
Jennifer Snow
Senior Director,
Health Policy
Xcenda

MANAGING EDITOR:
Scott Shields
Associate Director,
Health Policy
Xcenda

 

ADVISORY BOARD:

Amy Grogg, PharmD
Senior Vice President | Strategy & Commercialization | AmerisourceBergen Corporation

Kristine Flemister, PharmD
President | Xcenda

Tommy Bramley, PhD, RPh
President | Lash Group

Stacie Heller
Vice President | Government Policy | AmerisourceBergen Corporation

Rita Norton
Senior Vice President | Government and Public Policy | AmerisourceBergen Corporation

Ana Stojanovska
Vice President | Reimbursement & Policy Insights | Xcenda

CONTRIBUTING AUTHORS:

Scott Shields | Stacie Heller | Jennifer Snow

PRODUCTION:

Laurie Kozbelt | Ellen Olson

 

May 14, 2018

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