such as promoting the use of lower-cost generics and introducing annual out-of-pocket spending caps.
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Two position papers, published in Annals of Internal Medicine, outlined the College’s concerns about the increasing price of prescription drugs for Medicare and Medicaid, pointing out that the United States has an average annual per capita spend of $1,443 on pharmaceutical drugs and $1,026 on retail prescription drugs.
“The primary differences between health care expenditures in the United States versus other high-income nations are pricing of medical goods and services and the lack of direct price controls or negotiating power by centralized government health care systems,” wrote Hilary Daniel and Sue S. Bornstein, MD, of the Health Public Policy Committee of the American College of Physicians, in one of the papers.
They cited the example of new drugs for hepatitis C which, at more than $80,000 for a treatment course, accounted for 40% of the net growth in prescription drug spending in 2014.
Their first recommendation was to modify the Medicare Part D low-income subsidy (LIS) program, which currently supports approximately 12 million beneficiaries, to encourage the use of lower-cost generic or biosimilar drugs.
The rate of generic drug dispensing among LIS enrollees has been consistently 4%-5% lower than among non-LIS enrollees, they wrote. The Centers for Medicare & Medicaid Services estimated that Medicare could have saved nearly $9 billion, and passed on $3 billion in savings to the Part D program and its beneficiaries, if available equivalent generics were prescribed instead of brand-name drugs.
The authors wrote that zero-copay generics have had the strongest effect on generic drug use, both for LIS and non-LIS enrollees.
“Reducing or eliminating cost sharing for LIS enrollees would not require legislative action, because it would not increase cost sharing, would reduce overall out-of pocket costs for LIS enrollees, and would encourage use of generics among them,” they wrote. They authors of the paper also argued that this move could reduce Medicare spending on reinsurance payments, because most enrollees who reach the ‘catastrophic’ phase of coverage were in the LIS program.
The second recommendation was for annual out-of-pocket spending caps for Medicare Part D beneficiaries who reach the catastrophic phase of coverage. During 2007-2015, the number of seniors in Medicare Part D who reached this catastrophic limit of coverage doubled to more than 1 million, with those enrollees paying an average of more than $3,000 out of pocket in 2015 alone, the authors noted.
“Caps have been proposed in other areas of Medicare; a 2016 resolution from the House Committee on the Budget included a Medicare proposal with a catastrophic coverage cap on annual out-of-pocket expenses, which it called, ‘an important aspect of the private insurance market currently absent from Medicare that would safeguard the sickest and poorest beneficiaries,’ ” they wrote.
In an accompanying editorial, Shelley A. Jazowski of the University of North Carolina at Chapel Hill and coauthor Stacie B. Dusetzina, PhD, of Vanderbilt University, in Nashville, Tenn., said that, while a cap would improve financial protection for beneficiaries, it could result in trade-offs such as increased premiums to accommodate lower spending by some beneficiaries.
The American College of Physicians (ACP) supports a full repeal of the noninterference clause in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, wrote the position paper’s authors. This Act prohibits Medicare from negotiating directly with pharmaceutical manufacturers over the price of drugs.
The position paper also advocated for interim approaches, such as allowing the Secretary of Health and Human Services to negotiate on the price of a limited set of high-cost or sole-source drugs.
“Although negotiation alone may not be enough to rein in drug prices, this approach would allow the government to leverage its purchasing power to reduce Medicare program costs while also allowing plan sponsors to maintain the power to negotiate for the vast majority of drugs covered in the program,” they wrote.
The editorial’s authors pointed out that the success of these negotiations would rely on the ability of Medicare to walk away from a bad deal, which could delay or limit the availability of some drugs with limited competitors.
The ACP also called for efforts to minimize the financial impact of misclassifications of prescription drugs in the Medicaid Drug Rebate Program on the federal government. One study found that these misclassifications occurred in 885 of the 30,000 drugs in the program. The EpiPen and EpiPen Jr autoinjectors, for example, were improperly classified as generic drugs, the paper states.
The authors’ final recommendation in the position paper was for further study of payment models that could reduce incentives to prescribe higher-priced drugs instead of lower-cost and similarly effective options.
In the second position paper, Ms. Daniel and Dr. Bornstein made policy recommendations targeted at pharmacy benefit managers. The first was to improve transparency for pharmacy benefit managers, such as by banning gag clauses that might prevent pharmacies from sharing pricing information with consumers.
“The continued lack of transparency from [pharmacy benefit managers] and insurers can hinder how patients, physicians, and others view the drug supply chain and can make it difficult to identify whether a particular entity is inappropriately driving up drug prices,” the authors wrote in the second position paper.
This was accompanied by a recommendation that accurate, understandable and actionable information on the price of prescription medication should be made available to physicians and patients at the point of prescription. They also called for health plans, pharmacy benefit managers and pharmaceutical manufacturers to share information on the amount paid for prescription drugs, aggregate amount of rebates, and pricing decisions to the Department of Health & Human Services and make that information publicly available, with exceptions for confidential data.
The editorial’s authors commented that many of the policy recommendations raised in the position paper were currently being debated in Congress, and there was clear support from physician groups to address drug pricing, out-of-pocket spending, and access.
“Although trade-offs will need to be considered before selection or implementation of policy solutions, policymakers must act to ensure that patients have access to the prescription drugs they need at a price that reflects the benefits to patients and society,” they wrote.
One author declared book royalties but no other conflicts of interest were declared.
SOURCES: Daniel H et al. Ann Intern Med. 2019 Nov 12. doi. 10.7326/M19-0013; doi. 10.7326/M19-0035.