Amid Growing Rx Costs, No Consensus on Addressing Access

A hepatitis C regimen that costs nearly $100,000 for a full course; a more than 5,000% price hike for a 62-year-old drug — high prescription drugs prices have increasingly been making headlines.

On Friday, stakeholders gathered at HHS’ Pharmaceutical Forum to discuss the issue.

During the forum, CMS Acting Administrator Andy Slavitt said millions of Medicare and Medicaid beneficiaries, as well as individuals enrolled in the Children’s Health Insurance Program or health plans through the Affordable Care Act’s insurance exchanges, “rely on prescription medications to manage chronic illnesses and treat acute conditions.” However, surveys have shown “that as costs go up, so does everyone’s anxiety about their continued access to their prescription medicine,” he said.

He added, “As we encourage the development of new generations of highly targeted, personalized therapies, we need strategies for ensuring access to these innovations.”

Laying Out the Problem

Slavitt noted that CMS spent $140 billion last year on prescription drugs for Medicare and Medicaid beneficiaries. Meanwhile, rising prescription medication prices also influence monthly premiums in CHIP and exchange health plans, he said.

Spending on prescription drugs rose by 13% last year — the highest growth rate since 2001, according to Slavitt. By comparison, overall health care spending grew just by 5% in 2014, Slavitt said.

“Drug costs are not just the states and federal government’s fastest-growing cost, but through [Medicare] Part B and D premiums, co-insurance and deductibles, our beneficiaries pay 16% of the bill, making this a real kitchen table issue for working families and retirees,” Slavitt said, noting that Part D per capita spending jumped 11% last year.

“Given these costs, consumers’ access is already under threat,” he said. According to Slavitt, surveys have found that as many as a quarter of U.S. residents are unable to afford medications and, therefore, fail to fill prescriptions “on which their health depends.”

Further, “evidence suggests that this trend of diminishing access will continue if we do not work together to find viable solutions,” Slavitt noted.

What’s Been Proposed?

The “right ideas” to ensure prescription drug access “will in turn create bigger markets for innovator and should serve to create a more predictable climate for investors,” Slavitt said. But amid varying proposals, it’s hard to determine which will be the “right” ones.

There’s a myriad solutions on the table to address skyrocketing prescription drug prices. For instance, a proposed ballot initiative in California would impose price controls on prescription drug purchases funded — directly and indirectly — by the state.

Other proposals to address prescription drug costs include:

Negotiating Drug Prices, Increasing Rebates in Medicare

While federal officials did not push specific policy ideas during the forum, President Obama in the past has called for granting Medicare the legal authority to negotiate specialty drug prices.

Mark McClellan, former Medicare administrator and a speaker at the forum, said that “[t]here is a lot of evidence that the (clinical) value of drugs on the market today varies tremendously,” adding, “Government policies should provide stronger incentives for the development of clinically valuable treatments.”

However, Elaine Wong Eakin, executive director of California Health Advocates, told California Healthline, “Allowing CMS to negotiate prices with drug manufacturers is controversial.” Wong Eakin said, “It may lower costs for Medicare beneficiaries and the Medicare prescription drug program, but may lead to higher prices overall which may, down the road, increase costs to Medicare beneficiaries and the Medicare prescription drug program,” adding, “Furthermore, allowing CMS to negotiate prices does not address why prescription drug prices are so high in the US.”

Separately, some stakeholders have proposed increasing Medicare drug rebates for low-income beneficiaries, which the Congressional Budget Office has found would save $100 billion over a decade.

However, there hasn’t been “a great test case” for increasing rebates, according to Caroline Pearson, senior vice president at Avalere Health.

Cost-Sharing Caps

Some stakeholders have suggested capping the amount that insurers can require policyholders to pay for prescription medications. In fact, a report released last week by the American Cancer Society’s Cancer Action Network recommended that HHS and state regulators restrict insurers from requiring patients to pay a percentage of drug costs, rather than a flat rate.

Holly Campbell, a spokesperson for PhRMA, told California Healthline, “There needs to be a greater focus on the critical challenge facing patients: increasingly high cost sharing and additional restrictions on access as a result of their health insurance coverage.”

However, former HHS Secretary Kathleen Sebelius has said cost-sharing caps “really [don’t] get to the underlying costs, and I think at some point, that’s a much more difficult area to delve into.”

Expediting Drug Approval

During the forum on Friday, Mark Merritt, president and CEO of the Pharmaceutical Care Management Association, said, “The best way to reduce prescription drug costs is to expedite approval of brand and generic drug competitors.” PCMA also has suggested that FDA and lawmakers expedite approval of competing brand-name drugs and eliminate delays for generic drug approvals.

Republicans have long called for easing FDA regulations in an effort to hasten approval of new drugs.

Yet, Yevgeniy Feyman, deputy director at the conservative Manhattan Institute for Policy Research’s Center for Medical Progress, told STAT News, “It’s not clear to me that ‘Reform the FDA’ is going to be enough.”

Reforming Specialty Drug Reimbursements

Specialty drugs can cost more than $10,000 monthly, and the “skyrocketing costs” are a “major concern among employers and other health care purchasers,” according to a recent Health Affairs Blog post by Suzanne Delbanco, executive director of the not-for-profit Catalyst for Payment Reform, and Andréa Caballero, program director at Catalyst for Payment Reform.

“[R]eforming how we pay health care providers can impact the appropriateness with which we use specialty pharmaceuticals,” Delbanco and Caballero wrote, adding, “The more we package together the payment for the medical and pharmaceutical care patients need, the greater the incentive health care providers will have to make sure they deliver each type of care as appropriately as possible.”

However, like many proposals, the blog post notes, “We don’t yet know enough to be able to lay out for purchasers the ‘right’ strategy in this space.”

Campbell noted that “specialty medicines have never been consistently defined and are a subset of medicines often placed on a health plan formulary’s specialty tier based solely on cost.” Campbell said that “spending on all prescription medicines, including so-called retail specialty medicines, has been a consistent share of overall health care spending and is projected to grow in line with overall health care costs through the next decade,” adding, “This is possible due to a competitive marketplace for medicines where generic utilization rates are high, robust competition among brand name medicines takes place and aggressive negotiation occurs to lower prices.”

No Consensus on Which Plan To Choose

Stakeholders on all sides of the issue have not been able to agree on what the “right idea” is to address high prescription drug costs.

For instance, Stacey Worthy, public policy director for the Alliance for the Adoption of Innovations in Medicine, has said that “[p]rice controls for the entire pharmaceutical industry would interfere with supply and demand and there would be less funding for research and development.”

In addition, Campbell told California Healthline, “Discussions about cost need to look at spending across the health care system to find solutions that ensure access to high quality, patient-centered care and continue to encourage development of innovative, life-changing medicines.”

But Clare Krusing, a spokesperson for American Health Insurance Plans, in a statement argued that drug companies “are desperately trying to shift the blame for soaring pharmaceutical costs.”

“None of the proposals on the table move the needle that much,” Pearson said. “I’ve yet to see anything that you wave the magic wand and it solves the problem in a major way.”

Further, Federation of American Hospitals President and CEO Chip Kahn said, “There’s a grave concern about this, but it’s not clear at all what a public policy process would look like.”

Around the Nation

New Model. CMS has released a proposed rule to form a new type of partnership between state and federal health insurance exchanges created under the Affordable Care Act.

Replacement Plans. Sen. John Thune (R-S.D.), a critic of the ACA, defended his party’s ideas to replace the law during a recent interview.

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.

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KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.