Discussion on Drug Value Heats Up in US Election

Healthcare costs, specifically those related to prescription drugs, are a major election issue for many Americans. According to the August 2016 Kaiser Health Tracking Poll, two-thirds of Americans say Medicare access and healthcare affordability are top election issues, and 53 percent of voters say that prescription drug costs in particular are top priorities. Many of the efforts to address these issues concern the use of comparative efficacy and cost-effectiveness research. These forms of research, widely used integrated in the healthcare systems of many countries in Europe and elsewhere, are only recently gaining traction in the United States. Policy efforts and election outcomes could have a major impact on how these forms of research are used in the future.

Current Efforts

Numerous U.S. organizations, businesses, and special interest groups have been working to foster greater competition in the pharmaceutical marketplace and to tie the value of a drug to its price. On September 8, the pharmacy benefit manager Express Scripts recommended that employers and insurers cover fewer drugs for inflammatory conditions such as Rheumatoid Arthritis. Though fewer than 1% of Express Scripts users use these types of drugs, drugs in this category represent almost 10% of all drug spending. This would require manufacturers to compete directly on cost for limited spaces on formularies: manufacturers would need to offer better discounts than competitors to get their drugs on approved lists for employers and insurers. Express Scripts emphasized that clinical considerations always come first in determining which drugs to cover, but did not detail exactly how this related to the cost-cutting effort.

In July, the American College of Physicians (ACP) published a position paper in the Annals of Internal Medicine proposing various ways to control rising drug costs. They argued for transparency in drug pricing, particularly in cases where taxpayer-funded basic research led to the development of a drug. They also proposed eliminating the restrictions against the use of QALYs in PCORI research. Perhaps most notably, the ACP argued that Medicare and other publicly-funded health programs should have an increased ability to engage in pricing negotiations with manufacturers.

Several other organizations have recently been working to develop frameworks to assess a drug’s cost in relation to the value it offers to patients and to the healthcare system. The American Society for Clinical Oncology (ASCO) and the National Comprehensive Cancer Network (NCCN) created value frameworks aimed at helping patients and physicians work together to compare and select the best treatment based on efficacy and affordability. The Institute for Clinical and Economic Review (ICER) has been making waves in the pharmaceutical industry by conducting cost-effectiveness analyses and determining prices they believe to be appropriate based on the value provided by a drug. These prices tend to be considerably lower than the true prices. Comparative efficacy and cost-effectiveness research are key to these efforts: the organizations mentioned above are working to determine which drugs work best and which offer patients the best value for money.

Policy Changes

The United States government has also been participating in efforts to curtail rising drug costs, though these efforts are often impeded by the intensely partisan nature of the problem. The Patient-Centered Outcomes Research Institute (PCORI) was founded under the affordable care act (ACA) and is responsible for funding comparative efficacy research in the United States. However, PCORI is prohibited from conducting cost-effectiveness research, so the potential to leverage their research to reduce costs is limited.

There are also some pilot programs aimed at improving the way Medicare handles drug costs. For example, a pilot program under development would test a variety of value-based purchasing methods for drugs covered under Medicare Part B (usually drugs administered by doctors at outpatient centers using equipment such as infusion pumps or nebulizers). Clinical efficacy is a key component of these efforts. These policy changes, if implemented, would be a major step toward linking a drug’s performance to its cost. Two components of this pilot program plan are of particular interest:

  •  Indication-based pricing means that the same drug could be priced differently for different indications. For example, a cancer drug that is used for both melanoma and lymphoma may have a different price for each condition depending on how successfully it can be used to treat that condition.
  • Risk-sharing agreements based on outcomes would involve voluntary agreements with pharmaceutical manufacturers to alter prices based on outcomes. A drug may cost less if the treatment is unsuccessful or more if the desired outcomes are achieved.

These value-based programs, provided for under the ACA, will not begin before 2017.

The Election

The above efforts by industry, interest groups, the government, and other organizations give a sense of what is at stake in the upcoming elections. The two major-party candidates, Hillary Clinton and Donald Trump, have very different ideas about how to address the rising costs of healthcare in general and prescription drugs in particular.

Donald Trump takes the position that the ACA inhibits the free market and results in rationing of medical goods and services, including prescription drugs. He suggests that the best course of action is to repeal the ACA and remove barriers preventing drug providers from accessing the free market. He proposes that “allowing consumers access to imported, safe and dependable drugs from overseas will bring more options to consumers.” This free-market perspective suggests that the market will naturally favor those drugs that are effective and priced appropriately. Trump’s website does not provide further explicit details about implementing this plan.

Hillary Clinton’s approach is very different: she intends to build on the foundation provided by the ACA to empower government organizations to obtain better prices and to foster greater competition in the marketplace. Some key points of her plan are:

  • Requiring drug companies that benefit from taxpayer money to invest a “sufficient amount” of their revenue in R&D rather than marketing or profits.
  • Impose monthly limits on out-of-pocket prescription drug costs for patients and require insurance plans to provide coverage past those limits.
  • Provide greater access to generic medications by enabling the FDA to clear out its multi-year backlog of generic drug approvals.
  • Prevent pharmaceutical companies from paying to keep generic drugs off the market.
  • Invest in private research to “hold drug companies accountable for justifying their costs.”
  • Allow patients to import drugs from abroad.
  • Allow Medicare to negotiate drug prices.

 Though both candidates support allowing patients to import drugs from abroad, the similarities in their positions appear to end there. As such, the stakes in the upcoming election are high in this area. Though it is unlikely that either candidate could push through every component of their respective plans, they would be well-placed to influence the United States healthcare and prescription drug policies for years to come.

Efforts Abroad

As we have shown, there is a significant amount of interest in diverse approaches to linking drug prices to value in the United States. But these efforts are in no way unique to the United States: many countries in Europe and elsewhere have health technology assessment (HTA) agencies dedicated to determining what impact new drugs will have on individual patients and on healthcare systems as a whole. In a number of countries, these agencies have operated for more than a decade and have been updated and refined over that time.

While there is certainly no one-size-fits-all solution to the problem of prescription drug costs, there is still much to be learned from HTA agencies in other countries. If nothing else, they possess decades of collective experience and have overcome numerous hurdles. Policy makers and organizations in the U.S. may be able to streamline their approaches and avoid some major pitfalls if they are willing to learn from those who have already implemented systems with many of the same goals and challenges.

Conclusion

With the increase in US public awareness of the cost of healthcare (especially drugs), there have been significant moves by a wide range of organizations to tie the value of a therapy to its comparative efficacy. While these initiatives are garnering a tremendous amount of attention and controversy in the U.S., it is important to remember that established models for comparative efficacy research have been around for years in the form of global HTA agencies. While the exact approach of any one HTA agency is unlikely to work perfectly in the U.S., we believe there is much to learn from studying the work of these established agencies. 

Both the US government and private payers are testing plans to reduce costs while still ensuring quality care. Prescription drug costs are also a significant election issue and the major-party candidates have both released plans on how to confront these issues. As the costs of healthcare continue to climb, we can expect further heated discussion on the use of comparative efficacy research in healthcare.