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Payers Express Enthusiasm for Prescription Drug Pricing Reforms

Healthcare payers are eager to see prescription drug pricing reforms that could lower prices for beneficiaries.

Payers eager to see how prescription drug pricing reforms may lower drug costs.

Source: Thinkstock

By Thomas Beaton

- Healthcare payers and associated trade groups have expressed enthusiasm about President Trump’s proposed prescription drug pricing reforms.  

A number of influential organizations have offered commentary on the plan, including some of their own suggestions for how to best address the skyrocketing prices of prescription drugs.  

In a document called America’s Patients First, the Administration lays out a number of proposals that could increase competition in the prescription drug market.

Proposed changes include expanding the availability of biosimilars, increasing value-based reimbursement in Medicaid and Medicare, and adding transparency and cost negotiation tools for drugs purchased and paid for through Medicare Part D.

The document also includes provisions that would significantly reform the Medicare Part B and 340B programs. The reforms would require hospitals to provide charity care equating to more than one percent of their patient costs. These changes would also add limits to Medicare Part B drug price increases and create prescribing-based financial incentives for providers.

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Industry groups and commercial payers believe that many of the proposals in America’s Patients First are a good start to limit prescription drug costs in the public and private sectors.

Aetna CEO Mark Bertolini said that his organization supports the Trump Administration’s new initiatives to limit how much pharmaceutical companies can increase prices.

Bertolini cautioned that brand name medication prices continue to grow at unsustainable rates for his organization, and immediate policy solutions are required.

“Payers and pharmacy benefit managers often negotiate rebates on list prices, but those actions alone will not protect consumers from unjustified, unabashed price increases,” Bertolini said. “For Aetna, the average price of brand name drugs has increased by 40 percent over the past three years.”

“While the pharmaceutical industry spends hundreds of millions of dollars on advertising and lobbying campaigns blaming others, consumers continue to bear the burden of rising drug costs. Something has to change.”

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AHIP lauded the proposals as an effective way to regulate pharmaceutical manufacturers and improve provider behaviors related to prescribing cost-effective drugs like generics and biosimilars.

However, AHIP expressed concern with policy initiatives related to pharmacy rebates.

The organization explained that manufacturers and payers currently negotiate rebates that translate into lower copays and premiums for beneficiaries. Transferring rebates to the pharmacy level, as the White House proposes, would indirectly raise premiums for members.

“We are concerned that some proposals would actually lead to higher costs for Americans, because they would weaken the ability of plans to negotiate lower prices,” AHIP said.

“Insurance providers share the savings from negotiations with drug manufacturers by lowering premiums and copays for all consumers,” the trade group continued.

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“Requiring drug rebates to be passed through to Medicare patients at the pharmacy counter would likely lead to higher drug prices from manufacturers, and would lead to higher premiums for seniors, as well as $40 billion in additional costs for hardworking taxpayers.”

American Medical Association (AMA) President David O. Barbe, MD, conveyed a high level of enthusiasm about the potential reforms.

“The AMA is pleased the Trump Administration is moving forward with its effort to address seemingly arbitrary pricing for prescription drugs,” Barbe said.  “Physicians see the impact of skyrocketing prices every day as patients are often unable to afford the most medically appropriate medications—even those that have effectively controlled their medical condition for years.   

“No one can understand the logic behind the high and fluctuating prices. We hope the administration can bring some transparency—and relief—to patients.”

The BlueCross BlueShield Association (BCBSA) also issued a statement that largely praised the proposals within America’s Patients First.

BCBSA said that many of the policies match its existing strategies to lower drug prices.

Action items encouraged by both BCBSA and America’s Patients First include expanding generic and biosimilar availability, increasing drug pricing transparency and consumer education, and studying the effects of prescription drug costs on premiums and other healthcare expenses for senior citizens.

“We believe that everyone should have timely access to safe, effective and affordable prescription medicines, and we’re encouraged by the administration’s steps to promote competition and speed the entry of generic and other lower-cost drugs to the market,” said Justine Handelman, BCBSA Senior Vice President of the Office of Policy and Representation.

“We look forward to evaluating specific proposals as they become available, and we will continue to work with the Administration and Congress to reduce barriers to competition and consumer choice, increase transparency, promote innovation and strengthen patient education so that people can access the drugs they need at a more affordable price,” she said.

Potential changes to prescription drug pricing mechanisms may help payers formulate new strategies to lower prescription drug prices for their members and limit prescription drug price growth.

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