Weekly Policy Update: Drug Pricing News
By: Colorado BioScience Association Date: 06/15/2018
This week HHS Secretary Alex Azar appeared in front of the Senate Health, Education, Labor and Pensions Committee for a hearing on drug pricing. Secretary Azar’s prepared testimony in large part summarized President Trump’s blue print. For more information on the blueprint click here and to view the full hearing click here.
Azar highlights the administration’s plan to require drug companies to include list prices in television commercials; pivots to a call for getting rid of drug rebates; and suggests a system “where PBMs and drug companies just negotiate fixed-price contracts.” Azar also addresses possible changes to drug pricing in Medicare Parts D and B and praises FDA moves intended to increase drug competition.
During the hearing each Senator had the opportunity to give remarks and ask questions of Secretary Azar. Colorado Senator Bennet’s closing remarks include talking about the lack of transparency in the health care industry, but not just drugs, everything in health care. At CBSA we agree we need to look at the system holistically, we need true transparency.
At CBSA are dedicated to patients, and we work every day to help people live longer, healthier lives. That’s why we support true transparency. True transparency means:
- Examining the costs of prescription drugs, together.
- Addressing the health care system as a whole.
- Considering every player in the health care system to make meaningful changes for patients and their families.
It’s critical to consider our complex health care holistically instead of singling out individual stakeholders.
We encourage our CO delegation and our local state legislators to consider:
- Reviewing the influential role insurers, pharmacy benefit managers (PBMs) and others play in deciding how much patients pay for medicines at the pharmacy counter.
- Considering the information patients need to make decisions about out-of-pocket drug costs when selecting their health plans.
- Tackling all areas of health care that drive up prescription costs.
True transparency requires working together. Our industry is a pillar of the state’s booming economy. With more and more innovators evaluating Colorado as a place to establish a headquarters or relocate a growth business, now is the time to come together as business leaders, community builders and policymakers to discuss how we can protect innovation and provide more affordable options for patients.
Fortunately, with a holistic approach to the drug price conversation, there are better solutions. Here are our three recommendations:
1. Encourage competition from biosimilar and generic drugs. New competition from generic and biosimilar drugs over the next five years will reduce prescription drug spending by $143.5 billion. Food and Drug (FDA) Commissioner Scott Gottlieb, M.D., is making it a priority to deliver more generic medications. In June of 2017, the FDA announced new steps toward that goal, including speeding up the review of generic drug applications for medicines without significant competition.
Increased availability of generic medications will provide new opportunities for cost savings. The FDA approved a record 1,027 generic drugs in 2017, more than its previous record of 813 in 2016.
2. Share negotiated rebates with patients. In 2015, the discounts and rebates provided by biopharmaceutical manufacturers totaled over $100 billion. Often, rebates on prescription drugs go back to insurance companies or pharmacy benefit managers. Providing more access to discounted medicines at the pharmacy could save certain patients with high deductibles between $145 and $800 each year and would only increase insurance premiums by 1%, according to recent research by Milliman for PhRMA.
3. Examine the role of PBMs and insurance companies in drug pricing. Employers, insurance companies and pharmacy benefit managers (PBMs) all play an important role in the final cost of prescriptions. What patients pay can vary significantly, depending on what kind of insurance they carry or if they pay cash. Insurance companies and PBMs maintain the most control over prices, increasingly shifting the cost of medicines to you, the patient.
There’s a reason why close to 730 bioscience companies call Colorado home. Our state works to create an innovation-friendly environment. Colorado BioScience Association represents tens of thousands of researchers and entrepreneurs who work every day to improve the quality of life for patients.
We look forward to working with our Colorado Delegation in DC, and our local elected officials on creating federal and state policies that support patients and encourage innovation.