There are more questions than answers when discussing the future of drug pricing
A who’s who of health policy experts that are leading the national conversation on drug pricing gathered last Friday at the University of Pennsylvania Leonard Davis Institute of Health Economics. While the excitement for the passage of the Inflation Reduction Act (IRA) was palpable, they have more questions than answers about the potential impact on drug prices.
Mark McLellan, Professor of Business, Medicine and Policy at Duke University and the founding director of the Duke-Margolis Center for Health Policy, started the day by explaining why he believes real-world evidence can play a significant role in Medicare drug price negotiations. However, he also highlighted that it is uncertain if CMS has a data source suitable to generate the real-world evidence on all of the selected drugs with sufficient detail to measure clinical benefits.
Meena Seshamani, MD PhD, Deputy Adminstory and Director of the Centers for Medicare and Medicaid Services, did not provide any details on how real-world evidence could be used but agreed that CMS is interested in how medicines are addressing unmet need and improving outcomes in clinical practice for Medicare beneficiaries.
While the interest in real-world evidence is encouraging, an alignment on the outcomes of interest to determine clinical benefit is essential. However, It is unlikely that outcomes will be specified in the final guidance because outcomes are disease specific and the negotiations will include a wide variety of drugs from varying therapeutic areas. If CMS does decide to include outcomes of interest, universal outcomes could be time on treatment, time to treatment discontinuation or adherence. However, none of these outcomes are reflective of clinical benefit.
During the “Drug Pricing and Inflation Reduction Act” panel, James McSpadden, MDiv MA, Senior Policy Advisor at the AARP Public Policy Institute, raised important questions about the impact of the IRA on patients. The IRA includes provisions that cap out-of-pocket expenses for beneficiaries at $2,000 per year as well as provide free vaccines and limit the costs of insulin to $35 a month. However, what is uncertain is if the reduced cost-sharing will increase utilization of high-cost medicines. If this occurs, Medicare beneficiaries could experience an increase in prior authorizations and step edits.
While overall the speakers were encouraged that the IRA was passed with drug price negotiation provisions for Medicare included, they are cautiously optimistic regarding the implementation and the impact on drug prices and drug utilization. Most of the conversations focused on trying to predict how PBMs, insurers and manufacturers will respond to the provisions and anticipate the behavior it will incentivize.
I expect we will continue to have more questions and answers on the impact of the IRA for the foreseeable future. However, it is important to have these conversations now to generate hypotheses and use these insights when providing comments during the public comment periods that CMS have included. The information collection request on negotiation data elements is currently open and comments will be accepted until May 22nd.
