Pressure mounts for measures to control drug prices

The pharmaceutical industry is facing growing pushback on high prescription drug costs.

Last week, more than 100 cancer specialists from across the country published a letter urging more aggressive federal steps to address soaring drug prices, which they said harm patients. They noted that cancer patients who receive life-prolonging drugs often face bills that are several times greater than their annual family income.

They urged allowing the Patient-Centered Outcomes Research Institute to include drug pricing in its assessments of a treatment's value, and letting Medicare negotiate lower drug prices.

In addition, the cancer specialists recommended creating a mechanism to review fair pricing for drugs approved by the Food and Drug Administration.

Federal law prohibits the CMS from negotiating drug prices for Medicare, and generally bars HHS from considering cost in Medicare coverage decisions. Efforts several years ago to allow consideration of cost in comparative-effectiveness research prompted a conservative firestorm over alleged “death panels.”

But a growing number of policymakers and healthcare industry groups are pressing for action to reduce drug prices, and public opinion polls show strong support.

Also last week, the Institute for Clinical and Economic Review (ICER) announced it would begin releasing reports comparing clinical effectiveness and prices of drugs, as well as analyzing their potential impact on the U.S. healthcare system and economy.

The not-for-profit organization will set a value-based benchmark for pricing. The project is funded by a new $5.2 million grant from the Laura and John Arnold Foundation.

“What we're trying to do is create a transparent way to look at the relationship of the price with the value the drug brings to patients,” ICER President Dr. Steven Pearson said. “Drug prices have been trending upward quite dramatically in recent years. But the idea that insurers are just going to cover any new drug, at any price, whether or not there is benefit, is over.”

In a third development last week, a white paper published by advocacy group Public Citizen and Carleton University found that the CMS could save up to $16 billion a year if it negotiated prices with drugmakers for the Part D program and wrangled the same prices paid by Medicaid or the Veterans Health Administration. The authors said U.S. costs per capita for drugs are $1,010, more than twice as much as in other advanced countries that belong to the Organization for Economic Cooperation and Development (OECD).

“The good news is that effective new cancer therapies are being developed by pharmaceutical and biotechnology companies,” according to the letter signed by more than 100 cancer specialists and posted online in the Mayo Clinic Proceedings. But “the current pricing system is unsustainable and not affordable for many patients.”

The cost of a newly approved therapy averages $10,000 a month, with some exceeding $30,000 a month, according to estimates. The number of Americans taking at least $100,000 worth of prescription drugs annually tripled from 2013 to 2014, a recent report found.

The cancer specialists' letter suggested that the CMS be allowed to negotiate drug prices for Medicare as a whole. Although the agency cannot negotiate prices with pharmaceutical companies, private Part D drug plans, Medicare Advantage plans, state Medicaid programs and the VHA are allowed to negotiate.

The Public Citizen's white paper reported that Part D plans pay on average 73% more than Medicaid and 80% more than the VHA for brand-name drugs. It also said Part D plans pay nearly twice the median amount paid for brand-name drugs in the 31 OECD nations, most of which have systems for negotiating drug prices.

The pharmaceutical industry and many Republicans vehemently oppose allowing the CMS to negotiate drug prices.

The first ICER evaluations will focus on PCSK9 inhibitors for cholesterol and a new Novartis heart failure drug called Entresto.

Pearson said the U.S. needs an independent, objective source to look at the evidence on clinical effectiveness and then focus on the incremental costs downstream.

Dr. Peter Bach, director of the Center for Health Policy and Outcomes at the Memorial Sloan Kettering Cancer Center in New York City, said he agreed that an independent body is needed to objectively evaluate the evidence on clinical effectiveness.

In mid-June he launched a website called DrugAbacus as a roadmap for comparing particular drugs' potential harms with the quality-of-life years they provide, and to use this calculus to come up with appropriate pricing for the drug.

“Right now, patients don't have any fair boundaries for absolutely vital health decisions,” he said. “It's totally unreasonable and unfair.”