(This story was updated at 5:15 p.m. ET.)
An HHS forum on prescription drug prices Friday focused on balancing pharmaceutical innovation with patient access and affordability, while also developing payment models that work for the industry and consumers.
The daylong forum comes amid multiple spikes in the price of individual prescriptions and several 2016 presidential candidates laying out their plans for addressing the issue.
HHS Secretary Sylvia Mathews Burwell said in her opening remarks that prescription drug pricing is a complex issue that needs immediate attention.
“We believe that patients, manufacturers, providers, insurers and government all share a common goal,” she said. “Working together, we can deliver for the people we serve. Americans are depending on us to find innovative new drugs and help them access the care they need.”
Heather Block, a patient advocate who has stage four breast cancer that has spread to her liver and lungs, says she worries as much about her financial solvency as she does about her cancer.
“I still face financial insecurity and eventually bankruptcy—if I live that long,” she said.
According to a research brief released in May by the Kaiser Permanente Institute for Health Policy, the U.S. spends more on prescription drugs than any other nation in the developed world, accounting for 12% of total health spending. The report found the U.S. spent $1,010 per capita on pharmaceuticals in 2014, while per capita spending of the next highest country, Germany, was $668.
During audience questioning, Merck CEO Kenneth Frazier pushed back at the suggestion that pharmaceutical companies exhibit mostly greed.
Frazier said some drugmakers have taken advantage of vulnerable market situations, to charge exorbitant costs, but they are in the minority.
He described Turing Pharmaceuticals CEO Martin Shkreli, who has been criticized recently for increasing the price of one pill from $13.50 to $750, as a “hedge fund manager masquerading” as a pharmaceutical administrator. He said Merck does not focus on how much money treatments can make.
“We believe great drugs can change the world,” he said. “We don't believe profiteering can change the world.”
A panel discussion on value- and outcome-based purchasing programs that included mostly private sector executives focused on the difficulties of measuring value and implementing risk-sharing models.
Dan Durham, executive vice president of strategic initiatives for America's Health Insurance Plans, said health plans are focused on moving from the fee-for-service world to the value-based payment world, but value is tricky to standardize.
“It becomes very challenging to have a model of value that's consistent,” he said.
Frazier said some public contracts discourage risk-sharing by not allowing companies to use data gathered after a drug hits the market, such as whether the drug can prevent hospitalizations.
Durham said manufacturers don't have any incentive to participate in risk-sharing unless they face competition in the market.
Bernard Tyson, CEO of Kaiser Permanente, agreed that value has differing definitions that can depend heavily on the period of time being measured. Patients need to have tangible benefits to understand how the system can work, he said.
Research and innovation do not need to suffer from a switch to more value-based payments, he said.
“Every other industry has figured out how to do this in the free market context,” he said.
Dr. Steve Miller, chief medical officer for Express Scripts, talked about a plan his company is rolling out next year with a few prescriptions. It will feature adjudications at the indication level instead of drug level, involve outside experts helping determine value and spread savings across participating patients.
He said companies need to try multiple experiments for bringing costs down and suggested modernizing the U.S. Food and Drug Administration, lowering copays and reducing the large difference in U.S. drug prices versus international prices.
Polling from the Kaiser Family Foundation shows broad public concern about drug costs from Democrats and Republicans, who said it was a more important issue right now than the Affordable Care Act.
Bianca DiJulio, associate director for the public opinion and survey research program at KFF, said three-quarters of people surveyed said drug costs were unaffordable.
“The issue resonates very well with the public,” she said. “This is one of the key ways the public interacts with the system.”
Other panels looked at the role of specialty drugs and how drugs with rising costs can affect the evolving marketplace.
Doug Long, vice president of industry relations for IMS Health, said specialty drugs have the spotlight in the current drug market. More than half of FDA approvals in 2014 were for specialty drugs and treatments for hepatitis C; diabetes and oncology are leading spending growth.
“You can't look at this market here or anywhere in the world without talking specialties,” Long said.
Dr. Mark McClellan, senior fellow at the Brookings Institution, said the often-touted goal of value-based pricing needs to include risk management, better clinical measures, evidence of patient benefits and risks and regulatory changes for volume-based payment methods.
“These are not easy problems to solve, but they are critical problems,” he said.
A whopping 90% of CEOs responding to Modern Healthcare's latest CEO Power Panel survey said rising drug costs were undermining their finances. Nearly half (45%) said the impact was “very negative.” A surprising 86% of survey respondents supported giving the federal government the authority to negotiate drug prices on behalf of Medicare and Medicaid beneficiaries.
