ACP Issues Policy Statement to Stem Rising Cost of Drugs

Roxanne Nelson, BSN, RN

March 28, 2016

The American College of Physicians (ACP) has issued a call to slow the rising cost of prescription drugs in the United States.

In a position paper published online March 28 in Annals of Internal Medicine, the ACP makes several recommendations to address the escalating cost of prescription drugs.

The ACP notes that advances in drug development have led to tremendous progress in the treatment of disease, but that these therapies are only as effective as a patient's ability to access them.

Much has been said about the idea of getting the right drug to the right patient for the right indication at the right price, according to the position paper. Therefore, there is a need for comprehensive efforts to implement meaningful policies that will link price, value, innovation, and patient access.

"The ACP understands that this is a very complex problem, and we feel that all stakeholders — whether they are members of Congress, medical groups, pharmaceutical companies, patient advocacy groups — need to roll up their sleeves and work on greater price transparency in order to really stem the tide of rising drug prices," said ACP President Wayne J. Riley, MD, MPH, MBA, MACP.

"We are taking a mature and balanced view," Dr Riley told Medscape Medical News. "Our recommendations are not dissimilar to what has been proposed by other physician groups, but the tenor of the times is different, with Congressional concerns and hearings and celebrated cases in the media."

"This has catalyzed what we think is a more fulsome discussion about research and development and drug pricing," Dr Riley noted.

The most recent media storm focused on Martin Shkreli, who became the poster child for controversial drug pricing when his company raised the price of a 62-year-old anti-infective agent from $13.50 a pill to $750.00 — roughly a 5000% increase.

The Shkreli case was probably an outlier, Dr Riley noted. "But it underscored that there is deep concern among many Americans and physicians that there are drugs that were cost-effective only 5 years ago that have suddenly become very expensive," he said.

"We have heard evidence that even basic diabetes drugs that are generic have doubled and tripled in price," Dr Riley continued. "That begs the question: What is going on here? Where is the evidence to justify these price increases?"

"With seven out of 10 people taking a prescription drug on a daily basis, this is a very important issue, if not for themselves, for family members," he added.

The ACP emphasizes that prescription drug pricing is a multilayered process, with research, development, regulatory, and payment systems for prescription medication deeply intertwined with each other.

The pressing issue of drug pricing and payment has to be addressed, and it "will take comprehensive efforts to increase transparency, accountability, and stewardship," Dr Riley said.

In the position paper, the ACP points out that the United States is the only country in the 34-member Organisation for Economic Co-operation and Development (OECD) that lacks some degree of government oversight or regulation of prescription drug pricing.

The OECD includes 13 countries that are considered high income, but in comparison, the United States spends more on pharmaceuticals than any of these other nations.

However, new drugs tend to enter the market faster in the United States than in other countries, and this influences increases in prescription drug spending.

ACP Recommendations

In brief, the ACP calls for:

  • transparency in the pricing, cost, and comparative value of all pharmaceutical products, including the research and development costs contributing to a drug's pricing, and drugs previously licensed by another company.

  • elimination of restrictions on using quality-adjusted life-years (QALYs) in research funded by the Patient-Centered Outcomes Research Institute.

  • approaches to address the rapidly increasing cost of medications, which include allowing greater flexibility by Medicare and other publicly funded health programs to negotiate volume and bulk purchasing agreements, developing a process to allow re-importation of certain drugs manufactured in the United States, and establishing policies or programs that may increase competition for brand-name and generic sole-source drugs.

  • opposition to extending market or data exclusivity periods beyond the current exclusivities granted to small-molecule, generic, orphan, and biologic drugs, and support of the robust oversight and enforcement of restrictions on product-hopping, evergreening, and pay-for-delay practices.

  • research into novel approaches to encourage value-based decision making, including value frameworks, bundled payments, indication-specific-pricing, and evidence-based benefit designs.

In addition, the ACP believes that payers that use tiered or restrictive formularies must ensure that patient cost-sharing for specialty drugs is not set at a level that imposes a substantial economic barrier, especially for enrollees with lower incomes.

Finally, the ACP believes that biosimilar drug policies should limit patient confusion between originator and biosimilar products and ensure their safe use to promote the integration of biosimilars into clinical practice.

More Focus Needed on Other Costs

Joshua P. Cohen, PhD, research associate professor at the Tufts Center for the Study of Drug Development in Boston, told Medscape Medical News that he agrees with a number of the proposed approaches.

Dr Cohen said he agrees with the recommendations to include more regulatory clarity on biosimilars, to expedite the regulatory pathway for traditional generics, to limit patent extensions, and to make the pricing of pharmaceuticals more transparent so that consumers and payers can make meaningful comparisons.

However, Dr Cohen noted that there are several contradictory messages.

"For example, the authors suggest patient cost-sharing should not impose economic barriers," he said. "Yet the authors also advocate value-based decision making."

Dr Cohen explained that the latter is dependent on imposing economic barriers (higher cost-sharing) on patients where appropriate — namely, when the value of drugs and devices is low — and lowering those barriers where value is high.

"Unfortunately, our current patient cost-sharing system is mostly not value-based," he said. "Cost-sharing is a function of the cost of drugs, but not their value."

Dr Cohen also pointed out that several of the recommendations hinge on Congressional approval, which is not likely to be forthcoming in the near term. These include elimination of restrictions on the use of QALYs in comparative-effectiveness research and price negotiation by Medicare.

The authors included "other publicly funded health programs," and that is inaccurate, he noted. "The Veterans Administration and Department of Defense do negotiate prices."

Concerning the use of cost per QALY as a cost-effectiveness framework, Dr Cohen agrees that it is "fraught with methodological difficulties."

"However, its use would help rank the cost-effectiveness of drugs, and also physician services, surgical techniques, hospital inpatient spending, and outpatient clinics," he explained. "I am concerned that the ACP recommendations are somewhat myopic, in that they focus on drugs and do not even mention other sectors of our healthcare system that cost a lot more than drugs."

Dr Cohen acknowledged that drug spending has increased in recent years. Prior to that, for well over a decade, they were not a major driver of healthcare cost growth.

"Physician services, hospital inpatient, and outpatient clinics account for between 80% and 85% of healthcare spending, while outpatient drugs account for around 12% and hospital drugs another 5%," he said.

"I suspect that as drug cost growth diminishes in the coming years and settles around 4% to 5% a year, other healthcare sectors will be contributing more to overall growth, particularly in light of the fact that they account for a higher proportion of spending to begin with," Dr Cohen added.

Financial support for the development of the position paper comes exclusively from the ACP operating budget.

Ann Intern Med. Published online March 28, 2016. Abstract

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