Tag Archives: healthcare

Drug Pricing in the Crosshairs

by Amanda Patton, ACCC Communications

Drug pricing reform is in the news again this week as the Medicare Payment Advisory Commission (MedPAC) voted unanimously April 6 in support of the Commission’s multi-part Part B recommendations that include a Drug Value Program (DVP) with elements that align with President Trump’s interest in requiring drug companies to bid for government business.

ACCC17-Cancerscape“Despite Trump’s outreach to industry leaders and declaration of support for reducing drug prices, any attempt at price reform will be hard fought,” Jessica Turgon, MBA, ECG Management Consultants, told attendees last week at the ACCC 43rd Annual Meeting, CANCERSCAPE. The “how” of executing drug pricing reform will be “impressive,” Turgon said. She outlined five possible reform scenarios for lowering U.S. drug costs. The unknown: which reforms will the Administration stick to the most?

  1. Importing cheaper drugs from other countries in an effort to reduce average domestic drug prices. Pro: This might force drug companies to lower prices domestically. Con: It could result in higher drug prices worldwide.
  1. Increasing availability of generic drugs by requiring the FDA to speed up the approval process for generic versions of drugs. There is a similar option being put forward to hamper or make illegal the practice of “pay to delay,” which slows generic drug advancement. In fact, one study found that “pay to delay” has cost U.S. consumers $14 billion by keeping brand name drugs as the sole source product when cheaper, generic versions were available.
  1. Allowing Medicare to negotiate for drug prices using its leverage as the largest healthcare payer to achieve lower drug prices. This would require legislation or possibly execution through the regulatory process. However, the Congressional Budget Office has indicated this option would not have that great of an impact on federal spending, Turgon said.
  1. Increasing the use of value-based drug purchasing, i.e., paying for drugs based on the outcomes they achieved (i.e., treatment effectiveness) and not on a flat fee or other standard pricing approach. If this were integrated into protocols or pathways, it’s not clear how the financial results would be quantified, Turgon noted. However, as last year’s proposed Medicare Part B experiment showed, the impact would be very hard on providers.
  1. Scaling back the scope of the 340B Drug Pricing Program, for example, by revising the definition of a covered entity. The program remains in MedPAC’s crosshairs, Turgon warned. In FY 2013, covered entities saved $3.8 billion on outpatient drugs through the program; the number of 340B covered entity sites grew to 16,500 in 2013, a rise of nearly 8,000 sites from 2008. Turgon’s take-home message for cancer programs: Ask yourselves, “If I had to operate without my 340B program what would my cancer program, hospital, or health system look like?” Would it would likely have a significant impact on your health system overall? Is 340B funding “everything else” [e.g., services that are currently not-reimbursed, such as patient navigation] at your hospital right now?

Add to the mix, MedPAC’s recommendations for reducing spending in Medicare Part B. (Spending has gone up 9% every year since 2009, Turgon noted, which is not sustainable.) Briefly put, MedPAC’s recommendations fall into two track recommendations:

Track 1: Improve the average sales price (ASP) system.

  • Require drug makers to report ASP data and increase penalties for non-compliance.
  • Reduce WAC (wholesale acquisition cost), cut the add-on payment from 6 percent to 3 percent.
  • Require drug makers to give Medicare a rebate when the ASP price for a product exceeds an inflation benchmark.
  • Require the Centers for Medicare & Medicaid Services (CMS) to implement a common billing code for a reference biologic and its biosimilars.

Track 2: Establish a Drug Value Program

For this voluntary program, Medicare would contract with private vendors to negotiate prices for Part B drugs using tools like a formulary. The Drug Value Program vendor would negotiate directly with drug manufacturers. Providers would purchase all DVP products at the price negotiated by their DVP vendor. Medicare would reimburse providers for the DVP-negotiated price AND reimburse DVPs an administrative fee with a shared savings opportunity.

What Cancer Programs Can Do Now

What seems certain is President’s Trump continued interest in drug pricing reform. How (or if) reform is executed remains to be seen. MedPAC serves in an advisory role to Congress on Medicare issues—and whether Congress will consider MedPAC’s recommended changes to Part B is also uncertain. In the face of the many uncertainties surrounding drug pricing reform, cancer programs can still take proactive steps to address the rising cost of drugs, Turgon said. To do so, she suggested that cancer programs:

  • Develop and adhere to clinical pathways and protocols.
  • Determine the availability of evidence-based alternatives that are cheaper and comparable to high-priced drugs, and remove the higher-priced drugs from your formulary or tighten guidelines around use.
  • Deploy clinical pharmacists to educate prescribers about high drug prices.
  • Hold cost-of-care conversations with patients.
  • Reduce waste associated with high-cost drugs.
  • Keep negotiating with GPOs and wholesalers.
  • Identify signs of increases in drug prices as close to real-time as possible to avoid delays in taking action to minimize financial impact.
  • Keep the lowest possible inventory of high-cost drugs.
  • Keep communication lines open with senior administrators so they stay informed of the impact on the drug budget.

Final takeway: “Run your hospital-based cancer program as a private practice and know where your costs are,” Turgon advised.

Defining Value in Cancer Care

imagesBy Leah Ralph, Manager, Provider Economics and Public Policy, ACCC

Earlier this summer, ASCO released its much anticipated “value framework,” a proposed methodology designed to assist physicians and patients in assessing the value of different cancer treatment options. Comments on the framework were due last week, and a variety of stakeholders – including providers, patient groups, and manufacturers – provided feedback on the model.

While most would agree the framework is not yet ready for the clinical setting, it represents an important step in the broader conversation about measuring value in cancer care. As a conceptual framework, it seems to have done its job. But as ASCO points out, it is critical to consider this tool in context. The methodology contains notable limitations in data, practicality, and scope, and payers and policymakers should be cautioned that this framework is not meant to serve as a basis for reimbursement or coverage determinations.

ASCO’s approach uses randomized clinical trial data to compare new treatments with an established standard of care under two different scenarios: the advanced disease setting and the adjuvant (potentially curable) setting. A treatment receives a net health benefit (NHB) score (up to 130 points for advanced and 100 points for adjuvant) by combining a score for clinical benefit (up to 80 points), toxicity (up to 20 points), and up to 30 bonus points for quality of life measures, including palliation of symptoms and treatment-free intervals in the advanced disease setting. The NHB score is intended to demonstrate the added benefit patients may receive from a new cancer drug compared with a current standard of care.

Under the proposed framework, the clinical benefit score gives most weight to therapies that increase overall survival, followed by progression-free survival, and response rate. ASCO chose these clinical endpoints because they represent data most commonly collected and reported in clinical trials. So, for example, when survival data is not available and/or only noncomparative trials have been preformed, as is often the case with breakthrough therapies, response rate will be used to determine the effectiveness of the drug until survival data becomes available.

The combined clinical benefit, toxicity, and bonus points make up the NHB score, which is then displayed next to (and, notably, separately from) cost. Here ASCO uses drug acquisition cost, and concedes that while this is not the most complete or meaningful measure, particularly for the patient, it was the most straightforward to quantify. Of course any methodology to truly determine value should include total cost of care, including estimated costs for diagnostics, surgery, imaging, hospitalization, and provider charges. Ultimately ASCO envisions including another figure, the cost to the patient, which will have to be individualized based on the patient’s specific health benefit design. ASCO also notes the goal is that the patient will also be able to modify the importance of both clinical benefit and/or toxicity based on his or her personal values and treatment goals.

As we know, defining value is not an easy task and ASCO recognizes several limitations to this model. The first is that the NHB calculation is only valid within the context of the clinical trial, which does not allow for intertrial comparisons. Additionally, this model does not include the patient’s perspective on value, excluding critical endpoints such as quality of life and patient-reported outcomes in the calculation of NHB. We also know that the relative value of a given treatment will likely change over its lifetime; how will this conceptual framework become a practical, dynamic tool that will repopulate data and update NHB scores over time?

From the physician’s perspective, many questions remain. How exactly will this tool be used in a clinical setting? When will this conversation happen at the point of care? Who will ultimately perform the analysis, input the patient’s cost-sharing data and preferences, and present the numbers to patients? Some physicians will use the tools themselves, while others will rely on nurses, administrators, or pharmacists to perform the analytics. While ASCO is clear the proposed framework is “not meant to substitute for physician judgment or patient preference,” in current form, it may leave the patient with more questions than answers. We encourage ASCO to develop a strategy to provide the appropriate guidance, support, and education to providers to assist them in explaining these values to patients in the next iteration of this framework.

ACCC recently submitted comments on ASCO’s value framework, and we look forward to continuing to engage with ASCO and others on the challenging issue of cost and quality in the cancer care delivery system.