Washington. Healthcare. Translated.

Rx Price Reforms: PART I: We Already KNOW what DOESN’T Work

When it comes to controlling costs for prescription drugs, everybody wants to get into the act this year. With so many clowns trying to steal the show, I expect nothing good will result.

Yes, I’m typically cynical, but in Washington the cynic is often the realist. So forgive my being the one to point out, the major proposals are incapable of controlling national drug spend. What’s worse, that’s obvious because the mechanisms are familiar and proven to be ineffective.

Strong language, to be sure, but let’s take a look at what’s in the pipeline.

– The White House package creates an international price index. This turns drug pricing into a cat and mouse game – last year’s pre-sale discount becomes next year’s post-sale credit and IPI becomes a joke. We learned this in US programs like ASP and Medicaid rebates – pricing is tricky. On IPI, the US won’t even know how other countries compile the numbers. It’s Alice in Wonderland: prices are what I want them to mean.

– Congress is debating everything from Medicare for All to Canadian personal drug imports. Note to Congress: you already fixed that Canadian import thing (to FDA’s chagrin): move on. As to Medicare for All, it’s great but one thing it can’t do is save money.

– CMS finally proposes to be a real force in its own drug spending, but through experiments that hand federal pricing headaches over to private sector drugplans. Not a bad concept, except this version incentivizes drugplans to limit formularies to a single, cheap option (keeping the pricey stuff off-limits and keeping the change). That throws Grandma under the bus, along with an entire pipeline of high-tech drugs. I’ll try to write soon about how big a gamechanger this is, and not in a good way for anyone.

– States are looking at clawbacks for any price increases beyond basic inflation. Great idea but hardly new: we’ve had it in Medicaid drug rebates forever. Sadly, though, enforcing these provisions gets incredibly hard as PBMs get wiser about hiding their fees outside the required price reporting. (Check out recent qui tam suits if you’re skeptical.)

– Think tanks and lobbyists are chockablock with ideas, not always helpful. Do Pharma lobbyists really think national drug spending would drop via copay rebates to Medicare patients? Of course not, but it does reduce out-of-pocket, which might appeal to politicians as elections approach. Keep your eye on which proposals keep costs down for patients, versus payers, the Medicare Trust Fund or National Health Expenditures.

Okay, so maybe these proposals are old and worthless – that’s nothing new in Washington, not in healthcare and not anywhere. But somehow, there’s no one pushing the proposals that researchers have found have a real chance at helping.

Stay tuned for the next installment, where I’ll outline a couple of things “everybody knows” would help to keep drug spending down while keeping the door open for important new drugs.

Sad part is, the elements proven to be helpful have… gone missing.

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