Washington. Healthcare. Translated.

Rx Price Reforms: PART II: Whom are We Trying to Help, Anyhow?

I recently staked my claim that the Class of 2019 drug price reforms don’t include much new, effective, or even particularly pretty. It’s simple to throw stones at the proposals, but more challenging to build – and pass – alternatives that are helpful, feasible and affordable.

The bizarre fact in this case is, alternatives have been around for years. Many helpful reforms could happen with the stroke of a pen, without legislation or rulemaking. Watching so many pointless proposals grab airtime while genuine reforms get ignored has got to raise suspicion that the major players are looking toward political gain rather than productive reform.

The question is, what is a “productive” reform. This depends on the goal.

The goal means different things to different people. Does “reducing the cost of drugs” mean a drop in national Rx spending, or federal Medicare program costs, or out-of-pocket burden to patients (read, voters). All are “productive” goals, but they often run at cross-purposes.

Example 1: copay support: let’s say a drugmaker funds a coupon to a patient, forgiving a $50 copay on a $2,000 Rx. The patient is (nearly) $50 happier. Trouble is, the insurer is nearly $2,000 sadder. (The patient could have used a $20 generic and a $6 copay, which deserve to be in the calculations.)

Jump to the 10,000 foot view, and each copay rebate to a patient bumps up national health expenditures by almost $2,000. Pioneer drugmakers just booked another $2,000 in sales, of course. (Generics makers just lost a $20 sale.) Has the bump in NHE improved patient outcomes – maybe, but often there’s not much proof.

If a $20 generic could have treated the patient well, pushing the “copay coupon” might not be the optimal public policy result. So extending coupon support for “consumers” under Medicare and Medicaid would be good for out-of-pocket, but terrible for NHE.

Example 2: How to “fix” big price hikes. States might move to claw back any price hike beyond inflation, but some reasons for rising prices are actually helpful. Example: hundreds of drugs in shortage status according to FDA, some are there simply because the price of upgrading generics plants is too high a business hurdle. Without restoring the market for sterile injectibles, healthcare costs (and clinical outcomes for our loved ones) take a big hit.

So forget about the annual and cynical price hikes for brand name blockbusters. Think about funding some plant improvements related to FDA safety inspections. Sometimes, a price hike can save a lot of money. We’ve got to learn to distinguish good from bad in the world of pricing.

I’ll leave aside many other valid points, like the incentive for innovation that feeds our drug pipeline and the value of cross-channeling profits from blockbusters into ignored areas of need. The case is simply that knowing whether a proposal “works” requires more than a kneejerk view at whether voters have money left in their wallets at the end of the month. And I’ll rest this case with the reminder that that effective drug pricing reform isn’t as simple as keep prices down.” We need a national conversation on, “keep it down, for WHOM and at WHAT COST.”

These questions are easy to debate in the abstract, but when it’s your Granny who needs that chemo or your spouse who’s lining up for a Hepatitis C treatment, you’ll find yourself very quickly in a debate that’s anything but abstract. My next installment: drug prices as a shell game.

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