Friday, April 12, 2019

Drug Price Transparency and Rebate Reform Take Center Stage

Today’s guest post comes from Kay Morgan, Vice President of Drug Information Excellence at Elsevier.

Kay discusses her thoughts on the latest developments on rebate reform and drug price transparency reform. Learn more by downloading Elsevier’s white paper: Prescription Drug Transparency Reform: While You Wait.

Read on for Kay’s insights.

Drug Price Transparency and Rebate Reform Take Center Stage
By Kay Morgan, Vice President of Drug Information Excellence, Elsevier

The latest chapter in the continuing saga to lower prescription drug costs was written last month, when the U.S. Senate Finance Committee faced off with executives from AbbVie, AstraZeneca, Bristol-Myers Squibb, Johnson & Johnson, Merck, Pfizer and Sanofi in the second of a planned series of hearings on the issue.

Pushing for reform, Committee Chair Chuck Grassley (R-Iowa) and others urged the pharmaceutical leaders to accept responsibility for a variety of offenses, including escalating prices, anti-competitive activity and breaking promises to lower costs—recommending we all move forward with resolution.

Instead of playing the blame game, pharmaceutical leaders conditionally endorsed the overhaul of the drug rebate system. In the hearing, drug manufacturers agreed that if Congress extends the proposed ruling by the United States Department of Health and Human Services (HHS) to eliminate certain drug rebates and encourage direct discounts to include private insurers, it would most likely lower drug prices.

Critics of rebate reform contend that requiring rebates to be passed through to the patient in the form of discounts would reduce competition – leading to higher drug prices and insurance premiums.

One thing is clear, the Senate Finance Committee plans to continue the discussion with hearings expected to include other industry stakeholders such as PBMs, providers, and insurers.

The level of bipartisan anger over rising drug prices, which extends from Congress to consumers, to the current administration and his cabinet officials, suggests that legislative and regulatory actions are imminent and will hopefully have a positive impact on the consumer.

In fact, HHS's proposed regulation would create incentives intended to lower list prices and reduce out-of-pocket spending on prescription drugs. The regulation promises to bring innovative change to how drugs are priced at the pharmacy counter, bringing much needed transparency to the entire pharmaceutical supply chain.

Replacing the rebate system with upfront discounts was one of the ideas put forth in President Trump’s American Patients First plan. The HHS proposal supports this idea and will complement other ideas from the administration’s blueprint as well, including:
  • New tools for Medicare Part D plans to negotiate discounts for patients
  • Requiring television advertisements for prescription drugs to disclose the drug list price
  • Reducing practices that impede the approval of generic drugs and biosimilars
However, as noted in Elsevier’s white paper, Prescription Drug Transparency Reform: While You Wait, the fact remains there is no quick fix to lower the cost of prescription drugs. The complexity of the issue, complicated by multiple players with conflicting priorities to consider and exacerbated by well-intentioned “quick fixes” have resulted in piecemeal initiatives incapable of creating the critical mass necessary for a comprehensive solution.

In the ongoing quest to harness escalating prescription drug costs amidst this complexity, drug price transparency has taken center stage. Transparency proponents believe reform would not only expose inequities in the drug pricing ecosystem, but also create a stronger element of competition that could drive down prices.

As noted on his Senate web site, Senator Grassley recently stated: “From rooting out waste, fraud and abuse to getting the most bang for the buck, I have learned there’s typically one common denominator: transparency.”

Transparency is one point on which all should agree. Industry stakeholders, while waiting for final decisions on reform, should arm themselves with tools that help them know all they can about the environment in which they must operate today, remaining informed and competitive in today’s complex drug landscape.

And, of course, stay tuned – and tuned into – the ongoing saga of drug pricing.

Download Elsevier’s white paper: Prescription Drug Transparency Reform: While You Wait.

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