Hillary Clinton`s Plan to Address Drug Costs: Experts Weigh In
Editor’s note: This article kicks off First Report Managed Care’s coverage analyzing what the presidential candidates are saying—and not saying—about health care spending. In the coming months we will delve into the impact various proposals are expected to have on managed care, and address the roadblocks that will no doubt emerge in a politically divided nation. This installment explores Hillary Clinton’s proposal to take on health spending, with a particular focus on her recently released plan for out-of-pocket drug costs. Additionally, though the GOP candidates have been relatively quiet on health care, we dig into one candidate’s plan, and ask an expert to provide his take on it.
Hillary Clinton is no novice when it comes to addressing the issue of health care spending. As First Lady, she chaired President Bill Clinton’s Task Force on Health Care Reform and as senator from New York, she had her say in a number of votes on various health measures.
Experts contacted by FRMC about Clinton’s recently released proposal addressing prescription drug costs (see accompanying article on page 26 for an overview) acknowledged her experience, and noted which aspects of the plan they believe have value— and a chance of seeing light. But they pulled no punches in questioning certain facets that they think might have unintended negative consequences.
Some agreed that Clinton’s call for price transparency—through increased disclosure requirements about health coverage and out-of-pocket costs—has merit. “If Hillary Clinton is elected, we will head in this direction, and rightfully so,” said Mitch DeKoven, MHSA, principal, health economics and outcomes research, at IMS Health. “The health care system is at a brink,” he added, noting that “providing consumers with useful data to make informed decisions” is a logical next step.
On the Side of the Angels
Norm Smith, president of Viewpoint Consulting, Inc, which surveys managed markets decision-makers for the pharmaceutical industry, explained it this way: “When you say you are for price transparency, you’re on the side of the angels—who can argue with you?”
Mr Smith, a member of the FRMC editorial advisory board (EAB), believes that whomever is elected should push for an agreement between major purchasers of drugs and the companies that make them. “We need to move to net pricing and do away with the idea of rebating and discounting off of the invoice price. The bottom line is if you make the price more transparent, you will see that the market is effectively functioning.”
Mr Smith referred to sofobuvir, the hepatitis C drug that gets a lot of press due to its extremely high list price, which once stood at $80,000. “But look now,“ he said. “You have discounts that are greater than 40%. The market is working.”
Transparency is bound to come more to the fore as the fee-for-service (FFS) model fades, offered Anthony Morreale, PharmD, assistant chief consultant for clinical pharmacy services and health services research, Department of Veterans Affairs.
A Nuanced View
Catherine Cooke, PharmD, research associate professor at the University of Maryland School of Pharmacy, said that consumer demand means that transparency is inevitable. But she offered a nuanced view that reveals just how complicated the issue can be as various stakeholders interpret what price really means.
“Two issues affect health care and pricing: affordability and value,” said Dr Cooke, who is also president at PosiHealth, Inc. “Value is more complicated; its determination depends on perspective.” She added that cost-effectiveness models do not usually consider the patient’s perception, perspective, and valuation system.
No matter how complicated, “value pricing will need to be a part” of managed care’s future, said Arthur F. Shinn, PharmD, president of Managed Pharmacy Consultants, LLC. He agreed with Dr Morreale on the migration away from FFS. “No matter who is elected, they will need to push for continued focus on guideline-based care that is value-driven. This is fundamental to improving cost and quality of care.”
Dr Shinn moved on to address another aspect of the Clinton plan that he believes can work and will provide relief—her proposal to offer a tax credit to individuals and families whose out-of-pocket expenses exceed 5% of their income. “It makes sense to provide relief to those who truly need it,” he said. “The challenge will be designing it and monitoring it so that people are not gaming the system.”
“Mini-Shared Decision Making”
Jennifer Christian, MD, chair, work fitness & disability section, American College of Occupational & Environmental Medicine, is uncomfortable with the tax credit. “Before we ask the taxpayers to fund the credit, why not require those taking multiple prescriptions to first have a conversation with a pharmacist and then their physician to re-evaluate all of their medications, what they really need to be taking versus what is optional, and whether there are any medications they can stop taking?” She called it “mini-shared decision making.”
Dr Christian, who is also president of Webility Corp, does not buy the idea that there is no time for these kinds of patient visits. “It’s a bogus argument. If the government is willing to fund prescriptions with taxpayer revenue and create the red tape required to administer the tax credit, I say we should take that money and instead devote part of it to paying for carefully defined patient education and decision-making sessions between clinician and patient.”
In the end, clinicians and patients should jointly agree on any changes to the medication plan. Many patients do not understand that they can actually choose whether to take preventive and “prn” (as needed) medications, continued Dr Christian. “In elderly patients especially, polypharmacy is a risk by itself due to erratic adherence with complicated regimens, as well as cognitive decline and falls due to side effects.
“If after such a session patients are still strapped to pay for the medication—presumably only the necessary drugs—then maybe a tax credit should be considered,” she said.
Our panel ganged up on Clinton’s call to lower the patent exclusivity window on biologics from 12 to 7 years, noting its potential to spike prices, and stifle innovation. “If you are running a business and someone limits how much time you have to charge a certain price, you still have to recoup your investment and pay shareholders,” said Dr Morreale. “You will either raise the price even more, cut development costs, or not move forward.”
Mr Smith agreed, pointing out that biologics typically are developed for rare disease states. Breakthrough innovations will dwindle, he said, and those that are developed will likely be priced higher.
Dr Shinn noted how the price of aripiprazole increased just before it went off patent. He believes that shorter exclusivity will likely lead to the same.
Clinton also plans to require pharmaceutical companies that receive tax breaks to invest a specified level of revenue in R&D. “This will be impossible,” offered Dr Morreale. “We don’t tell Apple, Microsoft, or Boeing that they have to spend at a certain level. Companies spend on R&D when they believe that they have an opportunity to make money.” For that reason, he believes this provision would never get past Congress—or pass legal muster.
Dr Cooke added, “Forcing a certain level of R&D will inhibit flexibility, which may offset development of new drugs and technologies in the long run.”
Squeezing a Balloon
Dr Cooke went on to address another aspect of the Clinton plan that caps out- of-pocket drug costs for individuals at $250 per month. While such a concept looks great on paper, some question if it will actually reduce overall costs. “A tax rebate for the high cost of medical care may not influence the use of medications in the short-term,” explained Dr Cooke. “Furthermore, cost shifting from out-of- pocket to other segments may be likely.”
Limiting out-of-pocket drug costs is a great idea, offered Mr DeKoven. “But if you think of health care as a balloon—pushing on one side (eg, capping), often leads to expansion on the other side.”
As for which aspects of the Clinton plan have the most merit and are likely to pass muster, Dr Morreale thinks efforts to tackle fraud and abuse, encourage innovation through grants and tax credits, and allow Medicare to negotiate drug prices are ideas most can agree on.
Mr DeKoven brought it back to price transparency, and added that proposed health care mergers should be scrutinized for evidence that cost savings and market efficiencies are passed onto consumers in the form of lower premiums.
Dr Christian summed it up in a very practical way that brings the issue from politically-charged Washington to those at ground zero in the care setting.
“We have sped up the assembly line of medicine so fast that the clinician and patient now have little chance for meaningful interactions. When that happens, the healing techniques become the prescription pad, the test order, the specialist referral, or the scheduled procedure.” In the end, she recommends that policymakers and lawmakers adopt measures that ensure patients “leave a clinician’s office feeling that they were heard and that sensible decisions have been made.”—Dean Celia
