July 07, 2016
“Policy should not lose sight of the fact that new treatments represent miracles to many patients, and should encourage more, not less innovation.”
With those words in her op-ed in the Wall Street Journal, Susan DeVore, president and CEO of Premier, Inc. and chair of the Healthcare Leadership Council, gets right to the heart – or what should be the heart – of the national debate over pharmaceutical pricing. With so many new lifesaving therapies in various stages of development and clinical testing, how do we make these medicines accessible to patients and consumers while encouraging even more beneficial innovation?
Ms. DeVore answers that question with one word – competition. As she accurately points out, new breakthrough drugs like the cure for Hepatitis C often enter the marketplace with extremely high prices, but those costs drop considerably when competing products are made available. Thus, one important answer to the drug pricing issue is to speed the process by which new drugs and medical technologies are approved for the market. The Healthcare Leadership Council has made several recommendations in this area.
The answer is most certainly not to be found in the form of government price controls. As Ms. DeVore writes, “The reality is that government negotiation will translate into price controls. I have limited faith in the government’s ability to set pricing better than the market, or keep pace with innovation. Their solution will invariably set prices too low, creating a chill on research and discovery as talent and capital leaves the sector to seek a better return elsewhere.”
The Premier CEO is absolutely right. We can do better than a pharmaceutical pricing debate that, up to now, has been largely binary – either price controls or not. We need to discuss mechanisms and policies that will bring more innovative products to the market and, in so doing, strengthen accessibility and affordability.
June 22, 2016
On a day in which the House Republicans are announcing their alternative health reform plan, House Democrats are staging a sit-in over gun laws, and the presumptive presidential nominees are firing insults at each other, it’s understandable if the annual issuance of the Medicare Board of Trustees report gets a little lost in the mix.
It’s a report quite worthy of attention, though, because its pages contain more than one call to action.
First, the trustees are now projecting that the Medicare program will reach insolvency in 2028, two years earlier than last year’s estimate. This is not an insignificant change. Think of the time required to enact comprehensive health reform, from the Nixon Administration’s efforts in the early 70s to the Affordable Care Act signing in 2010, or the decades spent trying to bring a prescription drug benefit to Medicare. Twelve years may seem like a considerable amount of time to make Medicare financially sustainable and reliable for future generations but, in legislative terms, it’s not long at all.
We need serious discussions on how to modernize and strengthen Medicare. The successes of the Medicare Advantage and Medicare Part D prescription drug programs provide sound examples lawmakers can use in shaping the future. Those programs have utilized consumer choice and competition as drivers to provide high-quality care at reasonable costs. And, in fact, the Congressional Budget Office has concluded that bringing those choice-and-competition qualities to Medicare as a whole would reduce program spending and beneficiary out-of-pocket costs.
The Medicare Trustees report sends a clear signal that this discussion shouldn’t wait.
Another important aspect of the trustees report concerns the Independent Payment Advisory Board (IPAB). Many expected projected spending levels in this year’s report to trigger IPAB into action. That wasn’t the case, although that threshold is expected to be reached next year. Congress shouldn’t wait until then to make this bad idea go away for good.
Over 500 organizations representing patients, healthcare providers and employers have written to Congress already, pointing out that a mechanism which shifts power from elected representatives to unelected appointees would do significant damage to Medicare beneficiaries and the healthcare system as a whole. By making harsh, arbitrary cuts to Medicare payments to healthcare goods and services instead of focusing on bringing greater value to the program, quality and access would be adversely affected.
No, the Medicare trustees didn’t flip the switch to activate IPAB this year, but it’s an imminent problem and it needs to be addressed sooner rather than later.
April 04, 2016
As we’ve seen, there has been a steadily increasing level of discussion and enthusiasm surrounding precision medicine. The Healthcare Leadership Council (HLC) has remained engaged in this conversation, given the expertise and involvement of its members. HLC hosted a briefing on Capitol Hill last April on the subject, in which Bio-Reference Laboratories, New York-Presbyterian Hospital/Columbia University Medical Center and Mayo Clinic detailed the benefits that have already been realized, and the potential that has yet to be reached. They each shared stories of how targeted therapy transformed the lives of patients in ways that conventional medicine could not. Although the cost of sequencing will continue to benefit and see increased usage from price declines, early genetic testing has allowed for immediate diagnosis and treatment, bypassing the costly trial and error approach. Our member experts all agreed that one organization alone cannot succeed in integrating genome based knowledge into personalized care.
Last year the Precision Medicine Initiative (PMI) was announced by the National Institute of Health (NIH). This year the White House hosted a PMI Summit, in which President Obama both participated and partnered with the NIH in an educational tweet chat that answered questions from the public regarding the initiative. During this chat, NIH Director Francis Collins cited a paradox, “Only by studying populations at scale can you really understand individual differences.” The PMI Cohort Program is currently working towards collecting one million or more participants that reflect the diversity of our country.
Precision medicine is an area that would directly benefit from the ability to collect, store and share data electronically. In order to see real success, harmonization of data privacy laws is a necessary next step. Diverse state privacy regulations regarding patient information accompany HIPAA laws, adding to the complexity of sharing data in a way that would improve the quality of patient care. Federal rules for research subjects intersect with additional privacy policies that are also burdensome to the healthcare system. The ability to utilize any data gathered from partnering facilities is an important function, and dialogue between the federal government and states is needed to ensure this is feasible across the country. This is a field of health policy we have discussed fully in the Healthcare Leadership Council’s recently-released “VIable Options: Six Steps to Transform Healthcare Now” policy recommendations. The U.S. is on the cusp of a new era in healthcare, and the flow of health data is a crucial part of it.
February 19, 2016
It’s a notion we’ve heard a fair amount during the presidential campaign, this idea that Medicare should ‘negotiate’ prescription drug prices. (There’s a very good reason I put ‘negotiate’ in quotes. We’ll get to that in a moment.) The concept reached all new levels of visibility in recent days when the leader in the polls on the Republican side told MSNBC’s “Morning Joe” program, “We don’t negotiate. We don’t negotiate….If we negotiated the price of drugs, Joe, we’d save $300 billion a year.”
I’m not going to devote this post to litigating the $300 billion boast. The Washington Post has already done that by giving it “Four Pinocchios” on its lack-of-truthfulness scale. It is, of course, a mathematical impossibility to save $300 billion annually from a Medicare Part D prescription drug program that spends less than $80 billion per year. A candidate making that claim has ventured into loaves-and-fishes territory.
But that particular absurdity notwithstanding, let’s discuss the proposal coming from the current presidential race leaders in both parties that the heavy hand of the federal government should be involved in drug pricing. There are some myths attached to this idea that, in any reasonable debate, shouldn’t be shunted aside.
Myth #1 – In the Medicare program today, there are no negotiations to reduce drug prices.
This, of course, is patently untrue. Prices in the Medicare Part D program are determined through a negotiation process involving private health plans and pharmacy benefit management (PBM) companies. PBMs handle millions of individual pharmaceutical transactions yearly and have the bargaining power to achieve reasonable and realistic pricing.
The proof here is in the proverbial pudding. Average monthly premiums for enrollees in the Part D program have, according to the Centers for Medicare and Medicaid Services, remained stable at an affordable level for the past five years.
Myth #2 – Federal government involvement in Medicare drug pricing is a pro-consumer idea.
Proponents of federally-dictated drug pricing make it seem all so simple, that if the government takes over drug price negotiations then Medicare prices will drop to the level of the Veterans Administration. They don’t, however, explain the tradeoffs that come with this kind of policy change. When you arbitrarily lower prices, you invariably restrict accessibility. In the VA, for example, nearly one-fifth of the 200 most commonly prescribed drugs are not on its national formulary. As noted in a paper by the Center for Medicine in the Public Interest, the vast majority of drugs not made available to VA patients are accessible within Medicare Part D prescription drug plans.
This is why the Congressional Budget Office has traditionally been reluctant to ascribe any real savings to the concept of federal price negotiations within Medicare, because of the unlikelihood that lawmakers will tell their senior citizen constituents that many of the drugs on which they depend will no longer be available to them.
And let’s not forget that artificial price controls on pharmaceuticals have an inevitable impact on research and development of new therapies, an unacceptable outcome when devastating (and costly) chronic illnesses like diabetes and heart disease are affecting millions.
Myth #3 – We need hard-nosed federal negotiators sitting at the table with pharmaceutical company executives to push down prices.
The mental image of two sides bickering over numbers from their respective sides of a table is a fallacy. The reason I put ‘negotiate’ in quotation marks is because there really is no such thing. The federal government establishes pricing levels and drugmakers must agree to meet those prices in order to be in the Medicare Part D formulary. This has two effects – (1) the aforementioned restricted access to therapies and (2) the end of competition in the Part D program. Today, plans compete with each other to provide greater value to enrollees. With a single federally-set pricing level, the benefits of consumer choice and competition are lost.
The good news here is that there are ways to address healthcare costs while, instead of hurting patients and consumers, actually elevating care quality and bolstering innovation. The Healthcare Leadership Council unveiled a series of proposals this week to accomplish those goals and I’ll be discussing these in more details in a series of forthcoming posts. Watch this space.
February 04, 2016
This week the Patient-Centered Primary Care Collaborative (PCPCC) unveiled its fifth annual report on the patient centered medical home’s (PCMH) impact on cost and quality. In the quest to improve population health and reduce cost, PCPCC has collected data from peer-reviewed studies on medical homes’ costs and utilization. Several Healthcare Leadership Council (HLC) members – Anthem, Aetna, Johnson & Johnson, McKesson, Merck, Premier and Takeda — are executive members of PCPCC. The results are instructive in the continuing discussion on how to elevate healthcare quality while containing overall spending. Key takeaways from the report include:
- A focus on primary care drives down cost and utilization
- Best results came from sites that used multiple payers
- It is essential to align payment with performance
The panel that discussed the findings included Marci Nielsen, CEO of PCPCC, Alissa Fox, SVP of the Office of Policy and Representation at Blue Cross Blue Shield Association, Chris Koller, President of Milbank Memorial Fund, and Len Nichols, Director of the Center for Health Policy Research and Ethics at George Mason University.
The experts stated that PCMH’s have demonstrated the ability to control costs by providing the right care. Delivery reform and payment reform go hand in hand; one will not succeed without the other. As the nation works toward a value-based healthcare system it is important to be mindful of the cost of transformation. Incentives must be right, there will be a need for antitrust exemptions, and the industry will rely on national standards but local relationships. Currently, fee-for-service does not reimburse services that are key to coordinating patient care. The PCMH model is not one size fits all, according to the panel, and more research is needed to identify which varying components are demonstrating the most value. Defining measures and identifying best practices are necessary steps in ensuring successful implementation of the PCMH model.
This discussion on how to improve value within the healthcare system will reach an important juncture later this month when the Healthcare Leadership Council unveils specific policy recommendations – endorsed by virtually all sectors of the healthcare industry in addition to patient advocacy organizations – on how to remove barriers to quality-enhancing, cost-saving health innovations. Watch this space for more information.