Has The Era Of Slow Growth For Prescription Drug Spending Ended?

Effects of Medicare Part D coverage gap closure on utilization of branded and generic drugs

The Affordable Care Act included a provision to gradually eliminate the Medicare prescription drug coverage gap between 2011 and 2020, which substantially lower medication costs in the gap. Using 2007-2016 Medicare claims data, we estimate how filling the gap affects individuals' out-of-pocket spending and medication use, separately for branded and generic drugs. One important difficulty in estimating the policy impact is that around the same time, many blockbuster drugs commonly used by the Medicare population experienced patent expiration and began to see generic entry. Because generic entries affected different therapeutic classes at different times, we run difference-in-differences models by therapeutic category at the beneficiary-month level to isolate the effect of the gap closure from that of generic entry. Overall, we find that filling the gap substantially reduced out-of-pocket spending and increased the use of branded drugs, which had larger discount rates during the analysis period. Beneficiaries reaching the gap, at older ages, or with comorbidities experienced larger reduction in out-of-pocket spending. We show that without accounting for generic entry, the effect of filling the coverage gap on medication use is underestimated for branded drugs and overestimated for generic drugs.

Trends In Medical And Pharmacy Spending In The Affordable Care Act Markets, 2015-19

To control rising costs, it is critical for payers, providers, and policy makers to understand trends in health care spending. Using data from both on- and off-exchange Affordable Care Act (ACA)-compliant small-group and individual insurance markets in the United States for the period 2015-19, we analyzed the contributions of trends in utilization, unit price, and service mix to growth in overall health care spending. Overall annual growth trends in health care spending per member per month during that period were 4.0 percent in the small-group market and 1.1 percent in the individual market. In the small-group market, professional and outpatient facility services contributed the most to spending growth, driven by unit price increases. In the individual market, pharmacy and outpatient facility services accounted for the greatest growth in spending, driven by a combination of unit price increases and changes in the mix of services. Addressing these contributors to growth can help contain costs and premiums and provide more stability to ACA-compliant insurance markets.

Towards sustainability and affordability of expensive cell and gene therapies? Applying a cost-based pricing model to estimate prices for Libmeldy and Zolgensma

BACKGROUND AIMS

Drug prices are regarded as one of the most influential factors in determining accessibility and affordability to novel therapies. Cell and gene therapies such as OTL-200 (brand name: Libmeldy) and AVXS-101 (brand name: Zolgensma) with (expected) list prices of 3.0 million EUR and 1.9 million EUR per treatment, respectively, spark a global debate on the affordability of such therapies. The aim of this study was to use a recently published cost-based pricing model to calculate prices for cell and gene therapies, with OTL-200 and AVXS-101 as case study examples.

METHODS

Using the pricing model proposed by Uyl-de Groot and Löwenberg, we estimated a price for both therapies. We searched the literature and online public sources to estimate (i) research and development (R&D) expenses adjusted for risk of failure and cost of capital, (ii) the eligible patient population and (iii) costs of drug manufacturing to calculate a base-case price for OTL-200 and AVXS-101. All model input parameters were varied in a stepwise, deterministic sensitivity analysis and scenario analyses to assess their impact on the calculated prices.

RESULTS

Prices for OTL-200 and AVXS-101 were estimated at 1 048 138 EUR and 380 444 EUR per treatment, respectively. In deterministic sensitivity analyses, varying R&D estimates had the greatest impact on the price for OTL-200, whereas for AVXS-101, changes in the profit margin changed the calculated price substantially. Highest prices in scenario analyses were achieved when assuming the lowest number of patients for OTL-200 and highest R&D expenses for AVXS-101. The lowest R&D expenses scenario resulted in lowest prices for either therapy.

CONCLUSIONS

Our results show that, using the proposed model, prices for both OTL-200 and AVXS-101 lie substantially below the currently (proposed) list prices for both therapies. Nevertheless, the uncertainty of the used model input parameters is considerable, which translates in a wide range of estimated prices. This is mainly because of a lack of transparency from pharmaceutical companies regarding R&D expenses and the costs of drug manufacturing. Simultaneously, the disease indications for both therapies remain heavily understudied in terms of their epidemiological profile. Despite the considerable variation in the estimated prices, our results may support the public debate on value-based and cost-based pricing models, and on "fair" drug prices in general.

Physician perceptions of drug utilization management: Results of a national survey

The use of drug utilization management techniques such as formulary exclusions, prior authorizations, and step edits has risen sharply during the last decade, contributing to the growing burden on physicians and patients. Limited quantitative data exist, however, on physician perceptions of drug utilization management. A national survey was conducted between February 9 and March 30, 2021, targeting office-based physicians working in the United States to assess their perceptions on drug utilization management in their practice. Of the 742 physicians that participated in the study, over 80% reported deciding against prescribing certain treatments in anticipation of drug utilization management at least sometimes (>50% of the time). Despite utilization management having an impact on prescribing decisions, about half of physicians said that the utilization management policies they encounter rarely or never (0–25% of the time) align with clinical evidence.

The Physician and Administrator-Reported Cost of Drug Utilization Management to Physician Practices: A Cross-Sectional Survey

BACKGROUND

The use of drug utilization management techniques such as formulary exclusions, prior authorizations, and step edits has risen sharply during the last decade, contributing to growing administrative costs for physician practices. However, limited data exist on the extent of these administrative costs, with previous studies relying on data from over a decade ago.

OBJECTIVE

The aim of this study was to assess physician and practice administrator experiences with drug utilization management.

METHODS

A national survey was conducted between 9 February and 30 March 2021, targeting 925 physicians and administrators working at medical practices in the US. Time spent by physicians and their staff on tasks related to drug utilization management for prescription medications was collected and used to calculate the dollar value of that time.

RESULTS

We estimated that physicians spent a median of 4.0 h per week on drug utilization management, while nurses spent 15.0 h and other staff spent between 3.6 and 10.0 h on drug utilization management per physician per week. This time was associated with a calculated median dollar value of $75,927 per physician per year. Extrapolating this estimate to a national scale suggests that time spent annually by physician practices on drug utilization management could be valued at more than $43 billion.

CONCLUSIONS

Drug utilization management results in significant time spent by US physician practices, which in turn, results in meaningful costs to these practices. As the prevalence of drug utilization management continues to grow, the impact on physician practices will remain an important topic.

Effect of Competition on Generic Drug Prices

BACKGROUND

Promoting substitution of lower priced generics for brand drugs once the market exclusivity period for the latter expires is a key component of the US strategy for achieving value in prescription drugs.

OBJECTIVE

This study examines the effect of generic competition on drug prices by estimating the effect of entry of generic drugs, following a brand's loss-of-exclusivity (LOE), on the average price of competing drugs.

METHODS

Using the Medicare Part D drug event (PDE) data from 2007 to 2018, we utilize both fixed effects and random effects at the drug level to estimate the relationship of competitors and prices within each drug while controlling for factors across drugs. We follow a drug 24 months and 36 months after first generic entry to examine whether the relationship between number of suppliers and price would change over time. We also test the hypothesis that drugs with more recent LOE might face less competition than those with earlier LOE.

RESULTS

We find that drug prices fall with increasing number of competitors. Prices decline by 20% in markets with about three competitors (the expected price ratio of current generic to pre-generic entry brand average prices is 80%). Prices continue to decline by 80% relative to the pre-generic entry price in markets of ten or more competitors (the expected price ratio is about 30% following 2 years after entry, dropping to 20% following 3 years after entry). We also find that the impact of competition on relative prices is similar for generic drugs first entering the market in either 2007-11 or 2012-15.

CONCLUSION

Promoting generic entry and maintaining effective provider competition are effective methods for containing drug prices.

Quantifying The Economic Burden Of Drug Utilization Management On Payers, Manufacturers, Physicians, And Patients

The continuing launch of innovative but high-price drugs has intensified efforts by payers to manage use and spending and by pharmaceutical manufacturers to support patient access and sales. Payers are restricting drug formularies, requiring more stringent prior authorizations, and raising patient cost-sharing requirements. Manufacturers are investing in programs that help patients and physician practices navigate administrative controls and help patients meet cost-sharing obligations. Based on a compilation and analysis of the existing peer-reviewed and professional literature, this article estimates that payers, manufacturers, physicians, and patients together incur approximately $93.3 billion in costs annually on implementing, contesting, and navigating utilization management. Payers spend approximately $6.0 billion annually administering drug utilization management, and manufacturers spend approximately $24.8 billion supporting patient access in response. Physicians devote approximately $26.7 billion in time spent navigating utilization management, whereas patients spend approximately $35.8 billion annually in drug cost sharing, even after taking advantage of manufacturer and philanthropic sources of financial support. All stakeholders in the US pharmaceutical system would benefit from a deescalation of utilization management, combining lower drug prices with lower barriers to patient access.

Impact of a commercial accountable care organization on prescription drugs

OBJECTIVE

To determine the long-run impact of a commercial accountable care organization (ACO) on prescription drug spending, utilization, and related quality of care.

DATA SOURCES/STUDY SETTING

California Public Employees' Retirement System (CalPERS) health maintenance organization (HMO) member enrollment data and pharmacy benefit claims, including both retail and mail-order generic and brand-name prescription drugs.

STUDY DESIGN

We applied a longitudinal retrospective cohort study design and propensity-weighted difference-in-differences regression models. We examined the relative changes in outcome measures between two ACO cohorts and one non-ACO cohort before and after the ACO implementation in 2010. The ACO directed provider prescribing patterns toward generic substitution for brand-name prescription drugs to maximize shared savings in pharmacy spending.

DATA COLLECTION/EXTRACTION METHODS

The study sample included members continuously enrolled in a CalPERS commercial HMO from 2008 through 2014 in the Sacramento area.

PRINCIPAL FINDINGS

The cohort differences in baseline characteristics of 40 483 study participants were insignificant after propensity-weighting adjustment. The ACO enrollees had no significant differential changes in either all or most of the five years of the ACO operation for the following measures: (1) average total spending and (2) average total scripts filled and days supplied on either generic or brand-name prescription drugs, or the two combined; (3) average generic shares of total prescription drug spending, scripts filled or days supplied; (4) annual rates of 10 outpatient process quality of care metrics for medication prescribing or adherence.

CONCLUSIONS

Participation in the commercial ACO was associated with negligible differential changes in prescription drug spending, utilization, and related quality of care measures. Capped financial risk-sharing and increased generics substitution for brand names are not enough to produce tangible performance improvement in ACOs. Measures to increase provider financial risk-sharing shares and lower brand-name drug prices are needed.

FOUR FACTS CONCERNING COMPETITION IN U.S. GENERIC PRESCRIPTION DRUG MARKETS

We establish four facts concerning competition among U.S. generic drug suppliers, using IQVIA's National Sales Perspective™ 2004Q4 - 2016Q3 data. We define a unique product market ("molform"), consisting of the combination of a molecule active ingredient and a route of administration formulation, aggregated over different dosages and strengths. We find: (i) supply exhibits substantial churning in entrants and exits; (ii) volume-weighted use concentrates in older generic molform cohorts; (iii) the extent of competition is greatest for the oldest molform cohorts and is smallest for the youngest molform cohorts. With a median of one competitor, the extent of competition in the youngest molform cohort is very limited; and (iv) supplier-molform annual revenues are typically small, are largest for relatively young drugs, but are heavily right skewed. These four facts provide an empirical platform on which to construct and empirically evaluate hypotheses regarding generic drug market structure, performance, and possible policy reforms.

Policy Recommendations for Public Health Plans to Stem the Escalating Costs of Prescription Drugs: A Position Paper From the American College of Physicians

The increasing price of prescription drugs is an ongoing concern for Medicare and Medicaid, particularly for patients with chronic health conditions who are using multiple medications and patients in these programs taking high-priced brand-name specialty drugs. Shifts in benefit design, including higher deductibles and a movement away from copayments to coinsurance, have increased patient out-of-pocket costs and put pressure on program budgets. In this paper, the American College of Physicians expands on its position paper from 2016 and offers additional recommendations to decrease out-of-pocket costs for patients, enhance the government's purchasing power, and address existing policies that add costs to the health care system.

Value-based Pricing for Rifaximin Increases Access of Patients With Irritable Bowel Syndrome With Diarrhea to Therapy

BACKGROUND & AIMS

Increasing drug prices lead to payer coverage restrictions, which limit access to therapy. We assessed the cost effectiveness of rifaximin in management of patients with irritable bowel syndrome with diarrhea (IBS-D) under common payer coverage restrictions and determined the maximum price at which rifaximin would be cost effective using contemporary cost-effectiveness thresholds.

METHODS

A decision analytic model was constructed to evaluate quality of life, cost, and cost effectiveness of rifaximin for patients with IBS-D and complete noncoverage (insurer pays none of the drug cost), unrestricted access (insurer pays 100% of the drug cost), and formulary-restricted access (insurer pays 100% of the drug cost after for patients failed by initial therapy). The maximum cost-effective drug price was determined for each level of drug coverage using threshold analysis adjusted for willingness to pay thresholds from $50,000 to $150,000 per quality-adjusted life year (QALY). Analysis was performed from a payer perspective with a 1-year time horizon.

RESULTS

Unrestricted and formulary-restricted access were more effective than complete non-coverage, resulting in additional 0.03 and 0.05 QALYs gained over noncoverage. However, unrestricted and formulary-restricted coverage were more expensive. At current drug prices, unrestricted or formulary-restricted coverage would cost an additional $1,207,136 or $171,850/QALY gained, compared to complete non-coverage. A 12% to 62% price reduction ($18.46 to $26.34/pill) for formulary-restricted access and 84% to 88% price reduction ($3.53 to $4.71/pill) for unrestricted access would be needed for rifaximin to be a cost-effective treatment strategy. Rifaximin retreatment intervals, response rates, and adverse events were important factors in sensitivity analysis.

CONCLUSION

Using a decision analytic model, we show that payer coverage for rifaximin for patients with IBS-D exceeds generally accepted cost-effectiveness thresholds at current drug prices. Improved payer coverage could be justified using value-based pricing methods.

Variation in Prescription Drug Prices by Retail Pharmacy Type: A National Cross-sectional Study

BACKGROUND

Cash prices for prescription drugs vary widely in the United States.

OBJECTIVE

To describe cash price variation by retail pharmacy type for 10 generic and 6 brand-name drugs throughout the United States and stratified by ZIP code.

DESIGN

Cross-sectional study.

SETTING

Drug pricing data from GoodRx, an online tool for comparing drug prices, representing more than 60 000 U.S. pharmacies (fall 2015).

MEASUREMENTS

Cash prices for a 1-month supply of generic and brand-name drugs were ascertained. Stratified by ZIP code, relative cash prices for groups of generic and brand-name drugs were estimated for big box, grocery-based, small chain, and independent pharmacies compared with a reference group of large chain pharmacies.

RESULTS

Across 16 325 ZIP codes, 68 353 unique pharmacy stores contributed cash prices. When stratified by 5-digit ZIP code, the relative cash prices for generic drugs at big box, grocery-based, small chain, and independent pharmacies compared with those at large chain pharmacies were 0.52 (95% CI, 0.51 to 0.53), 0.82 (CI, 0.81 to 0.83), 1.51 (CI, 1.45 to 1.56), and 1.61 (CI, 1.58 to 1.64), respectively. The relative cash prices for brand-name drugs were 0.97 (CI, 0.96 to 0.97), 1.00 (CI, 0.99 to 1.00), 1.06 (CI, 1.05 to 1.08), and 1.03 (CI, 1.02 to 1.04), respectively.

LIMITATION

Results may not reflect current drug prices and do not account for point-of-sale discounts or price matching that may be offered by smaller pharmacies.

CONCLUSION

Compared with large chains, independent pharmacies and small chains had the highest cash prices for generic drugs and big box pharmacies the lowest. Relative differences in cash prices for brand-name drugs were modest across types of retail pharmacies.

PRIMARY FUNDING SOURCE

Arnold Ventures.

Projecting Pharmaceutical Expenditure in EU5 to 2021: Adjusting for the Impact of Discounts and Rebates

BACKGROUND

Within (European) healthcare systems, the predominant goal for pharmaceutical expenditure is cost containment. This is due to a general belief among healthcare policy makers that pharmaceutical expenditure-driven by high prices-will be unsustainable unless further reforms are enacted.

OBJECTIVE

The aim of this paper is to provide more realistic expectations of pharmaceutical expenditure for all key stakeholder groups by estimating pharmaceutical expenditure at 'net' prices. We also aim to estimate any gaps developing between list and net pharmaceutical expenditure for the EU5 countries (i.e. France, Germany, Italy, Spain, and the UK).

METHODS

We adjusted an established forecast of pharmaceutical expenditure for the EU5 countries, from 2017 to 2021, by reflecting discounts and rebates not previously considered, i.e. we moved from 'list' to 'net' prices, as far as data were available.

RESULTS

We found an increasing divergence between expenditure measured at list and net prices. When the forecasts for the five countries were aggregated, the EU5 (unweighted) average historical growth (2010-2016) rate fell from 3.4% compound annual growth rate at list to 2.5% at net. For the forecast, the net growth rate was estimated at 1.5 versus 2.9% at list.

CONCLUSIONS

Our results suggest that future growth in pharmaceutical expenditure in Europe is likely to be (1) lower than previously understood from forecasts based on list prices and (2) below predicted healthcare expenditure growth in Europe and in line with long-term economic growth rates. For policy makers concerned about the sustainability of pharmaceutical expenditure, this study may provide some comfort, in that the perceived problem is not as large as expected.

Generic prescription drug price increases: which products will be affected by proposed anti-gouging legislation?

Background

In the United States (U.S.), large price increases for selected generic drugs have elicited public outrage. Recent legislative proposals aim to increase price transparency and identify outlier drug “price spikes.” It is unknown how many and what types of products would be highlighted by such efforts.

Methods

IQVIA Health Incorporated’s National Sales Perspectives™ provided sales, use and price data for all generic prescription products (unique molecule-manufacturer-formulation combinations) sold in the U.S. We estimated annual prescription price levels and changes between 2013 and 2014. We identify drugs with annual prescription price increases in excess of the medical consumer price index (CPI), and in excess of 15% or 20%, per legislative proposals. We reported annualized inflation-adjusted mean, standard deviation (SD), median, and 95th percentile prescription price increases and percentage of products exceeding the growth in the medical CPI. We fitted logistic regression models to identify characteristics of drugs associated with each category of price increase.

Results

We analyzed data for 6,182 generic products. The mean inflation-adjusted price increase among all generic products was 38% (SD 1,053%), the median, 2%; the 95th percentile, 135%; and the mean price level, $29.69 (SD $378.44). Approximately half of all products experienced price increases in excess of the growth in the medical CPI; 28% had price increases greater than 15% and 23% had price increases greater than 20%. Drugs exceeding outlier thresholds exhibited lower baseline price levels than the mean price level observed among all generic drugs. The most consistent characteristic predicting whether a product would exceed “price spike” thresholds proposed in legislation is the being supplied by only one manufacturer.

Conclusions

“Price spikes” among generic drugs in 2014 were more common than newspaper stories and legislative hearings suggest. While the cross-sectional association between an indicator of being sold by only a single manufacturer and the probability of meeting specific price growth thresholds is suggestive of an economically intuitive causal story, future work should delve more deeply into whether decreases in generic competition explain the dramatic price increases that have captured the public’s attention in recent years.

Factors Associated With Increases in US Health Care Spending, 1996-2013

IMPORTANCE

Health care spending in the United States increased substantially from 1995 to 2015 and comprised 17.8% of the economy in 2015. Understanding the relationship between known factors and spending increases over time could inform policy efforts to contain future spending growth.

OBJECTIVE

To quantify changes in spending associated with 5 fundamental factors related to health care spending in the United States: population size, population age structure, disease prevalence or incidence, service utilization, and service price and intensity.

DESIGN AND SETTING

Data on the 5 factors from 1996 through 2013 were extracted for 155 health conditions, 36 age and sex groups, and 6 types of care from the Global Burden of Disease 2015 study and the Institute for Health Metrics and Evaluation's US Disease Expenditure 2013 project. Decomposition analysis was performed to estimate the association between changes in these factors and changes in health care spending and to estimate the variability across health conditions and types of care.

EXPOSURES

Change in population size, population aging, disease prevalence or incidence, service utilization, or service price and intensity.

MAIN OUTCOMES AND MEASURES

Change in health care spending from 1996 through 2013.

RESULTS

After adjustments for price inflation, annual health care spending on inpatient, ambulatory, retail pharmaceutical, nursing facility, emergency department, and dental care increased by $933.5 billion between 1996 and 2013, from $1.2 trillion to $2.1 trillion. Increases in US population size were associated with a 23.1% (uncertainty interval [UI], 23.1%-23.1%), or $269.5 (UI, $269.0-$270.0) billion, spending increase; aging of the population was associated with an 11.6% (UI, 11.4%-11.8%), or $135.7 (UI, $133.3-$137.7) billion, spending increase. Changes in disease prevalence or incidence were associated with spending reductions of 2.4% (UI, 0.9%-3.8%), or $28.2 (UI, $10.5-$44.4) billion, whereas changes in service utilization were not associated with a statistically significant change in spending. Changes in service price and intensity were associated with a 50.0% (UI, 45.0%-55.0%), or $583.5 (UI, $525.2-$641.4) billion, spending increase. The influence of these 5 factors varied by health condition and type of care. For example, the increase in annual diabetes spending between 1996 and 2013 was $64.4 (UI, $57.9-$70.6) billion; $44.4 (UI, $38.7-$49.6) billion of this increase was pharmaceutical spending.

CONCLUSIONS AND RELEVANCE

Increases in US health care spending from 1996 through 2013 were largely related to increases in health care service price and intensity but were also positively associated with population growth and aging and negatively associated with disease prevalence or incidence. Understanding these factors and their variability across health conditions and types of care may inform policy efforts to contain health care spending.

Merger mania: mergers and acquisitions in the generic drug sector from 1995 to 2016

Background

Drug shortages and increasing generic drug prices are associated with low levels of competition. Mergers and acquisitions impact the level of competition. Record merger and acquisition activity was reported for the pharmaceutical sector in 2014/15, yet information on mergers and acquisitions in the generic drug sector are absent from the literature. This information is necessary to understand if and how such mergers and acquisitions can be a factor in drug shortages and increasing prices.

Methods

Data on completed merger and acquisition deals that had a generic drug company being taken over (i.e. ‘target’) were extracted from Bloomberg Finance L.P. The number and announced value of deals are presented globally, for the United States, and globally excluding the United States annually from 1995 to 2016 in United States dollars.

Results

Generic drug companies comprised 9.3% of the value of all deals with pharmaceutical targets occurring from 1995 to 2016. Globally, in 1995 there were no deals, in 2014 there were 22 deals worth $1.86 billion, in 2015 there were 34 deals totalling $33.56 billion, and in 2016 there were 42 deals worth in excess of $44 billion. This substantial increase was partially attributed to Teva’s 2016 acquisition of Allergan’s generic drug business. The surge in mergers and acquisitions for 2015/16 was driven by deals in the United States, where they represented 89.7% of the dollar value of deals in those years.

Conclusions

The recent blitz in mergers and acquisitions signals that the generic drug industry is undergoing a transformation, especially in the United States. This restructuring can negatively affect the level of competition that might impact prices and shortages for some products, emphasizing the importance of updating regulations and procurement policies.

Electronic supplementary material

The online version of this article (doi:10.1186/s12992-017-0285-x) contains supplementary material, which is available to authorized users.

Association of Reference Pricing with Drug Selection and Spending

Background In the United States, prices for therapeutically similar drugs vary widely, which has prompted efforts by public and private insurers to steer patients toward the lower-priced options. Under reference pricing, the insurer or employer establishes a maximum contribution it will make toward the price of a drug or procedure, and the patient pays the remainder. Methods We used difference-in-differences multivariable regression methods to analyze changes in prescriptions and pricing for 1302 drugs in 78 therapeutic classes in the United States, before and after implementation of reference pricing by an alliance of private employers. We assessed trends for the study group relative to those for an employee group that was not subject to reference pricing. The study included 1,122,741 prescriptions that were reimbursed during the period from 2010 through 2014. Results Implementation of reference pricing was associated with a higher percentage of prescriptions that were filled for the lowest-priced reference drug within its therapeutic class (difference in probability, 7.0 percentage points; 95% confidence interval [CI], 4.0 to 9.9), a lower average price paid per prescription (-13.9%; 95% CI, -23.8 to -2.7), and a higher rate of copayment by patients (5.2%; 95% CI, 0.2 to 10.4) than in the comparison group. During the first 18 months after implementation, spending for employers was $1.34 million lower and the amount of copayments for employees was $0.12 million higher than in the comparison group. Conclusions Implementation of reference pricing was associated with significant changes in drug selection and spending for a population of patients covered by employment-based insurance in the United States. (Funded by the Agency for Healthcare Research and Quality and the Genentech Foundation.).

Association of Prescription Drug Price Rebates in Medicare Part D With Patient Out-of-Pocket and Federal Spending

The increasing cost of prescription drugs is a burden for patients and threatens the financial stability of the US health care system. Rebates are a form of price concession paid by a pharmaceutical manufacturer to the health plan sponsor or the pharmacy benefit manager working on the plan's behalf. Proponents argue that rebates result from vigorous negotiations that help lower overall drug costs. Critics argue that rebates have perversely increased the costs patients pay out of pocket, as well as the costs for Medicare as a whole. This special communication discusses how the availability of rebates for drugs covered by the Medicare Part D program may raise costs for patients and Medicare while increasing the profits of Part D plan sponsors and pharmaceutical manufacturers. Two policy alternatives are herein proposed that would reconfigure cost sharing to lower patient out-of-pocket costs and reduce cost shifting to Medicare.

Value-Based Calculators in Cancer: Current State and Challenges

The ASCO Value Framework, National Comprehensive Cancer Network Evidence Blocks, Memorial Sloan Kettering's DrugAbacus, and Institute for Clinical and Economic Review incremental cost-effectiveness ratio calculator are value-based methodologies that attempt to address the disproportionate increase in cancer care spending. These calculators can be used as an initial step for discussing cost versus value, but they fall short in recognizing the importance of the cancer journey because they do not fully factor the patient's perspective or the global cost of care. This timely review highlights both the limitations and the advantages of each value calculator and suggests opportunities for refinement. Practicing oncologists, payers, and manufacturers should be familiar with value-based calculators because the role these tools play in cost containment is likely to be hotly debated.