{"id":2404,"date":"2016-08-11T06:38:40","date_gmt":"2016-08-11T13:38:40","guid":{"rendered":"http:\/\/www.michrxconsulting.com\/?p=2404"},"modified":"2016-08-11T06:38:40","modified_gmt":"2016-08-11T13:38:40","slug":"drug-price-transparency-costs-down","status":"publish","type":"post","link":"https:\/\/www.michrxconsulting.com\/drug-price-transparency-costs-down\/","title":{"rendered":"Can Drug Price Transparency Keep Costs Down?"},"content":{"rendered":"
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By Pauline Bartolone<\/strong><\/a><\/span> KHN<\/a><\/p>\n<\/div>\n

Will forcing drugmakers to disclose big price hikes and new high-cost treatments help keep medications affordable for consumers?<\/p>\n

That\u2019s the premise behind legislation considered this year in roughly a dozen states, including California. In addition, President Barack Obama proposed in his 2017 budget that the Department of Health and Human Services require drugmakers to disclose their research and development costs.<\/p>\n

But some researchers and consumer advocates say these \u201cdrug price transparency\u201d measures likely won\u2019t bring spiraling costs down by themselves \u2014 other policy changes will be needed.<\/p>\n

\u201cBy themselves, I don\u2019t think it\u2019s likely the [measures] will have a big impact,\u201d said Chapin White, a senior researcher and health care cost transparency expert at the Santa Monica-based think tank RAND Corp. Chapin said getting more information is only part of deciding \u201cwhat\u2019s a fair amount to pay\u201d for pharmaceuticals.<\/p>\n

He suggested, however, that such laws could prevent pharmaceutical companies from raising prices \u201cfor no reason.\u201d<\/p>\n

On Wednesday, California state lawmakers will review a bill<\/a> that would require pharmaceutical companies to give advance notice if they plan to introduce drugs that cost $10,000 or more (per year or per course of treatment) or raise the price on existing medications by more than certain percentages.<\/strong> They also would be obliged to justify those costs within 30 days \u2014 although the legislation is not clear on how they\u2019d need to do so.<\/p>\n

The bill also would require health plans to report annually how much they spend on prescription drugs.<\/p>\n

Proposals in other states have included requiring pharmaceutical companies to report closely held research and development costs to government agencies, creating pharmaceutical review commissions and allowing government health programs not to cover certain high-priced drugs.<\/p>\n

Most of the measures have stalled this year, except in California, New Jersey and Pennsylvania, according to the National Council of State Legislatures. Supporters of such legislation attribute their failure to proceed in most states to strong pressure from the pharmaceutical industry.<\/p>\n

Rising prescription drug costs have been hotly debated, especially since Martin Shkreli, a now-disgraced pharmaceutical executive, obtained the manufacturing license for a lifesaving antiparasitic drug and last year hiked its price by more than 5,000 percent. With that episode as an extreme example, policymakers have been searching for ways to prevent price gouging.<\/p>\n

Supporters of the California bill say advance notice of price increases can help drug purchasers negotiate the best deal for consumers.<\/p>\n

But drug companies say the legislation could prompt \u201choarding\u201d by large pharmacies because once they learned of a price hike, they could buy up the existing cheaper supply.<\/p>\n

The industry says transparency measures threaten their fundamental business interests.<\/p>\n

\u201cDisclosing that information is revealing very commercially sensitive information to a large population, which could frankly undermine competition and yield unintended consequences,\u201d said Priscilla VanderVeer, deputy vice president of state communications at the Pharmaceutical Research and Manufacturers of America (PhRMA).<\/p>\n

VanderVeer said a drug\u2019s sticker price does not give an accurate picture of what it actually costs, since the price is almost always negotiated down.<\/p>\n

Chapin, the RAND senior researcher, noted that current patent rules give drugmakers the power to charge high prices as a reward for innovation.<\/p>\n

\u201cThrough the system of patent protection, we\u2019ve created monopoly power [for] pharmaceutical companies,\u201d he said, but added that he can\u2019t imagine that system being scrapped.<\/p>\n

Instead, he said, drug price discussions should focus on the \u201creasonable bounds\u201d of pricing, and the cost of a medication should reflect how much it advances the practice of medicine.<\/p>\n

\u201cThere has to be some limit,\u201d said Chapin. \u201cIt shouldn\u2019t be the case that [a] firm can just charge a sky\u2019s-the-limit price.\u201d<\/p>\n

Ameet Sarpatwari, a professor at Harvard Medical School, said transparency measures could arm lawmakers with information to help them enact other, more fundamental policy changes. Actually controlling drug prices would likely require federal action, he said, such as allowing state Medicaid programs to keep high-cost drugs off their formularies.<\/p>\n

California Public Employees\u2019 Retirement System (CalPERS), which in 2014 spent $1.8 billion on prescription drugs for its 1.4 million members, says it already benefits from its own efforts to collect pharmacy spending information from health plans every year. That data has helped the agency decide how much more to charge enrollees for drugs and to determine the list of drugs it covers.<\/p>\n

CalPERS supports California\u2019s transparency bill, calling it a first step towards bringing drug prices down.<\/p>\n

\u201cYou can\u2019t ask the questions relative to costs when folks don\u2019t know what the costs are,\u201d said Doug McKeever, CalPERS\u2019 deputy executive officer for benefit programs policy and planning. \u201cIt gives us opportunities to collectively say, \u2018how can we work together collaboratively to address these cost increases?\u2019\u201d<\/p>\n

For now, CalPERS\u2019 cost-cutting measures have helped protect the agency\u2019s bottom line primarily by requiring members to pay more or have less choice. But the agency believes more widespread drug price transparency might allow health care payers to negotiate better prices later on, easing the pain for consumers.<\/p>\n

Public Citizen, a national public advocacy group, supports state transparency measures as well, but it says they should have enough teeth to \u201copen up [the] black box\u201d of research and development costs. Without that, policymakers would not have adequate information to vet industry claims about costs, said Steven Knievel, an organizer with Public Citizen\u2019s Global Access to Medicines program.<\/p>\n

California\u2019s drug price transparency measure would be more useful, Knievel said, if it required disclosure of such costs, which some other state measures have called for.<\/p>\n

If policymakers don\u2019t push to make information available as broadly as necessary to change the drug price conversation, Knievel added, proposed transparency measures risk becoming no more than \u201cPR for policymakers that want to be seen as tough on the drug companies.\u201d<\/p>\n

The group is also pushing for federal action to suppress drug prices. It says it wants government officials to step in when drugs developed using public funds are not sold on \u201creasonable terms.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

By Pauline Bartolone August 10, 2016 KHN Will forcing drugmakers to disclose big price hikes and new high-cost treatments help keep medications affordable for consumers? That\u2019s the premise behind legislation considered this year in roughly a dozen states, including California. In addition, President Barack Obama proposed in his 2017 budget that the Department of Health […]<\/p>\n","protected":false},"author":1,"featured_media":2403,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[133,3,4,184,195,196,197,183,12],"tags":[31,141,278,7,8,34,28,115,36,37],"_links":{"self":[{"href":"https:\/\/www.michrxconsulting.com\/wp-json\/wp\/v2\/posts\/2404"}],"collection":[{"href":"https:\/\/www.michrxconsulting.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.michrxconsulting.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.michrxconsulting.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.michrxconsulting.com\/wp-json\/wp\/v2\/comments?post=2404"}],"version-history":[{"count":0,"href":"https:\/\/www.michrxconsulting.com\/wp-json\/wp\/v2\/posts\/2404\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.michrxconsulting.com\/wp-json\/wp\/v2\/media\/2403"}],"wp:attachment":[{"href":"https:\/\/www.michrxconsulting.com\/wp-json\/wp\/v2\/media?parent=2404"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.michrxconsulting.com\/wp-json\/wp\/v2\/categories?post=2404"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.michrxconsulting.com\/wp-json\/wp\/v2\/tags?post=2404"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}