Prescription Drug Prices are Rising, Does Harvard Have the Answers?
November 13, 2015
Prescription drugs are the fastest growing segment in the US healthcare market. While many people have been aware of recent drug pricing scandals, few people know about longstanding problems within the industry that drive up costs. Fewer people are aware of the growing consensus among doctors, organizations, and public policy experts that are quietly tinkering away in an effort to bend the cost curve. Rising drug prices are discouraging and there are major challenges to overcome, but there are reasons to be optimistic.
Enter Harvard University, they provided a sober and expert group of voices to discuss this bubbling-hot social, economic, and political issue. The Harvard T.H. Chan School of Public Health conducted a panel discussion on Friday, October 23rd. It explored the major causes of rising drug prices while exploring ideas and initiatives in different stages of development to reform these problems. Below these issues are summarized along with examples of policy ideas or market reforms that may lower drug costs as we move further into the 21st Century.
We Have the Most Expensive Drugs and That Won’t Change Soon
The price difference in prescription drugs bought in the US compared to other advanced nations is staggering. The United States routinely pays much higher prices for the same medications than in countries like Canada and Great Britain. Those countries are able to leverage their large public payer pools to negotiate better deals with drug companies. Our public health payers, Medicare and Medicaid are not allowed to negotiate better drug prices. The potential leverage that Medicare would have with the buying authority of 70 million American seniors is completely wasted. Medicare negotiates prices with providers for every other procedure and aspect of a patient’s care. The Veteran’s Association however, is allowed to negotiate with drug companies and not surprisingly, they get the best prices amounting to a total discount of 23%.
No other industrialized country in the world has a system like ours. The FDA does not have the authority to require drug companies to provide justification for the prices they set. Because we have a private health provider system, disparate private payers don’t have the leverage public programs would have in negotiating lower prices. Without any intervention from a regulatory body or the precedent of negotiating with public programs, drug companies have supremacy over the healthcare system.
Is there a bright spot? The outlook here is not great. There is political will for change because 75% of Americans think drug prices are too high. Unfortunately the current political climate makes another public healthcare overhaul very unlikely.
2) See No Price, Hear No Price, Pay the Price
There are many reasons why being a physician is a tough job. Trying to navigate the confusing and nebulous drug marketplace is something many doctors avoid. Depending on whether a physician works in private practice or in a large institution, they can be overwhelmed by the system or completely insulated from it. The result is the cost of treatment, and the cost patients absorb, has mostly unknown to many doctors. They believe that the nature of the work requires such focus that they think themselves above it. Their job is to deliver the best care they can provide and the rest will work itself out.
Despite inertia, this attitude is starting to change and there are reasons to be optimistic. The price of drugs has been an issue in our society for a long enough time that the narrative of patients being overwhelmed by out of pocket costs, has reached cultural saturation. Some doctors have begun to consider their patient’s financial situation when when deciding what medications to prescribe. Do they have all the tools they require to make the best decisions? Do patients feel empowered enough to broach the subject with their doctor?
The answer is a cautious: not yet, but we are working on it. There are simply too many variables for doctors to quickly gather all the pertinent data regarding possible medications. SwiftRx is a tool that both doctor and patient can use to explore alternatives and find the optimal combination of cost and efficacy in their prescriptions. RxREVU is a platform that can evaluate current and potential drug treatments and offer more economical options across all prescription drug categories. At the end of the day the goal is to create a more informed and connected conversation between the patient and their physician.
3) The Specialty Drug Bonanza and Reckoning
The specialty drug market is a booming area of the pharmaceutical industry. Specialty drugs represent 30% of the total cost to payers in the US, but make up only 1% of all prescriptions filled. The cost of these drugs is not represented in their “value.” The panel described the value of a medication as the benefit they provide to patients. Too often a drug’s price is completely detached from it’s true medical value. Patients with terminal cancer are often prescribed specialty drugs that cost thousands and thousands of dollars that may only extend life a number of weeks. Often times these drugs are prescribed for “off-label” use which limits their effectiveness, but are billed at the original price. Those outcomes are completely out of line with the original supposed value and the entire industry is buckling under.
There are several positive developments in specialty drugs and cancer care focused on reducing costs. The American Society of Clinical Oncology is developing a model that helps doctors consider the severity of the condition, potential quality of life, financial cost, and projected outcomes of each drug. These guidelines can be applied to individual cases to help Oncologists treat the condition while considering the patient’s ultimate concerns. Reuters reported that Anthem Inc, the nation’s second largest insurer has a program that steers doctors away from costly and ineffective cancer treatments. They will also pay less for the same drug if it’s used for an “off label” condition which is often demonstrably less effective.
4) Can Big Data Go to Washington?
Big Pharma and other sectors of the healthcare industry have long profited on the chaotic and opaque system that has developed in the United States. The US has no governmental commission that studies drug prices with comparative effectiveness, or a regulatory body that could regulate drug prices. The void when it comes to data has enormous consequences and whole sectors of the market profit from this lack of transparency. So little is known about the values and costs of many medications that there is no way of knowing if a patient is getting ripped off or getting a great deal. It’s a mystery. The drug companies make their prices, and the market bears them.
There are many ways that data is being used to influence the way the market functions now. We have much more data and analysis about baseball players, than we do about pharmaceuticals and how we pay for them. There is a stampede of tech driven initiatives that are trying to fix these inequities. Technology is the only scalable intervention that can truly revolutionize care and bring down costs. RxREVU is poised to provide a data driven platform that lowers prescription costs across the marketplace, from the big insurance companies to the solitary patient.