January 23, 2017
The Fifth Annual Health Law Year in P/Review symposium featured leading experts discussing major developments during 2016 and what to watch out for in 2017. The discussion at this day-long event covered hot topics in such areas as health policy under the new administration, regulatory issues in clinical research, law at the end-of-life, patient rights and advocacy, pharmaceutical policy, reproductive health, and public health law.
The Fifth Annual Health Law Year in P/Review was sponsored by the Petrie-Flom Center for Health Law Policy, Biotechnology, and Bioethics at Harvard Law School, Harvard Health Publications at Harvard Medical School, Health Affairs, the Hastings Center, the Program On Regulation, Therapeutics, And Law (PORTAL) in the Division of Pharmacoepidemiology and Pharmacoeconomics at Brigham and Women’s Hospital, and the Center for Bioethics at Harvard Medical School, with support from the Oswald DeN. Cammann Fund.
Learn more on our website: http://petrieflom.law.harvard.edu/events/details/5th-annual-health-law-year-in-p-review
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Ameet Sarpatwari, "Drug Pricing and Cost"
1. Health Law in P/Review
Drug Pricing and Cost
Ameet Sarpatwari, J.D., Ph.D.
Instructor in Medicine, Harvard Medical School
Assistant Director, Program On Regulation, Therapeutics, And Law (PORTAL),
Division of Pharmacoepidemiology and Pharmacoeconomics,
Department of Medicine, Brigham and Women’s Hospital
January 23, 2017
asarpatwari@bwh.harvard.edu
2. Prescription Drug Spending in the US
Net spending rose 20% between 2013-2015 to $457 billion
Outpaced a 6% increase in aggregate healthcare spending
Constitutes 19% of employer-based insurance benefits
International per capita comparisons
US: $858
Average of 19 industrialized countries: $400
-Keehan et al., Health Aff (2015).
-Kaiser Family Foundation (2015).
-Wall Street Journal (2015).
-OECD (2015).
3. Consequences of High Drug Prices
More patients have coverage due to Medicare drug benefit and
the ACA (for now), but cost-containment strategies have shifted
drug expenses onto patients’ shoulders
States facing higher drug prices have cut back on other services
or have imposed barriers to medication access within Medicaid
25% of patients in 2015 reported that they or another family
member did not fill a prescription in the last year due to cost
78% of Americans favor capping what drug companies can charge
Kaiser Family Foundation (2016).
Kaiser Family Foundation (2016).
Barlas. PT (2016).
4. Explanation for High Drug Prices
We are seeing surging drug prices because we
allow pharmaceutical companies to charge
whatever the market will bear, and at the
same time permit strategies that undercut
competition or hinder payors’ abilities to
provide counterweights.
6. Modern Bully Pulpit: Twitter
Lockeed Martin: December 12, 2016
“The F-35 program and cost is out of control. Billions of dollars
can and will be saved on military (and other) purchases after
January 20th.”
Drugs?
Press Conference: January 11, 2017
“Our drug industry has been disastrous.”
7. CMS Negotiation of Medicare Part D Prices
Trump
Challenges
Legislation
Medicare Modernization Act: Republican-led Congress
Meaningful savings
Latitude to make formulary choices
CBO: “A negligible effect on federal spending”
Leverage: prior authorization, step therapy
8. Negotiating Restrictions: Government Payors
FDA: no authority to regulate drug prices
Medicare (40M) cannot negotiate drug prices
2006 Medicare Modernization Act
HHS Secretary cannot
“interfere with the negotiations”
“institute a price structure”
Limits on formulary adjustments
Medicaid (60M) must generally cover all FDA approved drugs
Pays acquisition costs, gets rebate
Individual states may negotiate supplemental rebates
VA negotiates directly with manufacturers
Prices 40% below those paid by Medicare Part D plans
VA price excluded from Medicaid rebate calculation
9. Other Possible Federal Reform and Realities
Drug (re)-importation
Comparable safety and efficacy standards in Canada, EU, Japan, etc.
Authority exists for HHS Secretary to import from Canada
Problem: fail to address systemic deficiencies
Government patent use and march-in rights
Recent attempt: enzalutamide (Xtandi)
Problem: no indication of willingness to exercise
Targeting extensions of market exclusivity
Patents: reviewing policies for novelty and non-obviousness
CREATES Act: required sample sharing for bioequivalence testing
Pay-for-delay: non-cash based deals
10. State Policies
States as engine for reform
“If the federal government doesn’t tackle drug pricing fast enough,
participants agreed, state governments would.”
Disclosure: Consultancy, National Academy for State Health Policy
Politico Working Group (2016).
11. Transparency
Past focus: research and development costs for high-priced drugs
Vermont: An Act Related to Prescription Drugs
Concerns
Shift away from value-based pricing
Leverage
Possible utility: informing better decision-making
Sources of high drug costs: drug manufacturers vs. PBMs
Savings passed on by 340(b) programs
Utilization of drug coupons
Possible legal challenges
Trade secrets: regulatory takings?
ERISA: PCMA v. Gerhart (8th Cir. 2017)
12. Public Utility Model
Prescription drugs = critical goods
Drug price review board
Review drugs with high launch prices or price increases
Conduct open hearings
Collect data from drug manufacturers
Commission studies
Approve, reject, tax, or set
E.g., Governor Cuomo proposal: mandatory Medicaid rebates
Legal hurdle: scope of federal preemption
BIO v. District of Columbia (Fed. Cir. 2007)
13. Consumer Protection: Unfair Trade Practices
Nebulous definition: immoral, unfair, causing substantial harm
Predatory pricing
Forcing patients to forgo treatment altogether or partially
E.g., pyrimethamine (Daraprim)
Case study: sofosbuvir (Sovaldi)
Massachusetts
Chapter 93A Section 2
Attorney General Healey: threat to sue
Skepticism: “I think she looses in Massachusetts and
any court in the country.” –Prof. Erik Gordon
Result: negotiated rebate for MassHealth