Business Group Makes Price Recommendations for Specialty Drugs

As specialty drugs become more prevalent, the costs associated with them must be lowered, according to a report from the National Business Group on Health (NBGH).

Their report, “Policy Recommendations to Promote Sustainable, Affordable Pricing for Specialty Pharmaceuticals” details how and why specialty drugs are increasing in price, and how those prices might be more effectively managed in the future. NBGH is a non-profit, Washington, DC-based organization devoted to representing large employers’ perspective on national health policy issues.

Specialty drugs are rapidly becoming the new normal. According to the report, in 1990, only 10 specialty drugs were on the market, but there are more than 300 today. In 2016, 19 drugs approved by the FDA could be considered specialty drugs. 

Steve WojcikThe NBGH report stresses the need for more reasonable drug pricing, and, perhaps most importantly, the need for more competition. Employers are an important part of that. The report cites a 2014 survey of large employer groups, and concluded that, “more than half (58%) had an understanding of site-of-service price differences related to specialty pharmaceuticals, but only 19% reported that they were able to steer patients toward high-value options.”

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Steve Wojcik, Vice President of Public Policy at NBGH in Washington and one of the report’s authors, told Drug Topics that he hopes these policy changes will lead to more reasonable pricing. 

The NBGH’s plan

To combat the lack of knowledge and government policies that contribute to rising costs, the report made five specific recommendations that the authors believe would decrease costs and increase patient/employer satisfaction.

They are:

• Remove uncertainties around prices and implement pricing and reference pricing:

• The report recommends a move from the fee-for-service model to the value-based payment (VBP) arrangement, which is more closely connected with patient outcomes than a flat fee for drugs. Under a VBP, payments are tied to improved patient outcomes by means of tying reimbursement amounts to drug-associated patient outcomes and/or improvements in quality of life. These VBPs include structures such as risk-sharing agreements, value frameworks, indication-specific pricing, and reference pricing.

• Limit the reach of Medicare Part D protected classes: The report suggests changing rules regarding Medicare Part D. Specifically, the report advocates altering the rule requiring drug classes covering all disease states with at least two distinct drugs in each class. This will affect prices by allowing drug makers to manipulate drug prices. Eliminating these, it said, could decrease prices in these categories by 9% to 11%.

• Eliminate “perverse” payment Incentives under Medicare Part B: according to the report, the Medicare Part B business model “creates a three-part, cyclical incentive for prices to continuously rise.”

• Encourage greater use of biosimilars: this includes the need for the FDA to finalize its rule on biosimilars soon, and for an end to the uncertainty in the regulatory environment surrounding biosimilars and other generics.

• Reform patent and exclusivity protocols: this could be accomplished through steps such as reducing market exclusivity for biologics from 12 years to 7 years and by putting policies into place designed to limit patent abuses.

What this means for the pharmacist

It isn’t just profits that are on the line for pharmacies, however. Wojcik also stressed that these policy changes, if enacted, would result in greater patient satisfaction and ease the burden of payment. This would lead to better health outcomes, because more patients would follow through with their treatment.

Related article: Biosimilar: Coming to a Pharmacy Near You

When asked about the pharmacists’ role in educating patients, Wojcik mentioned that, though pharmacists have less of a role in specialty pharmacy, it was paramount for pharmacists to be educating their patients, and the broader public, about biosimilar drugs, since there is a large gap in patient understanding. Employers, according to Wojcik, are also concerned about misinformation regarding specialty pharmaceuticals. The better informed people are, the more they will make reasonable choices if a biosimilar can be substituted for a brand biologic. Broader acceptance of these drugs is crucial for increasing competition in the market.

When asked how likely it is that these policies will be accepted, Wojcik was optimistic. He said he hopes that the FDA’s rules regarding biosimilars will be finalized soon, and is encouraged by the outlook in the future.

“There’s definite public scrutiny” regarding drug companies, he says. “Companies will need to be more focused on customers' ability to afford medications and will have to justify their prices [to them].”