Negotiate Drug Prices Research Articles

AMA Calls for Ban On Advertising Directed at Consumers

AMA Calls for Ban On Advertising Directed at Consumers

‘Crony Capitalism’ And The ACA

‘Crony Capitalism’ And The ACA

The Research on Price Strategy to Incent China's Drug Innovation

In the past few years, there has been a rapid development in China's generic drug market, while the new drug innovation performance is not outstanding. As an effective means to achieve multiple policies for the government, drug price not only maintains the new health reform target of drug accessibility and lower drug costs, but also plays a crucial role in drug innovation incentives. Through the analysis of current situation of Chinese medicine manufacturing drug innovation and existing problems, the authors discussed the role of drug price incentive compensation mechanism in innovation, and proposed the following price incentive strategy, using the pharmacoeconomics evaluation system, into the compensation directory, setting up the mechanism of drug price negotiations and by means of controlling medical costs.

Proposal for San Francisco to negotiate drug prices makes waves

Proposal for San Francisco to negotiate drug prices makes waves

How Medicare Could Get Better Prices On Prescription Drugs

Congress may reform drug pricing policies under Medicare Part D as part of a larger health reform effort. Currently, the "noninterference" provision prevents the government from negotiating drug prices on behalf of Medicare Part D prescription drug plans. Commonly considered reform proposals borrow ideas from Medicaid, either through returning dual eligibles to Medicaid drug pricing or by imposing mandatory rebates across the Part D population. We examine a menu of other options, including value-based pricing; expansion of generic and therapeutically equivalent substitution; increased formulary diversity; importation; and limited antitrust waivers. These latter options may reduce federal spending without direct government price negotiations.

Colorectal Cancer Treatment Costs Vary Widely

The cost of treating colorectal cancer varies widely, with newer, life-extending therapies sometimes costing tens of thousands of dollars more than older agents, according to a study led by a team of researchers in the Duke Comprehensive Cancer Center. “The total cost of chemotherapy to treat colorectal cancer may differ by as much as $36,999 per patient, depending upon the regimen,” says Dr Gary Lyman, MD, an oncologist and health outcomes researcher at Duke, and senior investigator on this study. “We know that some therapies are more promising and effective, in general, than others, and cost variation raises many questions about what kind of care patients are receiving and whether this economic burden is matched by significant clinical advancements, especially with regard to quality of life.” The findings appeared in the November 2008 issue of the American Journal of Managed Care. The study was funded by the Duke Comprehensive Cancer Center's Health Services and Outcomes Program. The researchers identified the 8 most commonly prescribed treatment regimens within a cohort of >400 patients who were treated at 115 ambulatory care centers across the United States. Regimens included supportive agents often needed to combat treatment-related side effects such as nausea, and varied from an older chemotherapy cocktail known as 5-fluoroucil and leucovorin calcium, to newer therapies that include the use of bevacizumab, commonly known as Avastin. Bevacizumab was approved by the US Food and Drug Administration in 2004 for the treatment of colorectal cancer, and works by choking off a tumor's blood supply. The introduction of life-extending therapies for colorectal cancer over the past several years, which can in some cases almost double survival time, has led to a 340-fold increase in the cost of chemotherapy, Lyman says. The burden of this increase is felt by insurers, by patients and their families, and ultimately by taxpayers, he adds. “For many of these colorectal cancer patients, depending on how advanced their disease is, we may be talking about buying a few months,” Lyman points out. “And these rapidly increasing costs have raised ethical questions about whether such sums of money should be dedicated to treatments that may modestly prolong life but not offer increased cure rate.” Lyman says the new findings may suggest that new strategies should be sought to limit the economic impact of these newer treatment regimens, including appealing to drug companies to reassess their pricing policies and relaxing prohibitions on the federal government negotiating drug prices. There is also concern, he notes, that some patients, especially in smaller, rural areas, may have limited access to care or be receiving older, “out-of-date” therapies because of either the patient's or the practice's inability to pay for the newer agents. “At the same time, it may be prudent for researchers and clinicians to search for improved prognostic and predictive markers that may permit more selective or targeted application of expensive therapies in patients who stand to derive the most clinical benefit from them,” says Lyman. “Such strategies may provide not only the most effective but also the most cost-effective use of these new agents for patients with colorectal cancer.” See “Variation in the cost of medications for the treatment of colorectal cancer,” Am J Manag Care 2008;14:717–725.

What if the Federal Government Negotiated Pharmaceutical Prices for Seniors? An Estimate of National Savings

The government is prohibited from directly negotiating drug prices for Medicare Part D, resulting in substantial policy debate. However, the government has an established mechanism for setting prices with pharmaceutical manufacturers for certain other federal programs--the Federal Supply Schedule (FSS). To estimate how much could be saved nationwide if prices equivalent to the 2006 FSS were achieved for the top 200 drug formulations dispensed to seniors. Cross-sectional analysis of drug utilization patterns and costs from the nationally representative Medical Expenditure Panel Surveys (MEPS), 2003-2004, and the 2006 FSS. Seniors who filled a prescription for any of these common drugs (n = 6,135 individuals). Prescription expenditures were obtained from MEPS, and a price/unit was calculated in 2006 dollars. This price/unit was compared to the 2006 FSS, and a savings/unit was calculated and summed across the observed units dispensed in MEPS. The potential annual savings with FSS prices would be $21.9 billion [95% confidence interval (CI), $21.1 billion to $22.8 billion]. If FSS prices were substituted for only the top ten drugs, the annual savings would be $5.9 billion (95% CI, $5.7 billion, $6.1 billion). Extension of existing price setting mechanisms to Medicare could save tens of billions of dollars if prices similar to those already achieved by other federal programs could be reached. Whether or not this is a political or economic possibility, the magnitude of these savings cannot be ignored.

Toward A Rational, Value-Based Drug Benefit For Medicare

A major challenge facing Congress is what changes, if any, to make to Medicare Part D. With the apparent failure of the Democrats' attempt to remove the prohibition on government intervention in drug price negotiations, the party's next steps are unclear. One suggested option is a plan administered by the Centers for Medicare and Medicaid Services (CMS), to compete with private plans and facilitate a transition to a more rational structure. We discuss issues surrounding the design of such a mechanism and how it might provide a transition toward a more rational and sustainable drug benefit in the longer term.

Reducing uncertainty in health-care resource allocation

A key task for health policymakers is to optimise the outcome of health care interventions. The pricing of a new generation of cancer drugs, in combination with limited health care resources, has highlighted the need for improved methodology to estimate outcomes of different treatment options. Here we introduce new general methodology, which for the first time employs continuous hazard functions for analysis of survival data. Access to continuous hazard functions allows more precise estimations of survival outcomes for different treatment options. We illustrate the methodology by calculating outcomes for adjuvant treatment of gastrointestinal stromal tumours with imatinib mesylate, which selectively inhibits the activity of a cancer-causing enzyme and is a hallmark representative for the new generation of cancer drugs. The calculations reveal that optimal drug pricing can generate all win situations that improve drug availability to patients, make the most of public expenditure on drugs and increase pharmaceutical company gross profits. The use of continuous hazard functions for analysis of survival data may reduce uncertainty in health care resource allocation, and the methodology can be used for drug price negotiations and to investigate health care intervention thresholds. Health policy makers, pharmaceutical industry, reimbursement authorities and insurance companies, as well as clinicians and patient organisations, should find the methodology useful.

Negotiating Drug Prices

Passage of a bill on January 12 by the House of Representatives that would allow the government to negotiate with pharmaceutical manufacturers on Medicare's drug prices is a shot across the bow of the White House, signaling that Democrats intend to run Congress differently.

Medicare Drug-Price Negotiation Faces Uncertain Future

Back to table of contents Previous article Next article Government NewsFull AccessMedicare Drug-Price Negotiation Faces Uncertain FutureMark MoranMark MoranSearch for more papers by this authorPublished Online:2 Feb 2007https://doi.org/10.1176/pn.42.3.0002The House of Representatives approved a bill last month allowing the federal government to negotiate with pharmaceutical companies over the price of drugs offered in the Medicare Part D prescription drug program.The bill, which was approved by a vote of 255-170, is expected to have a much harder time in the Senate. At press time, APA Director of Government Relations Nicholas Meyers told Psychiatric News, “It does not seem likely that the House bill will pass the Senate without revisions.”He noted that Senate Finance Committee Chair Max Baucus (D-Mont.) has“ expressed concerns about the legislation as it is now written and has called for some compromises.”The bill, the Medicare Prescription Drug Price Negotiation Act of 2007 (HR 4), states that the secretary of Health and Human Services (HHS) “shall negotiate with pharmaceutical manufacturers the prices (including discounts, rebates, and other price concessions) that may be charged to prescription drug plan sponsors and Medicare Advantage organizations for covered Part D drugs for Part D–eligible individuals who are enrolled under a prescription drug plan or under [a Medicare Advantage] plan.”The inability of the government, representing millions of Medicare patients, to negotiate for lower prices has been a source of contention since passage of the Medicare prescription drug program in 2003. Opponents of the legislation claimed then that by prohibiting the government from negotiating over price, it paved the way for a bonanza for the pharmaceutical industry.APA has not taken a position on the bill, though in the run-up to its passage, it continued to advocate for access to psychiatric medications, whatever the outcome of the House vote. In a January 12 letter to House Speaker Nancy Pelosi (D-Calif.) and other House leaders, APA Medical Director James H. Scully Jr., M.D., urged House members to ensure that the legislation“ does not carry the unintended consequence of limiting beneficiary access to important medications.”Meyers told Psychiatric News that the drug-pricing discussions are part of a larger debate about access to care.“Access to the full range of medications psychiatrists use to treat their patients is also critical, which is why we have worked hard with the National Alliance on Mental Illness, Mental Health America, and others to ensure that the Part D implementation did not result in potentially catastrophic interruptions in, or abrupt switching of, psychotropic medications,” he said.He added that Scully's letter was intended to remind House leaders that the government has thus far protected psychiatric drugs in the Medicare prescription drug program and that enactment of drug-negotiation legislation does not change the need for continued protection.“We also recognize that the best medications in the world aren't going to work if patients can't afford them, which is why we joined with other medical specialties and patient groups in actively supporting the Partnership for Prescription Assistance,” Meyers said. “The PPA doesn't solve the drug-pricing debate, but it does bring immediate help to patients who have trouble paying for their medicine.”The Partnership for Prescription Assistance offers a single point of access to more than 475 public and private patient-assistance programs, including more than 150 programs offered by pharmaceutical companies. It is supported by member companies in Pharmaceutical Research and Manufacturers of America (PHRMA) and medical and health care advocacy organizations, including APA.Predictably, the Bush administration and the pharmaceutical industry did not respond favorably to news of the bill's passage.HHS Secretary Mike Leavitt noted in a statement that the Congressional Budget Office had determined that the legislation would not result in lower drug prices.“I am disappointed that a majority of House members discounted the overwhelming success of the Medicare Part D program over the last year and voted to pass HR 4,” Leavitt said. “Despite statements from the nonpartisan Congressional Budget Office and the independent Centers for Medicare and Medicaid Services' actuaries that this legislation would not result in savings, this legislation was hastily adopted without hearings in the House. We hope that the Senate will reflect on the evidence and resist the temptation to undermine a program that is working well for millions of people with Medicare.”The Pharmaceutical Care Management Association, in a statement released after the House action, said passage of the bill “would take the Medicare drug benefit in the wrong direction and potentially shift additional costs to private and public payers, including Medicaid and the Veterans Administration.”The text of HR 4 can be accessed at<http://thomas.loc.gov/cgi-bin/Thomas> by searching on the bill number. Information about the Partnership for Prescription Assistance is posted at<www.pparx.org/Intro.php>.▪ ISSUES NewArchived

Was Part D a Giveaway to the Pharmaceutical Industry?

The Medicare Modernization Act (MMA) prohibited the government from negotiating drug prices, a feature that the act's critics characterize as a giveaway to the drug industry. Instead of the government negotiating to keep prices down, the act relies on competition among drug companies to obtain business from private insurers; yet, competition cannot be effective when there are no close clinical substitutes. In the past few years, the rate of introduction of first-in-class drugs has been low; if this continues, the prohibition on negotiation may be only a minor problem. However, if the prior rate of introduction resumes, the government may find itself with unacceptable expenditure levels.

Price Negotiation Could Be Part Of Democrats' Part D Reform

Back to table of contents Previous article Next article Government NewsFull AccessPrice Negotiation Could Be Part Of Democrats' Part D ReformRich DalyRich DalySearch for more papers by this authorPublished Online:5 Jan 2007https://doi.org/10.1176/pn.42.1.0004bWith their gain of control of both houses of Congress, Democrats plan to move forward with a plan to allow the federal government to negotiate drug prices in the year-old Medicare Part D program, a change that could impact the substantial number of beneficiaries with mental illness.During the run-up to the 2006 mid-term elections Democrats campaigned on a “ Six for '06' ” platform of legislative goals they wanted to achieve. One goal was to “fix” the Medicare drug program by having the federal government negotiate lower drug prices and “ending wasteful giveaways to drug companies and HMOs,” according to Democratic campaign literature.In December congressional Democrats renewed their pledges to have the Department of Health and Human Services (HHS) negotiate directly with drug companies for reduced prices in Medicare Part D. Incoming House Speaker Nancy Pelosi (D-Calif.) went even further in mid-December when she said she would push legislation that would require—not just allow—HHS to negotiate directly with pharmaceutical companies on medication prices.The Medicare drug benefit is administered through various private plans, some of which are freestanding prescription drug plans, such as AARP's, and others that are administered through HMOs and other kinds of managed care plans.After the election handed Democrats control of both chambers of Congress, the Centers for Medicare and Medicaid Services (CMS) revealed that the cost of the Medicare prescription drug benefit would be about $30 billion in 2006, or 30 percent less than its previous estimate of $43 billion. The estimated long-term costs through 2015 also dropped to $729 billion from $926 billion. The drop, according to CMS, is due to lower-than-expected increases in prescription drug prices and the effect of competition among Part D plans.In addition, some Part D plans say they will offer enhanced benefits in 2007, including elimination of cost sharing for generic medications.Unintended Negative EffectsOpponents of the expanded government role have highlighted some evidence that such a move could have unintended negative effects. One report,“ The Human Cost of Federal Price Negotiations: The Medicare Prescription Drug Benefit and Pharmaceutical Innovation” by the Manhattan Institute for Policy Research, concluded that mandated federal price negotiations would substantially reduce the number of new drugs brought to the market each year because drug manufacturers would have less profit to reinvest in research.However, surveys have found public support for government negotiations to lower prices within the program, including a November Kaiser Family Foundation national poll that found substantial majorities of Democrats (92 percent), independents (85 percent), and Republicans (74 percent) support allowing the government to negotiate Medicare drug prices. Overall, 85 percent favored such a move, with 65 percent strongly favoring it and 20 percent somewhat favoring it.Any changes in the prescription benefit could have a large impact on beneficiaries with mental illness. Nearly 40 percent of low-income beneficiaries, or about 2.5 million people who qualified for both Medicare and Medicaid—so-called dual eligibles, have a cognitive or mental impairment, according to a MedPAC, a research program of the federal government.Some Prices Already NegotiatedSupporters of federal government price negotiations point out that the government already negotiates drug prices under Medicaid and the Department of Veterans Affairs and pays substantially less overall for the same drugs than do Part D beneficiaries. Critics of price negotiations, including the Bush administration, have pointed out that those price negotiations have resulted in a choice of drugs that is more limited for beneficiaries in those programs than for most Medicare beneficiaries.Due to the Bush administration's strong opposition to federal price negotiation and the narrow margins by which Democrats control Congress, some congressional officials said that Congress may stop short of mandating government negotiation of all drug prices in Medicare and instead direct the government to enter the Plan D market as another buyer alongside the existing private plans.Some advocates of greater change to the prescription drug program believe that major change will not happen unless the 2008 presidential election winner makes that a national priority.More information on the Part D program is posted at<www.mentalhealthpartd.org>.▪ ISSUES NewArchived

Part D ‘Doughnut Hole’ Could Weigh into the Election

Part D ‘Doughnut Hole’ Could Weigh into the Election

Rational and irrational factors in the dynamics of pharmaceutical expenditure and in the drug price negotiation

Rational and irrational factors in the dynamics of pharmaceutical expenditure and in the drug price negotiation

Conference Puts Spotlight On Medicare Part D Benefit

Conference Puts Spotlight On Medicare Part D Benefit

Beneficiaries Find Medicare Drug Benefit Wanting

Beneficiaries Find Medicare Drug Benefit Wanting

The drug budget silo mentality: the Dutch case.

This article provides a broad outline of developments in the Dutch health-care policy related to the costs, budgeting, and reimbursement of pharmaceuticals. In-hospital drugs costs are part of hospital budgets, whereas for the main part of costs, nonhospital drugs, no strict budget exists. The government sets a goal for the annual cost increase of nonhospital drugs, but has only limited means to enforce that goal. Two measures were implemented to reduce drug prices: a reference price system and a price law. Both measures had a modest and temporary impact on drug prices during the 1990s. In limiting the utilization of drugs, the package of reimbursed drugs has been restricted. This led to a shift from public to private costs and possible substitution of cheaper not reimbursed drugs by more expensive reimbursed drugs. An electronic prescription system was implemented to encourage rational prescription. Although 70% of the Dutch general practitioners reported to use the system, the estimated savings on drug costs appear to be modest and far less than expected. The use of economic evaluation for reimbursement decisions will increase. From 2005 onward a pharmacoeconomic study and budget impact analysis is formally required for new nonclustered drugs seeking a premium price. Furthermore, in the future the health-care insurers will get a more prominent role in limiting the costs of drugs and enhancing the efficient use of drugs within their overall budgets. Health-care insurers may choose which drugs to purchase and reimburse and they can negotiate drug prices with the pharmaceutical industry, wholesalers, and local pharmacists.

Pharmacoeconomic Evaluation in Japanese Pharmaceutical Companies

In Japan, since August 1992, materials derived from pharmacoeconomic evaluations have been accepted at the time of new drug price negotiation. Pharmaceutical companies generally consider the materials they submit to be private information. Moreover, it is unclear how the government uses these materials in its policy decisions. In this paper, for the purpose of understanding the present status of pharmacoeconomic evaluation in Japanese pharmaceutical companies, the results from an investigative interview of selected employees at 22 pharmaceutical firms are outlined. An analysis of how the submitted economic data are reflected in drug prices is provided. This analysis clarifies that in recent years pharmacoeconomic evaluations have been submitted for most new pharmaceutical products. A clear connection between the submitted economic materials and the issuing of premiums to innovative or useful products, however, was not found. It is concluded that there is an urgent need to construct a system in which the r...

Government and companies to negotiate drug prices in Italy

Government and companies to negotiate drug prices in Italy