Top Challenges in the U.S. Drug Market

September 24, 2018

Managed Healthcare Executive asked experts to weigh in on Trump’s new blueprint to tackle drug market challenges. Here’s what they said.

Healthcare executives should view

-The Trump Administration Blueprint to lower dug prices and reduce out-of-pocket costs-as well as the subsequent flurry of drug pricing administrative actions across Medicare Part B and Part D, as a “clear sign that the Administration is serious about pursuing significant policy changes across payers,” according to Lindsay Bealor Greenleaf, director at healthcare advisory firm ADVI Health.

Drug pricing is huge area of reform, agrees John Sarich, an industry analyst and vice president of strategy at VUE Software, a firm that specializes in innovating and automating business processes for the insurance industry.

“The Administration is looking to bring more competition into the drug market. There are generics whose cost is somewhat controlled by competition, but there are also many proprietary and orphan drugs that have virtually uncontrolled costs,” Sarich says. “This is a problem that the Administration is hoping to address by bringing competition into the fray.”

Specifically, he says, the Administration is looking to limit the protections of intellectual property, he says. At the same time, it wants to reinvent the way that drugs are brought to market. This process, Sarich says, “clearly needs to be faster and more open.”

Prescription drug pricing reform is a top priority of President Trump and HHS Secretary Azar, according to Megan Olsen, senior manager, Avalere Health, an Inovalon Company. “Within the topic of drug pricing, the administration is particularly focused on achieving lower drug list prices and reduced out-of-pocket costs for patients,” Olsen says.

As part of advancing toward these goals, the administration is primarily targeting reforms that would enhance drug management and negotiation in the system-essentially providing stakeholders with additional tools to manage drug costs, she says.

“We have already seen some early action from the administration that aligns with this focus on enhancing management and negotiation,” says Olson. For example, she points to the administration recently announced that Medicare Advantage plans will be able to require step therapy for Part B drugs and that Part D plans can setup their drug formularies on an indication-specific basis, Olsen says.

Top Four Challenges

In the Blueprint, HSS identifies four main challenges in the drug market:
• High list prices for drugs;
• Seniors and government programs overpaying for drugs due to lack of the latest negotiation tools;
• High and rising out-of-pocket costs for consumers; and
• Foreign governments free-riding off of American investment in innovation.
The May release of the Blueprint was accompanied by a Request for Information (RFI), in which HHS requested stakeholder feedback on a range of questions related to the drug pricing reform.

“President Trump and HHS Secretary Azar have established drug pricing reform as a top priority of the administration, and the Blueprint can be thought of as the playbook,” says Olsen.