Managed Healthcare Executive asked experts to identify Trump’s top priorities within the plan, and how those priorities could affect managed care.
The Trump Administration Blueprint to lower drug prices and reduce out-of-pocket costs, known as American Patients First, contains several different elements.
At a high level, some of the key focus areas, according to Maulik Bhagat, a managing director in the healthcare practice of AArete, a global consultancy specializing in data-informed performance improvement, are:
Lindsay Bealor Greenleaf, director at healthcare advisory firm ADVI Health, says of most note to managed care, the Administration seeks comment on how the elimination of the copay coupon exclusion from Average Manufacturer Price (AMP) and Medicaid Best Price determinations would affect drug prices. “If this policy change is enacted, manufacturer discounts provided through copay coupons would be treated the same as other discounts and rebates, and thereby serve to lower a drug’s AMP and Best Price,” she says. “This policy change could effectively eliminate the financial incentive to provide copay coupons.”
Also, notable for the commercial market, the blueprint seeks comment on policies that could be revised to promote greater adoption of value-based arrangements. “Additionally, the proposed changes to the rebating process for federal programs could influence list prices and thereby affect commercial contracting,” Bealor Greenleaf says.
Impact on Healthcare Stakeholders
Some of the reforms under consideration would have implications across many healthcare stakeholders, including health plans and providers, according to Megan Olsen, senior manager, Avalere Health, an Inovalon Company. “Notably, given the wide spectrum of policies being considered, there may be both risks and opportunities within the blueprint for any particular stakeholder,” she says. “For example, while some of the initiatives may provide health plans with additional tools or flexibilities to manage the drug benefit, the potential changes to rebating practices could cause some disruption. The reforms around physician-administered drugs (i.e., Part B drugs) may create additional burdens for providers in terms of patient access (e.g., step therapy), while some providers may benefit from a new third-party coordinating the management and distribution of these products.”
Rebates available to managed care companies could be reduced and potentially companies could be mandated to pass them on to patients, especially where there is patient cost sharing involved, according to Bhagat. “At the same time, it could give them more freedom and flexibility in negotiating lower drug prices, influencing utilization based on use of biosimilars and generics to reduce their costs, etc. It will also result in increased value-based contracts, now incorporating drug spend and pricing.”
If the U.S. healthcare system could get more competition going while reducing or eliminating foreign governments from free riding on the current system, managed care would benefit, according to 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. “Right now most of the underlying cost of proprietary drugs is funded by the U.S.,” he says. “Managed care would need to get more of this underlying cost pushed back to the free riders in order to get under control.”
Plan of Action
At this stage, Bhagat believes, healthcare executives should prepare for some change, and keep strategies and options on hand. “There is skepticism that the measures thought about per the [blueprint] aren’t comprehensive enough to actually bring down drug prices and impact the profits pharma companies and PBMs are raking in,” Bhagat says. “Also, from a healthcare payer and provider standpoint, there is some impact likely through rebate reductions, formulary choices, 340B discount reductions, etc.-but these don’t really impact pharma companies and PBMs materially. It is likely that the real impact on payers and providers will also be limited.”
Experts say there are six things all healthcare executives should know about the blueprint:
Healthcare executives are the point people on reforming the cost structure of all pharmaceuticals, and it’s time to step up, Sarich says. “The structure of the pharma industry from manufacturer to patient is full of middlemen that get a cut of the pricing. The executives need to understand that the kickbacks and rebates have to end. These leaders need to act as watchdogs over the process, and not beneficiaries. This will be a hard reality to change.”