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Branded Drug Report 2023: John O’Brien, NPC

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A contentious midterm election is behind us, and while pundits and other experts argue about what the results mean, those of us who deeply care about sound health care policy can hope for a new year where solid evidence and the quest for transparent information matters at least as much as political rhetoric.

John O'Brien

John O’Brien

We’ve come off a year where that was largely not the case. I’m always an optimist, though, and the issues that are most prominent for this coming year offer at least the chance that policy makers may actually dig into data about what’s working and what’s not in our drug pricing system.

The health care agenda in Washington and in state capitals next year will be busy, and it includes what could be a thorough examination from the Federal Trade Commission on the impact of pharmacy benefit managers on the drug supply chain and potentially a greater focus from Congress on who truly benefits from the 340B discount program.

And with the Inflation Reduction Act now law, policy makers and regulators are getting more information about the law’s actual impact and serious discussions will soon be taking place with the Centers for Medicare and Medicaid Services (CMS) about the importance of sound data as it begins to implement the law’s drug price controls.

The FTC’s ­exploration of PBMs

Nearly 80% of all prescription drug claims in the United States are processed by CVS Health, Express Scripts and OptumRx. Each of these vertically integrated companies is comprised of an insurer, PBM, a group purchasing organization, a specialty pharmacy, along with other related businesses. Add in the next three PBMs — Humana, MedImpact and Prime Therapeutics — and that claims number hits 97%.

These massive organizations have created a complex and increasingly opaque ecosystem with significant power over patient access, sites of care/dispensing and pricing. Within these systems, the PBMs hold much of the power to demand higher rebates and fees from drug manufacturers to gain access to their covered lives.

PBMs also use numerous tactics that make a direct impact on pharmacies, including steering patients towards PBM-affiliated pharmacies. These tactics disrupt patient care; jeopardize pharmacy monitoring, care control and clinical management; and lead to poor patient outcomes.

The system is full of incentives to help these middlemen, creating consistent revenue streams for their organizations while pushing up what patients pay at the pharmacy counter. What’s missing are incentives to get more medicines to more patients.

The FTC’s ongoing review of PBMs, coupled with the likelihood of increased attention from Congress and several state legislatures, means that 2023 will include a serious discussion of policies and proposals that curb the excesses of PBM actions.

Pulling back the curtain on a program’s explosive growth

The new year also ought to bring a more transparent discussion about the benefits of 340B, a 30-year-old discount drug program that was designed to help ensure that patients in underserved communities had access to medicines.

The program has become the second-largest federal prescription drug program behind Medicare Part D, and its growing spending has become a major boon for the bottom line of hospitals. However, it’s very difficult to get the information that could properly measure whether 340B delivers on its intended purpose.

As a pharmacist, I’m aware of how some hospitals and covered entities use the difference between the discounts and the list price to subsidize needed health care services. Other 340B organizations along the supply chain are also likely doing the same. But we don’t know for sure because the program lacks even the simplest of transparency requirements.

We do know from press accounts in 2022 that 340B profits played a key role not in providing care to underserved communities but in helping health systems generate revenue that they sometimes plowed into hospitals in affluent communities.

It is far past time to have an honest conversation about the 340B program, which appears to have grown far beyond its intended purpose. Protecting charity care can coexist with measuring and ferreting out the profiteering the 340B law has enabled, and an important first step is more transparency into how 340B works and who benefits the most.

From politics to regulation: the next vital step

Congress passed the Inflation Reduction Act in 2022 amidst an atmosphere where politics prevailed over sound evidence-based policy making. The task of implementing the drug price controls in the Inflation Reduction Act now falls to CMS, which is just beginning its work on the new law.

The new law has very few specifics for just how CMS should take on that task, so it should be everyone’s hope that the agency does the job thoughtfully and deliberately. Having previously worked at CMS and at its parent, the Department of Health and Human Services, I know that many of the career people will seek to do exactly that.

One key area to watch will be how CMS evaluates a drug’s price and considers its value to patients and society at large. Value assessments are no easy task, and that is why CMS should proceed cautiously, knowing that many assessments make assumptions based on evidence that is sometimes incomplete or immature.

Unfortunately, health policy and politics are often intertwined. Ideally, CMS will approach IRA implementation in a way that balances affordability and innovation — as opposed to simply scoring political points. Any framework, or frameworks, CMS uses should have models that are transparent, so stakeholders can reproduce and understand them. This will enable a more fully informed dialogue about the agency’s decisions.

Impact on the patient is what should matter — always

The above issues are hardly the only ones that will impact the health care landscape in 2023. Inflation, which usually lags in health care, could hit providers and insurers in a major way next year. Historically, payers respond to inflation within the underwriting cycle by raising premiums, reducing benefits, and increasing deductibles, co-payments and coinsurance. It is my hope that policy makers take a serious look at the impact of rising out-of-pocket costs and the impact that benefit trickery, like co-pay accumulators, maximizers and alternative funding models, has on health outcomes, especially among the sickest beneficiaries.

In these issues and all others, the dialogue should be informed by solid evidence and transparent data. Most importantly, all of us would be better off if we focus on what matters most to that patient who shows up at the pharmacy counter needing medicine to better their health.

John O’Brien is president and chief executive officer of the National Pharmaceutical Council.


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