Tara O'Neill Hayes January 7, 2019
Dear Administrator Verma,
I thank you for the opportunity to comment on
the October 30, 2018, Advanced Notice of Proposed Rulemaking (CMS-5528-ANPRM) seeking to establish an
International Pricing Index Model (IPI) for Medicare Part B Drugs.
The administration’s objective to reduce the
cost of drugs and increase Americans’ access to necessary medicines is
laudable. The solution that has been proposed here, however, is not likely to
achieve that objective, and in fact, could result in significant undesirable
repercussions.
The primary concerns with this model include:
Restricted access to existing medicines: The 14
countries that the Centers for Medicare & Medicaid Services (CMS) has
proposed referencing in this IPI model, on average, have access to only 48
percent of the new drugs developed in the past eight years, and it took an average
of 16 months after their initial global launch for those drugs to become
available in those 14 countries. If the United States adopts the prices of
those countries, American patients may very well face the same access
restrictions as exist in those countries and lose access to existing treatment
options.
Reduced innovation for future advancements and
new medicines: If this model were adopted and applied to all Part B drugs,
revenues would be reduced approximately $9 billion per year based on the most
current expenditure levels. Given that the cost to develop a new medicine is
estimated to be $2.9 billion, as many as three fewer new medicines may be
developed each year as a result of this model if drug manufacturers are unable
to recoup these lost revenues in other markets.
Cost-shifting to other health insurance markets
and federal programs: Given the unlikeliness that other countries will begin to
pay more for medicines as a result of this demonstration, drug manufacturers
will instead attempt to shift the cost to other health care markets in the
U.S., namely the employer-sponsored insurance market. To the extent that such a
result occurs, American workers—not foreign countries—will bear the cost of
this experiment. Further, if the average sales price in the private market
increases, then Medicare will pay more for the drugs used that are not covered
by the demo, potentially negating any savings that may be obtained within the
demo.
The inconsistency of this model with the
administration’s efforts to encourage value-based pricing in the health care
system: CMS has made it a priority to transition all reimbursements to a
value-based payment system. Simply adopting the price set by other countries
without assessing the value of the product appears to be inconsistent with this
goal.
The harm this proposal will have on U.S. trade
policy: For decades, American administrations, including this one, have worked
hard to implement and enforce trade agreements with other countries that
protect intellectual property and patent rights for U.S. products in other
countries. Part of that effort includes disallowing coercion through the threat
of compulsory licensing—a practice known to occur in European countries in
order to force the sale of drugs at discounted prices. This demonstration, by
adopting the price that other countries have obtained through coercion,
undermines those efforts and sends the signal that such tactics are acceptable.
For these reasons, the administration may be
better served finding a different solution.
Background
The administration has identified a problem in
the pharmaceutical market that warrants a solution: Americans pay significantly
more, on average, for brand-name medications than people of other countries. A
recent report from the Assistant Secretary for Planning and Evaluation (ASPE)
at the Department of Health and Human Services (HHS) found that the price of 27
studied medicines was, on average, 80 percent higher in the U.S. than the
average price of those medicines in 16 other countries.[1] This
is largely because the price paid in those other countries is dictated by the
government, most of which operate a single-payer health care system and use
price controls to limit their expenditures. The higher prices paid for
medicines in the U.S. contribute to Americans paying between 64 and 78 percent
of worldwide pharmaceutical profits, despite the U.S. accounting for only 27
percent of global income.[2] President
Trump and his administration are understandably looking for a solution to end
the American subsidization of the rest of the world’s health and ensure that
other countries pay their “fair share.” CMS states in the ANPRM that the goals
of the model are to reduce government and beneficiary costs and thereby
increase access and adherence, preserve the quality of care, obtain prices
comparable to those paid in other countries for such drugs, reduce providers’
incentive to use high-cost drugs as well as their financial burden and risk
associated with furnishing drugs, and maintain stability in provider revenue.
To that end, the administration is considering
launching a demonstration project through the Center for Medicare and Medicaid
Innovation (CMMI) to test a new reimbursement model for physician-administered
drugs covered under Medicare Part B. This demo will apply to selected drugs and
all providers within the selected geographic areas; areas will be chosen to
account for 50 percent of annual Medicare Part B drug spending. All providers
in the demo, when using one of the drugs subject to the new reimbursement
model, will be required to purchase that drug from a designated vendor. The
vendor will serve as a middleman, responsible for negotiating discounts and
rebates from drug manufacturers for the drugs covered by the model. CMS, rather
than reimburse providers as under the current payment system, will reimburse the
vendors for the drugs used. The reimbursement rate will be set at a fixed
percentage based on the newly developed IPI—a pricing index based on the
average price of a drug in selected other countries (14 are listed in the ANPRM
for consideration). Finally, CMS will use a target price multiplier to adjust
the IPI factor such that the reimbursement rate under the IPI model will be 30
percent less than the reimbursement rate would be in the absence of the model.
There are more than 500 drugs covered under
Medicare Part B, but spending is highly concentrated on a small number of those
drugs. The top 50 drugs in terms of total spending under Part B are primarily
biologics and single source drugs—accounting for nearly 80 percent of those
expenditures. Accordingly, CMS is planning to apply this model, at least
initially, to single source drugs, biologics, biosimilars, and multiple source
drugs with a single manufacturer.
Concerns with the IPI Model
Lost Revenue and the Harm to Innovation and
Economic Growth
Analysis of the top 10 drugs covered by Part B
in terms of total spending shows that in 2016 these drugs accounted for 48
percent ($12 billion) of all Part B drug expenditures but only 13 percent of
all claims. While the average sales price of these drugs was only $602, these
drugs must be taken many times during treatment. The average annual spending
for these drugs for each beneficiary using them was $15,849 in 2016. These
drugs were provided to more than 5 million beneficiaries, roughly 9 percent of
all Medicare enrollees. Sales of these drugs in the U.S. accounted for 62
percent of their worldwide revenues, but only one-third of worldwide sales by
volume, highlighting the price disparity between the U.S. and foreign markets.
Nearly half (47 percent) of U.S. revenues and 29 percent of worldwide revenues
for these drugs are covered by Medicare Part B. With the demonstration applying
to half of Part B drug spending, it is estimated that if this demo had been
applied in 2016, roughly 15 percent (or nearly $8 billion) of worldwide sales
of these medicines would have been subject to the 30 percent price reduction
under this model. This would amount to nearly $2.5 billion in reduced revenues
in a single year just for these 10 medicines. If the demo were applied to all
Part B drugs, expenditures for which now equal nearly $30 billion, revenues
would be reduced approximately $9 billion per year.
Reduced revenues have a significant effect on
future investments and development, as the probability of earning a worthwhile
profit is critical to enticing potential investors to finance an endeavor with
such high costs and such low probabilities of success. In 1986, research and
development (R&D) investments by pharmaceutical firms in Europe exceeded
R&D in the U.S. by roughly 24 percent.[3] Following
the imposition of government price controls in many European countries, and
consequently the reduced return on investment, R&D spending by
pharmaceutical companies grew at an annual rate of just 5.4 percent in the
European Union, compared with 8.8 percent growth in the U.S. As such, more than
half of the world’s pharmaceutical R&D investments have been made in the U.S.
since the turn of the century, whereas less than 30 percent is invested in
Europe.[4] Research
estimates that this lack of investment came at a cost of 46 fewer new medicines
being introduced and nearly 1,700 fewer jobs over a 19-year period.[5] Research
by the Organisation for Economic Cooperation and Development (OECD) and IQVIA
indicates the need for R&D investments is even greater now as the target
populations for each new drug grows smaller with the development of treatments
for less common diseases: 95 percent of the 7,000 known rare diseases are still
without any therapeutic option.[6] Further,
the amount of spending per new drug approved has been growing for decades.[7] It
is well known that innovation is the primary factor that drives economic growth
and improves people’s standard of living. Pharmaceutical companies have
historically invested 10-15 percent of revenues in R&D.[8] Declining
revenues will reduce innovation and lead to lower economic growth.
Given that the cost to develop a new medicine
was recently estimated to be $2.87 billion, after accounting for the costs of failed
attempts for each successful one, the lost revenue expected from this
demonstration is nearly equivalent to the cost of a new medicine each year.[9] And
as the cost to develop a new medicine is increasing each year, the significance
of this lost revenue will as well. If this reimbursement model were adopted for
all Part B medicines, an estimated three fewer new medicines would be developed
each year; unless, of course, these lost revenues in the U.S. market can be
replaced by increased revenues in other markets.
Cost-shifting
Unfortunately, because drug prices in most other
countries, including those being considered for this IPI model, are dictated by
their governments rather than the market, it is unlikely manufacturers will
gain enough leverage to convince other countries to pay them more. This is
underscored by the fact that other countries have already proven their
willingness to deny access to medicines if the price is above what they are
willing to pay, as shown by the average availability of new medicines standing
at only 48 percent in the 14 countries being considered. To the extent this is
true and drug manufacturers are indeed unable to shift the cost of reduced
revenues overseas, they will likely shift costs to the private market in the
United States. The primary holders of private market insurance are American
workers. But only so much cost-shifting to American workers is possible. In
order to make up for a 30 percent price reduction on nearly a quarter of their
sales, prices in the private market would have to rise by 13 percent to keep
the average sales price (ASP) roughly equal to what it currently is. The
remaining lost revenue will be seen in less innovation and fewer new medicines
in the future with a high probability of restricted access to existing
medicines once the model goes into effect.
Undermining Trade Policy
Adopting the failed and unfair practices of
other countries will not solve the problem, it will simply import it while
simultaneously undermining other efforts by the administration. For years, U.S.
trade negotiators have been fighting the exact unfair trade practices the
administration addresses in this proposal. Foreign governments prohibit drug
manufacturers from selling their product at a price above that set by the
government and threaten American drug manufacturers with compulsory licensing
if they do not provide the medicine at the government’s dictated price. The
Drug Pricing Blueprint—the initial document outlining the administration’s
ideas for reducing drug prices—was released by HHS in May 2018. It states:
“Every time one country demands a lowers price, it leads to a lower reference
price used by other countries. Such price controls, combined with the threat of
market lockout or intellectual property infringement, prevent drug companies
from charging market rates for their products, while delaying the availability
of new cures to patients living in countries implementing these policies.”[10] In
February 2018, a report from President Trump’s Council of Economic Advisors
noted the importance of “preserving incentives for biopharmaceutical
innovation” as a key to “better health in the future,” and recognized that the
prices set by foreign governments “erode the returns to innovation.”[11]Adopting
the prices set in these other countries is an indirect adoption of the policies
and practices they use to obtain those prices. Doing so undermines the Trump
Administration’s own trade policy and erroneously sends the signal to other
countries that the U.S. supports their tactics and price controls.
Rather than adopt the ill-advised and punitive
practices of foreign countries, a more appropriate solution would be to fight
those unfair practices and encourage countries to instead pay prices truly
representative of a drugs’ value and cost to develop. Doing so would have
significant positive effects worldwide in the long-term. A recent study found
that if other nations lifted their price controls on pharmaceuticals, there
would be 9 percent more medicines available by 2030 and the life expectancy of
a 15-year old today in America would increase by more than a year.[12] Another
study found that if European prices for medicines increased 20 percent, the
resulting increased innovation would generate welfare gains over the next 50
years worth $10 trillion in the U.S. and $7.5 trillion for Europeans.[13]
Ultimately, without the adoption of appropriate
trade enforcement mechanisms, it is unlikely that other countries will
willingly agree to pay more simply because the U.S. is paying less. Other
countries have already proven their willingness to deny access to medicines if
the price is more than they’re willing to pay.
Savings Estimate
CMS estimates that if this demonstration is
implemented, the federal government could save $17.2 billion between 2020 and
2025. This estimate, though, assumes the prices in the referenced countries
will remain the same. But the objective of this policy as stated by President
Trump is for other countries to pay more. If they do, the amount of savings
gained in the U.S. will be diminished. In other words, the only way to achieve
that level of savings is for the policy objective to fail to be met. If the
objective is not achieved (and it is not likely to be), we will have saved $17
billion, but likely at the expense of the advancement of science and the
development of new medicines along with potentially restricted access to
existing medicines.
The savings estimate also assumes utilization
rates for these products will remain unchanged; but six of the top 10 drugs by
total spending in Part B have biosimilars available now and the other four have
biosimilars in development. It is likely that between now and 2025—the end of
the demonstration period—utilization of many brand name drugs is expected to
decrease as biosimilar use increases. Some savings would be gained simply from
differences in utilization. It is possible, though, that this model will reduce
revenues for biosimilars beyond a sustainable level, having the undesirable
effect of suppressing their availability and thus their expected savings.
Responses to Specific Questions Included in the
ANPRM
III. Model Concept Designs
Countries to include in the International
Pricing Index
CMS should carefully review the pricing
standards and mechanisms used to set prices in each of the countries under
consideration for inclusion in the IPI. CMS should only select countries that
it believes appropriately assess and price covered drugs; such an evaluation
and corresponding price should accurately reflect a drug’s value. This is
particularly important given CMS’s commitment to transitioning all Medicare
reimbursements to value-based payments; this goal can only be achieved with
this payment policy if CMS determines the prices set in these other countries
accurately reflect a drug’s value. Setting a fixed price for a given product
based on nothing more than the price paid in other countries means the
reimbursement rate is devoid of any value-assessment by CMS. To the extent that
the price set in other countries is based on the country’s assessed value of
the product, we are simply adopting their value metrics. CMS should consider
whether this is appropriate and consistent with our own goals and value metrics.
For example, if a country’s evaluation protocols
use a specified value for a year of life to calculate the drug’s value, CMS
should determine if it matches the value that CMS places on an additional year
of life. CMS in the past several years has used a median quality-adjusted life
year (QALY) value of $293,000.[14] The
National Institute on Cost Effectiveness (NICE)—the organization responsible
for determining the price of covered health care goods and services in the
United Kingdom—on the other hand, uses a cost-effectiveness threshold that is
30 percent lower than what the standards of the World Health Organization would
dictate.[15] Evaluations
of the top 10 Part B drugs have found that six of the top 10 drugs are
cost-effective for the treatment they provide at their U.S. market price[16];
two were found to not be cost-effective[17];
and two lacked studies on their cost-effectiveness. Evaluations conducted with
too strict a cost-effectiveness threshold, such as that used by NICE, will not
yield the same results and access to these medicines may be denied, which
largely explains why the U.K. only provides access to 60 percent of new
medicines launched within the past eight years.[18]
To that point, CMS should also analyze the level
of access to drugs in each country it plans to include in the model, particularly
new drugs that improve current treatment options. In the United States, 89
percent of all 290 new medicines and 96 percent of the 82 new cancer medicines
launched between 2011 and 2018 were available within three months; in the 14
countries being considered by CMS for the IPI, only 48 percent of all new
medicines and 57.1 percent of new cancer medicines are available, and it takes
an average of 16 months and 17.8 months, respectively, for access to those
medicines to be gained.[19] When
adjusting for population, the figures improve just slightly: 51.5 percent of
all new medicines and 59.7 percent of new cancer drugs are available in these
14 countries within 17.4 months. Still, this level of access to new medicines
significantly lags behind the availability of new drugs in the United States.
Of the 54 new medicines launched during this period covered under Medicare Part
B, only 28, on average, are available in these other countries, and it took an
average of 18 months for access to be granted after their initial launch. In
fact, only 11 of the 27 medicines studied in the ASPE report were available in
each of the 16 other countries analyzed, despite all 27 being available in the
U.S. and covered by Medicare Part B. Basing the target price on a study for
which nearly 60 percent of the medicines (and thus their prices) were not
universally available for comparison makes it more likely that the price will
not be truly reflective of a drug’s value.
The lack of access to new medicines seems to be
highly correlated with a country’s use of price control mechanisms. Japan, the
world’s second largest pharmaceutical market, has a highly protectionist policy
intended to bolster its domestic pharmaceutical industry and does not
adequately reward innovation.[20] Only
49 percent of new medicines launched since 2011 are available in Japan. In
France, a committee is tasked with evaluating a medicine’s therapeutic value
relative to existing treatments, and this is used as the primary basis for
determining a drug’s reimbursement rate.[21] The
committee tends to undervalue products during its assessment because a higher
rating dictates a higher price. Further, if expenditures grow faster than a
target rate, pharmaceutical companies are required to pay rebates. Only 48
percent of new medicines are available to the French as a result of these
policies. As noted in a report by the U.S. Department of Commerce International
Trade Administration, Canada’s Patented Medicines Prices Review Board sets a
maximum price for pharmaceuticals and any price increase is punishable by fine;
further, price cuts and freezes are used to prevent prices from rising faster
than inflation.[22] The
U.K., as mentioned, uses a cost-effectiveness threshold that is so low, only 60
percent of all new medicines since 2011 are available there. Of particular
concern among the countries being considered is the inclusion of Greece: only
14 percent of all new medicines since 2011 are available to the people of
Greece, and it took an average of 30 months for those 41 medicines to become
available.
Also of concern are the indirect effects and
implications of adopting a reference pricing model. Of the 14 countries under
consideration for this reference pricing model, 11 use reference pricing
themselves to control their prices. The average number of countries referenced
is 17. Between four and six of these 11 countries reference each of the
following countries in determining their own price: Cyprus, Hungary, Latvia,
Lithuania, Poland, Romania, Slovakia, Slovenia, and Spain. By referencing the
price of drugs in countries that reference the prices in other countries, we
would indirectly be referencing the prices of those other countries. The
average gross domestic product (GDP) per capita in these countries listed was
$18,685 in 2017, while the GDP per capita in the U.S. was $59,532—more than
three times greater. The estimated age-standardized mortality rate for all
cancers in these countries is 123.47, compared with a rate of 91 in the U.S.
The average life expectancy in these countries is nearly a year shorter than
that of the U.S. It is not appropriate for the U.S. to reference the prices
paid in countries whose GDP per capita is less than a third of ours. Further,
given the poor health outcomes in these countries, CMS should carefully
consider the implications of modeling our health care programs on the policies
of these countries.
Given the evidence that prices paid are strongly
correlated with the availability of medicines, CMS should consider the impact
that such a reduction in reimbursements will have on the availability of
medicines in the U.S. and determine the degree to which such a trade-off
between reduced costs and access to medicines is in the public’s interest.
III. A. Model Vendors
Opportunities for model vendors and participants
to enhance quality and reduce costs
CMS seems to be looking for ways to encourage
use of high-value products while avoiding incentives that have plagued
the Medicare Part D program and led to the
increased use of high-cost/high-rebate drugs. In this ANPRM, CMS states its
interest in vendors’ use of indication-based pricing and outcomes-based
contracts. CMS also states that vendors will be prohibited from paying rebates
or volume-based incentive payments to physicians and hospitals. One potential
pitfall here, though, is that CMS has not indicated its intention to prohibit
vendors from receiving rebates from drug manufacturers. In Part D, such rebates
are often provided to plan sponsors as a reward for preferential formulary
placement which is known to increase sales for a product relative to
competitors with less favorable placement. If vendors’ primary negotiating
leverage in this model is similarly drawn from its ability to increase sales
volume for a given product, it is likely that a rebate structure similar to
that currently used in Part D may develop. Vendors may establish a fee schedule
with providers that offers preferential fees for drugs for which they have
negotiated the best deals, which may not be the lowest cost drugs in the rest
of the market.
Despite concerns regarding the potential rise of
perverse incentives, the ability to utilize indication-based pricing and
outcomes-based contracts will likely yield positive results. This is especially
important given the development of biosimilars for many of the top 10 Part B
drugs with the highest total program spending. Currently, many biosimilars have
difficulty gaining market share because they may not share all of the
indications of a reference product and manufacturers of the original biologic
may threaten to stop providing significant rebates for their drug if a
biosimilar is added to the formulary. Because the biosimilar does not cover all
the same indications, the reference product is still needed and losing access
to its rebates is not worth the benefit gained from having access to the
biosimilar. To the degree that indication-based pricing in Medicare may allow
for that obstacle to be overcome elsewhere, significant savings may be
achieved, as the effects will reach beyond the Medicare market.
III. B. Model Participants, Compensation and
Selected Geographic Areas
Model Geographic Areas
CMS should consider the extent to which spending
on particular drugs is concentrated inside or outside the selected geographic
areas and take caution to ensure the model does not disproportionately impact a
particular drug. Further, CMS should not just consider overall spending, but
spending across classes of drugs so as not to place an undue burden on any
particular sector of the drug industry.
Increased administrative burden for providers
Providers in the demo are likely to face an
increased administrative burden as a result of the new payment and drug
acquisition mechanisms that must be established to run this model. While the
demo will be mandatory for all providers in a selected geographic area, not all
drugs will be included in the model. Thus, providers in the demo will be forced
to utilize two different payment and acquisition systems. This increased
administrative burden may need to be accounted for in the add-on payment.
Drug Add-on Payment
CMS, noting that the current add-on payment made
to providers may unintentionally encourage use of high-cost drugs over
potential lower-cost alternatives, is looking to replace the current method for
calculating the add-on payment. CMS is considering alternatives, such as
payments based on a drug’s class, the physician’s specialty, or the physician’s
practice. CMS is right in its identification of the potential undesirable
outcome of the current add-on payment method to encourage use of high-cost
drugs (though evidence of this occurring does not exist). Whether a perverse
incentive is being exploited or not, the current methodology for determining
the amount of the add-on payment does not seem to match its intent. The add-on
payment should reimburse providers for the cost of their labor in administering
the drug as well as any costs associated with acquiring the drug, such that the
provider is financially neutral with regard to which drug to use, allowing them
to make the best decision for their patient. In order to achieve this goal, the
most appropriate basis for such payments is likely drug class and
administration mechanism. CMS should further evaluate the amount of time
required to administer the drug as well as any necessary monitoring that must
be conducted; this evaluation should also consider the type of provider
administering the drug and performing any monitoring to allow payments to
appropriately reflect differences in labor costs across provider types.
CMS should implement such a change immediately.
Given that providers under this model will no longer be responsible for the
cost of the drug itself, they are not at risk of any financial loss on the cost
of the drug. Thus, recognizing the inappropriateness of the current payment
structure, CMS should act to correct it as soon as possible. Further, the
notion that providers should be financially held harmless seems unjustified.
CMS has already made the case that providers have likely been overpaid for years
as a result of the inappropriateness of the current add-on payment structure.
If that’s the case, then there should be no reason to ensure they continue to
be overpaid. Establishing a payment metric and formula that adequately
compensates providers for their work can and should be established without
regard to an arbitrary and inappropriate baseline.
III. C. Included Drugs
Given CMS’s objective to reduce overall program
expenditures, the drugs CMS intends to target with this model seem to be the
most appropriate for achieving that result, with the exception of biosimilars.
Single-source drugs, biologics, and multiple-source drugs with a single
manufacturer tend to be the highest cost drugs and benefit from a lack of
competitive pressures to naturally bring prices down. The 27 drugs included in
the ASPE report fall into these categories and represent more than 50 percent
of Part B drug expenditures. Biosimilars, though, are the market-based solution
to high prices for biologics; biosimilars create competition and—like generics
for small molecule drugs—are less expensive than the innovator drug and place
downward pressure on the price of the reference product. Biosimilar development
and use should be encouraged and applying this model to biosimilars will likely
stifle their creation and adoption.
Also of great concern is how CMS will reimburse
for new drugs that are not yet available elsewhere, which, as the evidence has
shown, is quite common. In the ANPRM, CMS notes it is considering simply
applying to new drugs the average price differential established by the IPI.
This could significantly undervalue new drugs, enough so that it could very
likely have a chilling effect on the development of new medicines. As discussed
before, the promise of a return on investments is vital to incentivizing an
investment to be made in the first place. If a drug manufacturer cannot expect
to recoup the costs of their investments, they have no incentive to spend the
money and take the risk of not earning it back.
Finally, as mentioned before, including some
drugs used by a provider but not all will create additional administrative
burdens for providers in the demo.
H. Interaction with Other Federal Programs
CMS states in the ANPRM that the reimbursement
rate provided in the IPI model will be included in the calculation of metrics
used in reimbursement formulas for other federal programs, including the
Medicaid Drug Rebate Program, 340B, and Medicare itself. Such a policy expands
the impact of the model far beyond its direct scope, exponentially increasing
the potential impacts of the model.
Regarding Medicare Fee-for-Service and ASP: The
average sales price (ASP), which is currently used to determine the
reimbursement rate for Part B drugs outside the model, will be impacted by this
model because sales to vendors will be included in the calculation of ASP.
Given that CMS is only going to reimburse vendors at 126 percent of the average
international price, manufacturers will need to provide their drug for no more
than that, or else the vendors will lose money. If manufacturers sell their
drugs to providers in the demo for a lower price than currently available, this
will have the impact of lowering the ASP. However, to the degree that
manufacturers account for such price reductions in the demo by increasing their
prices in the private market in the U.S., as discussed earlier, the ASP may
increase, and thus the reimbursement rate for drugs used by Medicare providers
outside the demo would increase, potentially negating any savings obtained by
the IPI model.
Conclusion
The Trump Administration has properly identified
a significant problem with the international pricing of pharmaceuticals. The
proposed solution, however, is misguided and likely to backfire. Adopting the
non-market prices of other countries, and thus the punitive and authoritative
policies used to obtain those prices, will likely also mean adopting for
American patients the same level of restricted access to new medicines as
experienced in other countries. Worse yet, this demo may result in new
medicines never being developed in the first place. Americans highly value
their access to and choice of new treatment options. The reduced innovation
that will occur as a consequence of the reduced revenues that will result from this
model will have significant ramifications. Further, referencing the prices paid
for drugs in countries that do not adequately reflect the value of medicines is
inconsistent with the administration’s goal of adopting a value-based payment
system. Finally, this model will undermine American trade policy which may have
repercussions far beyond the pharmaceutical industry. The Administration should
not adopt this policy and should instead look for other means to reduce
Americans’ health care costs.
[1] https://aspe.hhs.gov/system/files/pdf/259996/ComparisonUSInternationalPricesTopSpendingPartBDrugs.pdf
[2] https://healthpolicy.usc.edu/wp-content/uploads/2018/01/01.2018_Global20Burden20of20Medical20Innovation.pdf
[4] https://www.abpi.org.uk/facts-and-figures/science-and-innovation/worldwide-pharmaceutical-company-rd-expenditure-by-country/
[6] https://www.iqvia.com/institute/reports/orphan-drugs-in-the-united-states-growth-trends-in-rare-disease-treatments
[7] https://www.oecd-ilibrary.org/social-issues-migration-health/health-at-a-glance-2015/research-and-development-in-the-pharmaceutical-sector_health_glance-2015-70-en
[8] https://www.oecd-ilibrary.org/social-issues-migration-health/health-at-a-glance-2015/research-and-development-in-the-pharmaceutical-sector_health_glance-2015-70-en
[12] https://www.ispor.org/publications/journals/value-in-health/abstract/Volume-21-Supplemental-S1/The-Impact-of-Lifting-Government-Price-Controls-on-Global-Pharmaceutical-Innovation-and-Population-Health
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https://www.americanactionforum.org/comments-for-record/comments-to-cms-on-proposed-international-pricing-index-for-medicare-part-b-drugs/#ixzz5c1oXJx4o
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