HCPF report offers data-driven solutions to high Rx prices

The Colorado Department of Healthcare Policy and Financing (HCPF) released a thorough report Monday detailing strategies for reducing prescription drug (Rx) costs in Colorado. The report looks at the main drivers of Rx costs in the state, which HCPF says are the fastest growing health care expense for consumers.

According to Kim Bimestefer, the Executive Director of HCPF, total Rx expenditures in Colorado increased by over 50 percent between 2014 and 2019. It also says specialty drugs currently represent over 50 percent of state Medicaid spending on prescription drug expenditures.

 

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One of the major cost drivers listed in the report is the lack of statewide accountability to protect consumers from the many factors influencing drug prices. The report suggests establishing an Affordability Board to address high drug costs. According to the department, the board would enforce upper payment limits on drugs and influence federal drug pricing.

Another driver of drug cost is the overuse of high cost drugs, the report says. To address this, HCPF recommends limiting direct to consumer marketing and marketing to physicians by passing rebates and giving providers tools to see the cost of drugs, allowing them to incorporate this information into their decision process when they are prescribing drugs.

HCPF says the U.S. spends more than nearly any other country for the same drugs. This can be addressed by importing drugs from other countries, reforming patent and exclusivity policies and expediting generic approvals. The department again listed the creation of an Affordability Board as an additional solution to this issue.

Another issue mentioned in the report is the complexity of pricing structures and the lack of competition during patent protection, which is critical to driving appropriate pricing, according to HCPF. The report says increasing transparency can help solve this, as well as having state and federal agencies (such as the Food and Drug Administration) intervene to influence price during the patent approval process.

To address the increasing yearly number of high-cost, specialty drugs being produce, the report suggests utilizing value-based contracts and re-evaluating the incentives drug producers have for manufacturing drugs. The federal government can also play a role here by intervening in the launch prices of drugs, the report says.

The report recommends passing cost-lowering rebates to relieve employers and consumers. This would bypass the “middlemen” who profit off of high drug costs, HCPF says.

The report also touches on disparities in drug pricing, saying there are impactful differences in the pricing Pharmacy Benefit Managers and insurance companies give to small and large employers. HCPF calls for coalition-led negotiations to improve drug discounts, rebates and other pricing to address these best practice disparities.

Bimestefer says studying and learning from federal Medicaid protections is key to solving some of these issues. The Medicaid Drug Rebate Program requires manufacturers to offer their “best price” for Rx — if an Affordability Board in Colorado established a lower price, Medicaid would have the right to that price, she said.

Another thing the state can learn from Medicaid is the utility of rebates for drug prices, according to HCPF.

“We get a special rebate from manufacturers where their price increases to the market go up more than inflation,” Bimestefer said. “So we have increases across brand, specialty, generic [drugs] — when those increases go up ten, fifteen percent, twenty percent, the manufacturer has to give Medicaid back a rebate that neutralizes that increase down to about one percent. That is dramatic, and a huge reason why we have the savings that we do.”

Bimestefer says HCPF will send an invitation this month to Canadian suppliers to help import drugs at Canadian prices.

“If we do that, we’ll save more than sixty percent of drugs coming in that are allowed under federal regulation,” she said. “If we were to open that up, we could save an additional almost eighty percent if we pull drugs from Canada, or eighty-four percent if we imported from France.”

According to Bimestefer, importing biologics from other countries is also a priority for HCPF. Among fourteen different biologics, HCPF says the U.S. is paying an average of 71 percent more than Canada, 77 percent more than France and 78 percent more than Australia. Humira, which has been protected by paten for over two decades, is 67 percent cheaper in Canada, 79 percent cheaper in France and 74 percent cheaper in Australia, she added.

“[For] Trulicity, which is a diabetes drug, prices in Canada are 88 percent cheaper,” she said. “In France, 84. In Australia, 91. Let me translate that. We are spending ten times the price that Australia is for that same drug.”