Video and Highlights from “5 Slides: Innovations in Bending the Rx Cost Curve”

Experts on prescription drug policy joined State of Reform’s Washington “5 Slides” event on Thursday to discuss the nation’s ever-rising costs of prescription drugs and some possible innovations and strategies to combat the rising prices.

In the conversation, Donna Sullivan, PharmD, chief pharmacy officer of the Washington State Health Care Authority, Megan McIntyre, PharmD, director of pharmacy business services at Virginia Mason, Yusuf Rashid, RPh, vice-president of pharmacy at Community Health Plan of Washington and Wayne Winegarden, PhD, senior fellow and director for the Center of Medical Economics and Innovation at Pacific Research Institute, spoke about the causes, case studies and policy solutions to the crisis.

 

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Sullivan focused her slide on the complex system through which prescription drugs are delivered to patients. She said there are really three main components in the purchasing and distribution process, the purchaser, the manufacturer and the pharmacy. She said the purchasing process is so complex and there is not one solution to lower costs.

“I think the biggest challenge we have with this system, is not only is it complicated, but it’s opaque. We don’t have the transparency into what the rebates are between a Pharmacy Benefit Manager and the manufacturer. We don’t know what the manufacturer considers when they are developing the cost of their drug. How do they come up with a $2.1 million price tag on a gene therapy? It’s just really opaque.”

McIntyre focused her remarks on the pursuit of the Quadruple Aim. This concept focuses on improving patient experience, better patient outcomes, lower costs and improved wellbeing for the care team. She said that after a year of COVID, the cost of burnout among providers is really high.

“The topic of this presentation is around innovations in bending the Rx cost curve, but who’s cost curve are we talking about? What incentives are out there? Are there things we want to have stay a part of the system? We’ve been given a kind of a gift in some ways, where we’ve been given kind of a punctuation to really move forward health care with some innovations right now [to achieve the Quadruple Aim].”

McIntyre went on to say that providers often do not receive the incentives that might help lower costs. So, in this time of innovation that COVID has created it’s really important to look at how some of the incentives need to be redirected.

Rashid focused his remarks on what makes an efficient market. He said that markets that are transparent, competitive, liquid and standardized are the ones that have the most efficiency and lowest costs. He said the prescription drug market is not currently transparent. The prices do not reflect the costs paid by the seller. 

“The connection between the prices paid by the payor and the costs of the seller is kind of a carnival mirror distortion through the whole system that really makes it hard to get our arms around. It creates a space for other players, rebate negotiators and aggregators to potentially add more waste in the system that wasn’t needed except to increase the complexity and lack of transparency.”

Finally Winegarden centered his remarks on how stronger biologic competition is improving drug affordability. Biologics are much more complicated to create than chemically derived drugs because of the natural variations that occur in biology. Biosimilars are the cheaper, generic version of biologics. From his perspective, the drug affordability crisis is really a result of the high costs of biologics.

“These are very expensive medicines. It’s also important to note, incredibly high value medicines. When you talk about our ability to help cancer go into remission, that’s largely due to biologics. So we have very high-value medicines, but they’re also expensive.  So when we talk about drug affordability, when Congress tackles this, what we don’t see them talking about is the drivers. One of the drivers is the complexity of the system, another is biologics.”

Winegarden said that the competition that is now occurring because of the introduction of biosimilars will help bring down the cost of prescription drugs. The biosimilar market is beginning to grow and they are being sold at steep discounts compared to biologics. 

“Today we see that biosimilars have a larger share of the market and given that they have lower prices that is actually providing savings. This is demonstrating that competition can provide the savings that we’re looking for, while still promoting innovation in the future and that’s the crucial balance.”