As new and promising medications are developed, they often come with significant cost. In this 5 Slides We’re Discussing: Bending the Rx Cost Curve conversation, State of Reform’s DJ Wilson tackles that subject with three subject matter experts.
Joining State of Reform for the conversation were Annette Guarisco Fildes, president and CEO of ERISA Industry Company, Andrea Reed, vice president of pharmacy at Novant Health, and Robert Popovian, senior fellow of health policy at the Progressive Policy Institute.
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State of Reform’s slide featured relative price implications and cost increases for different drugs, and specifically large molecule drugs like Biologics. It teed up the conversation on ways to reduce drug costs. Popovian said biologics fit into the larger cost conversations, and what is driving increases in spending and whether it’s mainly attributable to pricing or utilization.
“Why we are spending more on drugs in the United States is primarily driven by utilization,” he said.
Popovian said there are two main reasons why there is inappropriate utilization in the U.S. The first is a fear of litigation among prescribers, but the second and largest is incentives for middlemen to disqualify generics from coverage.
For his slide, Popovian said rebate contracting creates the wrong market incentives. He cited a study he completed on Express Scripts, which excluded hundreds of medicines from coverage. Some of these exclusions included generics that were at times 75% cheaper than the allowed, brand-name drug, because it generated more rebates.
Reed’s slide highlighted the success and cost savings that can come with early adoption of biosimilars for health systems. She said that health systems try and use criteria to make sure they’re suing drugs effectively. They’ve had success moving to biosimilars, and moving forward on value-based agreements.
Fildes in her slide highlighted how large employers support biosimilar competition. She also said companies are becoming more sophisticated, and focus on prescribing the right drug in the right amount to patients.