The Department of Health Care Policy and Finance (HCPF) sponsored the Colorado Health Cabinet Policy Summit on Wednesday to outline the progress being made on healthcare affordability.
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Lieutenant Governor Dianne Primavera and HCPF Executive Director Kim Bimestefer led the virtual summit.
Bimestefer said prescription drug costs are the leading driver of overall rising healthcare costs mostly due to essential, high-cost drugs consuming a large portion of the state’s budget.
“So less than 2% of drugs that are prescribed by physicians here in Colorado and across the country are so expensive they’re consuming more than 50% of budgets,” Bimestefer said. “Whether you’re talking about commercial coverage, employer [coverage], HCPF and Medicaid—that is the lead driver.”
Colorado is tackling the high cost of prescriptions through two innovative approaches. One is the Prescription Drug Affordability Board (PDAB), which is conducting a state review of high-cost medications to place upper payment limits (UPL) on an initial selection of up to 12 drugs. The other is a plan to import cheaper drugs from Canada, which was submitted to the FDA for approval in December.
Lila Cummings, PDAB director for the Division of Insurance (DOI), provided an updated timeline on the board’s efforts during the summit.
“So the board is going to select drugs for an affordability review this spring, conduct affordability reviews and determine if a drug is unaffordable,” Cummings said. “The goal is for the summer and fall with the anticipated dates for the board potentially selecting drugs for an upper payment limit and establishing an upper payment limit this winter. And then that would result in [upper payment limits being enforced] sometime in summer or fall of 2024.”
Cummings added that DOI is in the process of studying prescription drug rebates in the individual market to ensure the savings are not being retained by pharmacy benefit managers (PBM) and carriers. House Bill 22-1370 requires PBMs to use 100% of rebates included in a carrier’s drug formulary to reduce costs and pass savings on to consumers. The DOI will publish the evaluation this summer, which will focus on applying rebates to reduce out-of-pocket costs at the point of sale or in prescription drug tiers.
Meanwhile, the state’s drug importation program awaits FDA approval for its supply chain. Colorado is partnering with AdiraMedica to secure drugs directly from manufacturers and prepare them for export to the US. It is also partnering with Premier Pharmaceuticals to import and distribute the drugs.
“Across the 112 drugs that we included in our analysis [of the all-payer claims database], we found an average of 65% savings across all of these drugs [through this program], which amounts to about $53-88 million in annual savings per year,” said HCPF Drug Importation Program Manager Lauren Reveley.
“This number is dependent on market adoption and we used a fairly conservative estimate of 15-25%. To estimate that market adoption, it’s important to note that our drug list is 80% brand and 20% generic, and we’ve generally focused on brands. But we have found that there are opportunities in the generic space, and generic manufacturers may prove to be early adopters and partners for our program.”
Reveley said the drug importation list at this point is aspirational—and the actual drugs to be imported are unclear—because of how contracts between manufacturers and wholesalers in Canada are structured. Colorado must still negotiate directly with drug manufacturers to secure drug supply for the program, a process that is underway. The program hopes to create a unique marketplace for prescription drugs, which will offer lower-cost medications and pricing transparency.
Gerard Anderson, PhD, a professor at the Johns Hopkins Bloomberg School of Public Health, said that gene and cell therapeutic drugs are great innovations but exceedingly expensive. He has been working with states at the national level to help reduce the costs of these medications. According to Anderson, Colorado has been a national leader in policy innovation.
“Colorado is already using value-based payments to [lower drug costs],” Anderson said. “What we’re essentially saying is [we want to see] if we can do this at a national level, and Colorado was taking the lead in helping the federal government do this. We’re also trying to figure out if we can do a subscription model or a promoting access model, which will help states purchase unlimited amounts of the drug at a single price.”
Another area of progress on affordability is the state’s prescriber tool for Medicaid value-based contracts, which launched in 2021. The tool utilizes electronic health records to predict risk and help prevent the misuse and overprescribing of controlled substances like opioids.
“To date, almost 5,300 licenses have been allocated to Medicaid prescribers,” said Tom Leahey, HCPF pharmacy office director. “And after the first 12 months of this program, the average dosage per opioid prescription [through the tool] was reduced by about 16%, which is truly outstanding.
In phase two, we implemented the affordability module through soft launch in June 2021. This module shares real-time cost information with prescribers. It supports the transmission of electronic prescriptions directly to pharmacies that helps [physicians] understand atomic prescribing, which drugs need a prior authorization, and it supports electronic prior authorization requests.”
The prescriber tool helped save over $6 million in gross rebates in 2022 and will soon enter its third phase, the procurement stage, this year. The third phase will eventually allow physicians to prescribe more than medications, including relief programs such as federal supplemental nutrition programs for pregnant and food-insecure members.