3/18 - Why Are Prescription Drug Prices So High? - Brand Name Drug - usually sold by the original sponsor of the application for regulatory approval -> Generic Drug - a version of a brand name drug manufactured by a different supplier - Can be certified as bioequivalent by the FDA - Biologic Drug - often protein-based therapeutic product that is distinguished by its molecular complexity - Specialty Drug - a drug designated by a payer for special attention, often because of its high price, but also potentially because of the need for distinctive handling or particularly patient monitoring Specialty drugs are expected to account for half of total US drug spend by 2020 even though only 1% to 2% of Americans use them In the next 15 years, the cost to employers of providing healthcare benefits is expected to exceed wages > Spending on prescription drugs has risen rapidly over past decades > Brand vs. Generic Drugs Brand name drugs comprise 10% of all dispensed prescriptions, but account for 72% of drug spending Generic drugs consistently and substantially decrease prescription drug prices after patent expiration of the brand > Price Justification Manufacturer Pricing Strategy Value Based Pricing Price related to effectiveness Premium, parity, discount R&D Costs Innovation > US Drug Approval Process Drug discovery -> preclinical trials - 3 phases of clinical trials - new drug application and FDA Review - Phase 4: post-marketing surveillance About 14 years total Take Home Messages Spending on prescription pharmaceutical expected to increase Drug pipeline projects are more expensive specialty drugs Takes up to 14 years to bring a new drug to market and is expensive Generic medication availability has the greatest impact of reducing drug costs > What is a PBM? Administer prescription drug plans for more than 266 million Americans who have
health insurance Projected to save employers, unions, and government programs, and consumers $654 billion - up to 30% - drug benefit costs over the next decade > PBM reduce drug costs by: Offering home delivery of medications and creating select networks of more affordable pharmacies Encourage use of generic drugs Negotiating rebates from drug manufacturers and discounts from drugstores Managing high-cost specialty medications Reducing waste and improving adherence > Formulary Access: Pharmacy and Therapeutics Committee P&T Comm consists of non-employee physician members and pharmacists from active community and academic-based practices and represents a broad range of medical specialties
>Rebates
Prescription drug rebates are generally paid by a pharmaceutical manufacturer to a PBM, who then passes through or shares a portion with the health insurer Rebates are mostly used for high-cost prescription drugs in competitive therapeutic classes
Incentivize PBMs and insurers to include the manufacturers products on their formularies and to obtain preferred "tier" placement Some payers are proposing to negotiate directly with manufacturers with the expectation of reducing drug costs
4/3 Quality Measurement #1 > Value in Healthcare Has to do with paying a fair or reasonable amount for something Dollars per unit of quality > Definition o