The cost of prescription drugs has always been a top issue for many employers and employees alike. With recent statements from President Donald Trump calling for a reduction in pricing and an increase in competition among drug companies, many in the healthcare industry are looking to value-based pricing as a way to alleviate cost.

To show businesses why certain drugs cost a particular price, PBMs have begun to share data with their clients to prove the effectiveness of certain drugs that deal with conditions such as oncology and inflammatory issues.

Eileen Pincay, senior pharmacy benefits consultant at consulting group Segal Consulting, says employers have cause to demand transparency on drug pricing and it will continue to be a growing trend as policy on drug pricing control develops.

Pincay has seen a few PBMs utilizing value-based pricing not just on specific drugs, but also on the formularies used to determine at which tier pricing system a drug is set.

“We also see that this type of value-based control may help PBMs use these rights to greater influence the pharmaceutical companies pricing practices,” Pincay says. “This could help lower future employer-sponsored prescription costs.”

Switching to a value-based pricing system could help PBMs and government agencies by shifting the accountability of determining who should be getting a specific drug back to the manufacture, says Mark McClellan, professor of the practice of business, medicine and health policy administration at Duke University.

Also see: HSA expansion could change broker-employer role.”

“Within these patient populations, there are a lot of patient specific factors that need to considered,” McClellan says. “Not only just generic factors or how [manufactures] analyze the drugs, but also behavior and care circumstances that they face.”

Removal of REMS
One drug policy that has stood out for Pincay is the removal of risk evaluation and mitigation strategies. While REMS are used as a safety precaution prior to the approval of a new drug, Pincay says there have been some cases where REMS have been used to delay the approval of a new generic drug that would compete with a current drug on the market.

“I think this is a good thing that they do end this [practice] because we do want generics to come out in the market. Because they do drive net cost,” Pincay says.

This delay in competition also extends to the biosimilar market, which initially was intended to help reduce cost on biologics that have already been approved by the FDA.

In 2010, Congress approved the Biologics Price Competition and Innovation Act, creating an abbreviated approval pathway for biosimilars, while maintaining incentives for continued medical advances.

Because of the length of time biologic patents have, the ability for biosimilars to be produced and compete in the market has been stifled, says Leigh Purvis, director of health services research at AARP.

“There are multiple products with incredibly high scales that are going off patent and will not necessarily face competition from biosimilars,” Purvis says. “There are a lot of state and regulatory debates thwarting the development of biosimilars. The reality is that they will be much more difficult to get those products on the market and get the price competition that we need to bring prices down.”

Sen. Sherrod Brown (D-Ohio), has introduced a bill to reduce the timeframe biologics maintain exclusivity on the market from 12 years to seven. However, the bill will only be enforced for biologics licensed by the FDA after the bill is enacted.

Pincay says if this bill is passed it could lead to new possibilities for improved drug cost for those on employer-sponsored prescription coverage. “I foresee biosimilar competition offering cost savings and a better opportunity for patient access,” Pincay says.

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