Last week, Donald Trump unveiled his blueprint to combat rising drug prices, called the "American Patients First" plan.
The plan includes persuading other countries to pay more for prescription drugs, trying to lower drug prices for Medicare, more regulation around drug ads, banning the "gag clauses" for pharmacists, reining in patients and fixing the rebate system.
Here, five healthcare industry executives examine the winners and losers of the proposal, and where they expect drug prices to head in the future. Contact Laura Dyrda at ldyrda@beckershealthcare.com to add your thoughts to this article.
Christopher Lee. Healthcare Consultant and Clinical Solutions Marketing Manager at Family Health Centers of San Diego: "Part of Trump and HHS Sec. Alex Azar's plan purports to change the way Medicare pays for certain drugs, namely high-cost specialty medications. According to NPR, one method may be to shift coverage of certain drugs from the Part B buy-and-bill approach to Part D drug coverage.
If this happens, I predict the losers will include:
1. Physicians: Currently, they get paid to administer these drugs. In fact, the reimbursement structure encourages them to prescribe more expensive alternatives. Shifting coverage to Part D will eliminate this income stream, at least for certain drugs.
2. Hospitals: Likewise, hospitals will lose out on a lucrative income stream. Over the past several years, they have bought up oncology physician practices to bring in patients. Coupled with their deep discounts from the 340B program, hospitals have made a fortune when physicians prescribed these expensive medications to patients.
Winners, on the other hand, may include:
1. Specialty pharmacies: They will gain additional market share lost by physicians.
2. Pharmacy benefit managers: Despite the rhetoric against these 'middle men,' they may actually benefit in some regards. PBMs own some of the largest specialty pharmacies and in cases where they don't, they will negotiate and capture more rebate dollars.
3. Medicare Part D plans: Likewise, insurers will capture additional rebates from manufacturers. They will also receive more funding from CMS due to their expanded book of business.
4. Community pharmacies (maybe): Certain specialty drugs are not subject to a limited network of distributors, which are usually a handful of specialty pharmacies. If a few Part B drugs are moved to open network Part D coverage, some community pharmacies may earn additional revenue selling these drugs, especially in jurisdictions with 'any willing pharmacy' laws.
As for pharmaceutical manufacturers, it really depends on the specifics of the policy change. Some may be winners, while others would be counted as losers."
Dave Fitzhenry. Managing Partner of Trinity Partners: "The short-term winners in Trump's plan to lower drug prices are pharmaceutical companies, PBMs and biosimilar manufacturers. However, when looking at long-term winners, it's important to acknowledge that the industry needs to make changes in terms of the cost and quality of healthcare in the U.S. There has been a shift in the balance of power from the life sciences industry to payers and PBMs, and this has an effect on moderating net price increases. Ultimately, the industry is still challenged with translating savings for consumers, and until that is accomplished, consumers will not feel like they're winning.
During the speech, President Trump referenced policies already enacted that will save seniors millions. He was likely referring to a ruling enacted as of January that made dramatic payment cuts to 340B hospitals by CMS. And while this decision is still being fought through the legal system, it is a clear blow to hospitals that depended on that reimbursement to fund operations."
Michael Rea. CEO and Founder of Rx Savings Solutions: "The elimination of rebates would reshape the industry. The market would move from pharmaceutical companies buying patient access where inferior drugs can dominate from a sales standpoint to one where cost effectiveness — common sense — would take over.
We need a 'market' where information flows freely and transparently. Everyone who currently makes money when higher priced drugs go out the door should be worried — pharma, wholesalers and PBMs.
Consumers need to be 'empowered' to be consumers. We do it in every other facet of our life with every product we buy. Why we don't do it for medications in lunacy. Consumers need to be able to obtain information about not only price, but also therapy options. Drugs that work best and are at prices patients can afford would be the new leaders. This shouldn't be surprising; that is what happens in a free market."
Cheryl Larson. President and CEO of Midwest Business Group on Health: "Since public and private employers pay for the majority of healthcare, 56 percent, in the U.S. today, we are disappointed to see that the blueprint did not place a priority on the use of pharmacy benefit management drug rebates, putting it in the 'Further Consideration' category of the recommendations. It's alarming that restricting or removing rebates is not seen as an immediate priority and this will continue to negatively affect employers as pharmacy spend is one of their key cost drivers. Employers shoulder the burden of the rising costs by all stakeholders in the supply chain, especially PBMs. Without placing a high priority on rebates and taking immediate action to address other chronic, egregious behaviors that directly impact healthcare purchasers, PBMs and players in the middle will continue to take advantage of the marketplace as they have for far too long. Employers need to work together and serve as catalysts in the way drugs are paid for and delivered to get rid of waste and misuse in the system."
Thomas Parry, PhD. President of the Integrated Benefits Institute: "The remarkable thing about the conversation about drugs in particular, and health generally, is that no one is discussing the real underlying issue — declining health in the U.S. It matters little how we change drug prices, adjust deductibles for health plans or adopt consumerism strategies unless we directly address how to improve health and more fully understand all the outcomes that flow from that improvement."