When Hillary Clinton adds her voice to the growing chorus of disapproval at U.S. drug prices, a captive audience is guaranteed. But when the Presidential-hopeful vows to tackle “outrageous price gouging” and address “runaway prescription drug prices,” she opens up a healthy discussion about the chance to find an alternative solution in the value-based pricing already adopted in Germany, Canada and Australia.
The U.S. drug pricing debate has been running for longer than a German opera. Early movements wandered pianissimo through high-cost drugs from A to Z—Avastin to Zaltrap—before reaching a crescendo in late 2013 with the spotlight on Sovaldi. Recent events at Turing, shrouded in controversy, mark a familiar refrain, but the uproar that followed the 5,000% price hike of Daraprim is unlikely to lead to the end of an aria. Hillary Clinton’s overtures may have put the pricing debate firmly at center stage, but this particular opera won’t be over if, or when, the First Lady sings.
The Importance of Value
Clinton’s attack on the cost of medicines is an understandable, though narrow, view. With U.S. healthcare spending forecast expected to reach $4.3 trillion by 2019, it’s right that policy-makers do all they can to ensure spending is efficient and effective. But appropriately priced good medicines are not part of the problem, they’re part of the solution. The current U.S. pricing model of “what the market will bear” needs to end. We must focus not on the cost of innovation, but on the value it provides. That value is not simply equal to a therapy’s price, it must also be measured by its effect on patient health.
We must not allow price to become the guiding metric in the evaluation of medicines. Price cuts on many medications are long overdue; however, enforced price cuts may be excessive, and may have detrimental effects on pharmaceutical R&D. Moreover, the ensuing innovation vacuum would punish patients and deny them access to life-changing treatments. It must also be acknowledged that the excessive unjustifiable costs of many therapies are threatening lives today.
Current “sell all you can” marketing techniques also contribute to significant and expensive adverse events in patients who are being treated with no realistic expectation of benefit. There also needs to be an inclusive dialogue involving healthcare institutions and pharmacies who significantly increase the acquisition costs of medications in the U.S. to most patients. The “managed care” and commercial pharmacy purchasing organizations, all highly profitable, are important players in the increased cost of U.S. healthcare.
Look to Other Countries for New Evaluation Models
There is, however, a more effective way to ensure healthcare is affordable. It’s time for the U.S. to consider the value-based methods of evaluation being adopted in countries such as Germany, Canada and Australia—and to catapult the concept of value into the prescription-costs debate. It must also be acknowledged that these countries cannot simply reap the benefit of U.S.-based pharma research, which is in part possible because of unfettered pharma pricing in this country.
With the escalation in healthcare spending not accompanied by commensurate improvements in health outcomes, it’s understandable (and societally necessary) that payers do not wish to pay a premium for the incremental health gains some new treatments deliver. However, in many countries, health technology assessment (HTA) agencies have been established to measure the comparative effectiveness—and value—of new medicines. For example, IQWiG (Germany), NICE (UK) and HAS (France) each have transparent models for evaluating the additional benefits and cost-effectiveness of new therapies, which underpin the final recommendations for reimbursement. The impact of these models, particularly on patients with cancer, is controversial; it is less than clear that appropriate patient access to life-saving medications is optimized by the application of these models.
In the UK, “bridge” funding, which the government allocated to fund medications denied by NICE, is a transient and unsatisfactory feature of public healthcare funding that has already been maxed out. In the U.S., organizations such as the American Society of Clinical Oncology (ASCO) are developing frameworks to assess the value of cancer treatments, but it’s possible that we’ll never see a centralized U.S. HTA agency. However, the clues to how industry can demonstrate value and, crucially, how U.S. payers can evaluate it, can be found in the various HTA methodologies seen elsewhere in the world.
To assess the value of new treatments, stakeholders need access to the tools, data and metrics required to make informed judgments. For pharma, the development of health economics tools such as budget-impact models, cost-effectiveness models and cost-utility models can help stakeholders evaluate products for the efficiencies demanded by the Affordable Care Act. Alongside these, numerous value-driven, evidence-based solutions can be used to demonstrate health outcomes and unlock funding.
U.S. pharma can no longer avoid the populist debate on drug pricing. In addition to more appropriate pricing, it must do more to demonstrate the value its innovations provide. Scandals such as Turing provide unhelpful fuel for debate, highlight currently excessive drug prices, and undermine attempts to improve pharma’s image. The scandal of U.S. patients dying because they cannot afford life-saving medications must be addressed. There would be another scandal, however, if the true value of medicines becomes obscured by a misaligned focus on price. We can’t let that lady sing.