WASHINGTON (FRONTLINE MEDICAL NEWS) Insurance companies need to be doing more to push down drug prices, Scott Gottlieb, MD, Food and Drug Administration commissioner, said March 7 at an insurance-industry policy conference.

“Payers are going to have to decide what they want,” Dr. Gottlieb said at the conference sponsored by America’s Health Insurance Plans. “Do they want the short-term profit boost that comes with these rebates or in the long-run assist in their function” to make things better for patients, for providers, and those who pay for care.

Dr. Gottlieb criticized the insurance industry for profiting from rebate-based contracts and creating an environment where there is a significant disincentive for biosimilars to come to market. He decried the “rebate trap” in which insurers profit from the difference between the wholesale acquisition cost and the actual rebated price. Because manufacturers typically tie rebates to volume, there is no incentive for plans to incorporate biosimilars, which could cost insurers some or all rebates from the reference biologic product, Dr Gottlieb noted.

It is possible to spur competition while working within the confines of the rebate-based system, he said. “I don’t see these as binary choices. You can have your cake and eat it too. Or in this case your rebates.”

His comments received a quick rebuttal from AHIP.

“There is a lot of blame being pushed around,” Daniel Nam, AHIP executive director of federal programs, said in an interview. “Along with the blame are a lot of distractions, misdirections, and these easy one-off fixes or problems that pop their head up and come and go. … We try to stay focused on what is the real problem and that is essentially the starting price.”

He noted that if a treatment has a high starting price, such at coming gene therapies that could cost $1 million per patient, “it creates a pressure on the industry and it threatens our health care system to be unsustainable in the long term. What we are worried about is that there is no check on [the pharmaceutical industry’s] ability to set high list prices and even subsequently increase them.”

Mr. Nam noted that there is a fine balance that needs to be achieved to allow manufacturers to profit while at the same time ensuring access to therapies at reasonable prices.

“We believe in the free market and competition, but we feel like there are levers that could bring down the list price very effectively,” such as meaningful competition. “The situation that we have now is really more about the list price being way too high and unchallenged at this moment.”

Mr. Nam also took issue with the characterization that insurers are gaming the rebate system for profit.

“With the rebates, plans and PBMs [pharmacy benefit managers] want the lowest net cost,” he said. “That is our end goal. When you have this accusation that plans manipulate the rebate structure in order to skim off a couple of dollars here and there … they are giving plans a lot more credit than what they can actually do at the negotiation table.”

He said the rebate system “is not perfect by any means, but I think drawing a conclusion of an imperfect system that [creates] a perverse incentive for insurers is completely distracting from the real problem” of high list prices.


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