Perspectives on Pharmaceutical Costs in the U.S.NCSL Legislative Summit
August 9, 2016
Chuck Shih, PhD MHSThe Pew Charitable Trusts
Macro Trends in US Healthcare
• Intensifying need to demonstrate value.
• Rapid evolution of healthcare payment & delivery.
• Shifting balance of medical decision-making.
• Use of Real-World Evidence matures & expands.
• Early impact of ACA being assessed.
• Preparing for MACRA implementation.
Why are pharmaceuticals an issue?
• Rising prescription drug costs– Up 8.4% in 2015 ($310B)
• New drugs are a significant driver of spending growth– Projected to account for $91B in spending growth
between 2016 & 2020.
• Increasing spending on specialty drugs– 1% of all prescriptions but 36% of drug spending.
– Est. 50% of prescription drug spending by 2020.
Sources: IMS (2016), ESI (2016)
Are we getting better value? (not always)
825
0
50
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350
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450
500
Pri
ce
per
yea
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rviv
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efit
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1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Approval date
Benefit measured from RCT using OS
Benefit measured from RCT using PFS
Benefit measured from modeling study
The best fit line is: Price per year of life gained = $101,077 + $7,396 × Approval year.For purposes of display, we re-coded one value from $825,000 to $500,000.RCT: randomized controlled trial. OS: Overall survival. PFS: Progresion-free survival
Figure 2: Price per year of life gained versus approval date
Source: Howard, Bach, Berndt, Conti (2015)
Policy Ideas
• Allow HHS to negotiate drug prices
• Medicare Part B Drug Payment Model
– Value-based pricing
• Increasing Generic/Biosimilar Competition
– CREATES Act
• More Transparency
• Price Benchmarking
Questions?
Chuck Shih, PhD, MHSSenior OfficerThe Pew Charitable Trusts901 E St, NWWashington, DC 20004Phone: 202-540-6300Email: [email protected]