QUESTION: How can we afford life-saving drugs?
ANSWER: Spend less on non-life-saving drugs!
Now that wasn’t so hard.
I am not trying to oversimplify things. I just want you to pause and think about what we’re spending our money on. None of us wants to restrict access to life-saving drugs but, in essence, that’s exactly what we’re doing by spending so much on ineffective and over-priced non-life-saving drugs.
Maybe a good follow-up question is, how much are we willing to spend on ineffective medications, greater adverse side effects, and/or more convenience? Another angle on this issue: how much are we willing to spend on “me too” medications, drug advertising, and rebates? Because the truth is, these are the things we spend most of our money on. And by “we,” I mean individuals, corporate health plan sponsors, and our nation.
Collectively, I believe we have plenty of money. We’re just terrible at spending it. We allow manufacturers to drive demand by selling their products directly to us and our physicians. In the process, we let them control the narrative and data that supports it. And we allow manufacturers and PBMs to negotiate deals that give higher cost and no more (often less) effective drugs preference over lower cost and more effective therapeutic alternatives.
Furthermore, over the last 10 years or so, we’ve let the same entities circumvent the cost sharing provisions in benefit plans via “copay assistance” programs. Overall, net results: high cost, ineffective drugs, free (or almost free) to plan members, high profits to manufacturers and PBMs, and rapid cost increases for health plan sponsors.
For example, instead of low-cost biosimilars, most corporate benefit plans are still paying for brand name drugs to treat auto-immune disorders. Why is this happening? Advertising, rebates, and copay assistance cards. Biosimilars as an option favors the status quo of overspending. It is not a clinical issue; it is a revenue issue for PBMs and drug manufacturers.
Likewise, we permit manufacturers to make insignificant changes to extend patent protection and/or rebrand medications and introduce them to the market at higher costs. We also allow manufacturers to improve convenience via “extended release” formulas and simplified delivery systems.
And here’s how it works. One manufacturer introduced an extended release of one of its existing drugs. The initial drug, taken 4x per day, costs $20,000 per year. The extended-release drug, taken 2x per day, costs $600,000 per year. No clinical improvement — just more money to manage the same situation.
Granted, everyone would probably prefer to take a pill twice a day rather than 4x. However, is the cost of this convenience anywhere near reasonable? One of our clients had two plan members make this switch. The manufacturer sold the attending physician on the change. The plan members readily took advantage of the convenience. And the PBM didn’t bat an eye. In the meantime, the plan sponsor got taken to the cleaners.
As an aside, let me state that drug manufacturers (some more than others) push the envelope to capitalize when there is a lack of market competition. Some even take older, less expensive medications off the market and replace them with new and not really improved, but much more expensive versions.
This isn’t just about specialty medications. Insulin manufacturers have played this game time and time again. For decades, low-cost insulin was readily available and did an effective job of helping people control their diabetes. Now, it’s been replaced with much more expensive insulin products and distribution systems. Diabetics wouldn’t have an affordability issue if manufactures didn’t cause one — and again, costs have increased while clinical outcomes have not improved.
So, back to the original Q&A. How can we afford life-saving medications? By spending less on non-life-saving medications. And here are some practical steps employers can take:
- Avoid rebate-driven PBM arrangements. Instead, secure clinically-driven, fee-based arrangements. Favor biosimilars as part of this process (even exclude the brand alternatives from your formulary).
- Work with your new PBM to make coverage decisions based on comparative effectiveness and cost of medications. Drug-specific rebate information (real transparency) is critical to this process.
- Make sure your new PBM requires documentation from the prescriber to support the appropriateness of high-cost medications for each patient at hand. With direct-to-consumer and physician advertising, as well as consumer rating systems, doctors are frequently compelled to prescribe low-value, high-cost medications. This doesn’t mean your plan has to pay for them. And some doctors will even be grateful you’re forcing the shift to more appropriate medications.
There are many more steps you can take to preserve your plan assets for life-saving medications, but this list addresses much of the “low-hanging fruit.” Let us know if we can help now or in the future.