- Social Responsibility
- Social Responsibility
- Our Giving
- Corporate Social Responsibility
- Be The First Tobacco-Free Generation
- Community Stories
- Thought Leadership
- Investor Story
- Results Center
- 2016 In Review
- Financial Information
- SEC Filings
- Events & Presentations
- Stock Information
- Corporate Governance
- Investor Resources
Reining in Prescription Drug Prices: The Experts Weigh In
Dr. Troy Brennan is Executive Vice President and Chief Medical Officer of CVS Health. Here, he offers his perspective on a recent panel that examined solutions for keeping drug prices in check.
I recently participated on a panel at The Brookings Institution during their event Reining in Prescription Drug Prices. There, my fellow panelists and I considered and evaluated several proposals from esteemed health care thought leaders to address high drug costs, including:
A framework for government negotiation during the reinsurance phase of Medicare Part D, which is often the most costly period for the government as they pay 80 percent of drugs’ costs;
Opportunities for creating new, faster pathways to approval and importation of generic drugs; and
Ideas to enable better competition in pharmaceutical markets, especially among biologic drugs.
The panel, included Jennifer Bryant, senior vice president of policy and research at the PhRMA; Dr. Steven Pearson, president of the Institute for Clinical and Economic Review (ICER); and Rachel Sachs, associate professor of Law at Washington University School of Law. Following the presentations, we discussed our reactions to these proposals, with the following themes emerging:
The Problem with Prescription Drug Prices
High drug prices limit access to important drugs and drive high, unsustainable, health care spending. There is near-universal agreement that our system needs to rein in the high cost of prescription drugs, yet how do we do this without stifling the development of new, innovative and life-saving medicines?
Our challenge as a health care system is to determine where we can give and take to encourage innovation but lower drug prices and improve access. And we all need to recognize that there are a growing number of examples of high-priced drugs that do not offer additional value in terms of better patient outcomes.
Competition is Key
The U.S. Food and Drug Administration’s (FDA) efforts combined with federal legislation have been effective in increasing generic competition. For example, the Drug Price Competition and Patent Term Restoration Act, commonly known as the Hatch-Waxman Act, has worked to increase the manufacturing and approval of generic drugs, which has helped boost competition. As one of my fellow panelists noted, “in 1984, no one thought more than 90 percent of prescriptions would be generics, but now here we are …”
While generics are widely prescribed, heavily utilized and very effective in lowering drug costs, there is still more work that can be done.
Reciprocal Approval Pathways and Importation
One proposed solution to reduce costs of these older drugs is to create reciprocal approval pathways among certain international regulatory entities – such as the E.U. and Canada – to increase the entry of generic competitors into the U.S. market. While faster approval of generic drugs and importation can be a good thing, we do have to worry about the potential for bad products to come to market without FDA protections to certify that these medications are safe. In particular, Congress enacted the Drug Supply Chain Security Act, or DSCSA, to ensure that prescription drugs may be tracked through the entirety of the supply chain to avoid patient safety risks and drug diversion. Any changes to drug importation should not bypass these important requirements and increase the risk of diversion or counterfeit products being sold.
The Boon of Biosimilars
As biologics continue to play an increasing role in our health care system – with new, high-priced therapies available and growing utilization of these medicines among broader patient populations – we discussed the value and potential of both generic biologics, which are interchangeable for the original product, and biosimilars to help mitigate the rising impact of high drug costs.
But there are currently only five biosimilars approved in the U.S., with just two marketed therapies, as compared to more than 20 in Europe. Once we can get more biosimilars into the marketplace, our system can do a better job of lowering prices of biologics through competition.
At CVS Health, we are already seeing the impact of biosimilars. This year, for example, we replaced Lantus, a widely use insulin biologic, with Basaglar, its biosimilar, on our formulary, and we are seeing dramatic price decreases without compromising patient outcomes or care.
Making Drugs More Affordable for the Consumer
With the rise in high deductible health plans, we’ve seen sharp increases in the patient cost-share of many medications. In fact, “walk-away” rates, where a patient chooses not to pick up their medication(s) is more than 20 percent when a patient has to pay $90 or more for the prescription.
One way CVS Health is working to address this is at the pharmacy counter. For example, our clients can implement point-of-sale rebates, whereby a rebate is applied to the patient cost-share at the point-of-purchase, resulting in a lower out-of-pocket cost for the patient.
As we wrapped up the discussion, we all agreed that there is no one-size-fits-all model or approach to reducing prices. It requires all actors in the health care system to work together to develop and implement new, innovative solutions.