By Bryan Walsh and Aaron S. Kesselheim
This blog was originally published on Bill of Health, the blog of the Petrie-Flom Center for Health Law Policy, Biotechnology, and Bioethics at Harvard Law School.
Patients may face increased out-of-pocket drug costs as a result of a new rule finalized by the Centers for Medicare & Medicaid Services (CMS) in July 2020 that would permit wide use of co-pay accumulator adjustment programs (CAAPs).
These increased costs may have effects on medication adherence, and in turn may affect health outcomes. In a recent commentary published in the American Journal of Managed Care, we explain the background to this rule and suggest ways CMS could narrow it to avoid these potential negative effects.
Drug manufacturers often have temporary assistance programs that cover all or a portion of a patients’ out-of-pocket costs when filling a prescription for a brand-name drug. While this reduces financial barriers to filling prescriptions, it creates economic waste when lower cost generic versions exist, yet are overlooked because the assistance programs make it cheaper for the patient to fill the brand-name drug.
Commercial insurers use CAAPs to respond to this concern. CAAPs incentivize use of lower cost generics over brand-name drugs by ignoring payments made by drug manufacturer assistance programs when determining whether a plan beneficiary’s out-of-pocket costs have reached the annual limit imposed by the Affordable Care Act.
But the success of CAAPs requires three things:
(1) Lower-cost alternatives must exist, such as in the form of generic versions of the brand-name drug, or generic versions of drugs in the same class that have similar clinical benefits;
(2) beneficiaries must know that these restrictions on manufacturer assistance exist, and therefore be able to choose the lower-cost alternative; and
(3) beneficiaries would have met their yearly out-of-pocket limits, and thus would have been excused from coinsurance and co-payments for a portion of the year, only if these restrictions did not exist.
In July 2020, CMS finalized a rule that ignores the first two requirements. The finalized rule permits CAAPs even in situations where no lower cost generic exists, and it fails to mandate disclosures to beneficiaries informing them of the existence of such programs. This allows insurers to ignore all payments made by drug manufacturer assistance programs while potentially surprising beneficiaries with unexpected out-of-pocket costs. This is particularly detrimental to beneficiaries with high yearly out-of-pocket expenditures for prescription drugs who expect to meet their yearly maximum and be excused from such expenses for a portion of the calendar year.
The new administration should therefore seek to narrow this rule to permit CAAPs only in situations where a lower cost generic alternative exists and is medically available, and mandate disclosures informing beneficiaries of the existence of CAAPs in their plan to assist in making informed decisions concerning the acceptance of drug manufacturer assistance.
Why France Spends Less than the United States on Drug: A Comparative Study of Drug Pricing and Pricing Regulation
By Veronique Raimond
Pharmaceutical spending per capita in the U.S. is higher than in all other industrialized countries. Policymakers seeking lower drug spending often suggest benchmarking prices against other countries, including France, which spends half as much as the US on prescription drugs. In a new study, PORTAL researchers found that Medicare could save billions of dollars annually on prescription drug spending if the US adopted the French approach to evaluating and negotiating drug prices and limiting unfettered annual drug price increases.
We compared the price dynamics in France and the US between 2010 and 2018 for the six brand-name drugs with the highest gross expenditures in Medicare Part D. We analyzed associations between price changes in each country and key regulatory events in the light of a comprehensive review of US and French laws and regulations related to drug pricing. Prices for the six drugs studied were higher in the US than in France. In 2018, if Medicare had paid French prices for just the 6 the brand-name drugs in the cohort, the agency would have saved $5.1 billion. We identified 12 factors that explain why the US spends more than France on drugs, including variations in unit prices and the volume of prescriptions, driven by health technology assessment and value-based pricing in France.
American citizens are rightly concerned about the high cost of medications, and this study shows that regulations can help to reduce the cost of drugs and to align it with their value.
We point out that linking a drug’s price to clinical benefits at the launch of the drug and over its lifetime, as observed in France, is key to controlling spending. The regulation of prescription drugs in France is governed by rules that can inform discussions of US prescription drug policy and potential Medicare price negotiations.
By William Feldman
The true prices of prescription drugs in the US are obscured by complex, private negotiations. Manufacturers set sticker prices (or list prices) of drugs and then negotiate confidential rebates with insurers to arrive at a final “net” price. Patients, physicians, researchers, and policymakers lack basic information about how much a given drug actually costs. With a week remaining before the presidential election, the Trump administration released the “Transparency in Coverage” Final Rule. For prescription drugs, this rule requires, among other things, that insurers disclose list and net prices online.
This rule was completed along with several other last-minute executive orders and rules related to drug-pricing. Political and legal challenges may undo many of these other initiatives. But, in a new perspective in the New England Journal of Medicine, we argue that Trump’s transparency initiatives may endure. First, such efforts enjoy bipartisan support, including from President-elect Biden himself. Second, in the absence of Congressional intervention, the Biden administration would have less than a year to complete new rulemaking were it to seek rescission. Finally, the rule is likely to survive court challenge. We examine two recent court cases on other transparency initiatives--Merck vs. the Department of Health and Human Services and American Hospital Association vs. Azar—to explore why. At the heart of these decisions is a low evidentiary requirement on the part of HHS; the Department need not provide definitive proof that transparency will facilitate patient decision-making or lower prices but may instead rely on common-sense analysis and predictive judgment.
If implemented, the “Transparency in Coverage” rule would begin to peel away the secrecy of drug pricing. Whether the rule will achieve its intended effects is far from clear. As a recent review on healthcare pricing transparency underscores, empirical data about the benefits of transparency are sparse and conflicting. But, as the Trump-era transparency initiatives continue to be litigated, it may the courts in the end that finally hand researchers and policymakers an opportunity to study the effects of transparency and develop more rational policies moving forward.
William B. Feldman, MD,
DPhil, MPH is a
postdoctoral fellow at
PORTAL and an associate
physician at Brigham and
By William Feldman
Asthma and chronic obstructive pulmonary disease (COPD) are prevalent among Medicare beneficiaries; approximately 1 in 20 has asthma, and 1 in 9 has COPD. Inhalers remain the primary treatment for these diseases. Yet, as prior research from PORTAL has demonstrated, inhalers are protected by numerous patents—often on the devices themselves rather than the drug ingredients contained within the devices—and generic competition for these products is limited.
In a new study in Annals of the American Thoracic Society, we sought to quantify Medicare Part D spending on inhalers over the last several years and analyze the extent to which changes in spending were driven by changes in costs per inhaler or utilization. The study found that, between 2012 and 2018, Medicare Part D spent a total of $39.7 billion on inhalers after adjusting for estimated rebates and inflation. Among the 42 inhalers covered during the study period across nine different classes, only two inhalers were generic. Spending increased from $4.5 billion in 2012 to $6.5 billion in 2018. Three of the nine classes were combination maintenance inhalers—inhaled corticosteroid (ICS)-long acting beta agonists (LABA), long-acting muscarinic antagonist (LAMA)-LABAs, and ICS-LAMA-LABAs—and these were responsible for $1.8 billion of the $2.0 billion growth. Taking all nine classes together, nearly 90% of the growth in spending could be explained by increased utilization, as the number of beneficiaries receiving inhalers climbed from 8.1 million in 2012 to 11.5 million in 2018 and the number of inhalers prescribed jumped from 34.4 million to 47.7 million. Only around 10% of the spending growth was driven by increased costs per inhaler.
These findings have important implications for the future Medicare Part D spending. There are now three generic ICS-LABA inhalers on the market: Mylan’s Wixela Inhub (a version of Advair Diskus [fluticasone-salmeterol]), GSK’s authorized generic of Advair Diskus, and Teva’s authorized generic of AirDuo Respiclick (fluticasone-salmeterol). Further generic competition in the ICS-LABA class may help lower the costs per inhaler and reduce overall Medicare spending. Yet, the other two classes of combination maintenance inhalers have no generic competition. Inhalers in the LAMA-LABA and ICS-LAMA-LABA classes have patents lasting through at least 2030. Without generic competition, these classes will likely represent a growing share of inhaler spending in Medicare Part D. More generally, in the absence of drug-pricing reform, Medicare spending on inhalers will likely continue to climb as the US population ages and Part D provides insurance coverage for more seniors with asthma and COPD.
By Beatrice Brown
Instituted by the US Food and Drug Administration (FDA), Risk Evaluation and Mitigation Strategy (REMS) programs place additional restrictions on drugs deemed to pose heightened safety concerns. One such drug regulated by a REMS program is mifepristone, which is used together with misoprostol to induce a medication abortion during the first 10 weeks of pregnancy.
During the COVID-19 pandemic, the FDA suspended in-person requirements for many drugs subject to REMS programs. However, they did not suspend these requirements for mifepristone, leading the American College of Obstetricians and Gynecologists to challenge the validity of the REMS program on the grounds that it impeded access to abortion and put women at unnecessary risk for contracting COVID-19. Although a federal district court suspended these in-person requirements for the duration of the public health emergency, the ruling has proved controversial.
A new article in Annals of Internal Medicine by researchers from PORTAL and the Milken Institute School of Public Health at George Washington University aims to shed light on the comparative safety of mifepristone and the need to ensure access to mifepristone in today’s political climate surrounding abortion rights.
Building on previous arguments highlighting the low absolute risks of mifepristone, we looked at the safety profile of both medication abortions and surgical abortions. Although numerous studies demonstrate that the two methods have comparable safety profiles during the first 10 weeks of pregnancy, the risks of surgical abortion increase with gestational age, suggesting that additional restrictions on mifepristone may increase rather than decrease the risk posed to women as a result of seeking a later surgical abortion.
We also contextualize the importance of access to mifepristone within the political climate surrounding abortion rights. With Justice Ginsburg’s recent passing, states passing an increasing number of laws that contradict the Supreme Court’s precedent on the constitutional right to abortion, and the weakening of the ACA’s contraceptive mandate, which may cause hundreds of thousands of women to lose free access to contraceptives, unburdened access to mifepristone is more important than ever.
Further, given language by multiple states calling abortions “nonessential” during the pandemic, messaging is particularly important. Keeping the REMS requirements for mifepristone intact may suggest to women that the drug is “unsafe.” It is important that the REMS demonstrates a factual and not value-laden evaluation of safety.
To best protect women’s reproductive rights, we argue that the FDA should release the REMS on mifepristone. Twenty years of data and experience suggest that it is safe to do so.
Beatrice Brown, BA, MBE is a
Research Assistant at PORTAL
Beatrice Brown, Neeraj Patel
Kerstin N. Vokinger
Most novel drugs that are introduced in clinical practice globally are first approved by the US Food and
Drug Administration (FDA) and European Medicines Agency (EMA). Over the past two decades, both regulatory agencies have established expedited programs, which are intended to prioritize the drugs expected to provide an improvement over available therapies. These programs are increasingly the route by which most new drugs are approved. But since many new drugs are approved on the basis of placebo controlled trials or single-arm studies, the therapeutic value of drugs benefiting from the FDA and EMA expedited programs is uncertain.
An international research group with researchers from PORTAL, Yale School of Medicine, and the University of Zurich (Switzerland) evaluated the association between expedited programs and ratings of therapeutic value for all new drugs approved by the FDA and EMA from 2007 through 2019. We applied ratings of therapeutic value published by health authorities in four countries (Canada, France, Germany, and Italy) and an independent non-profit organization (Prescrire).
From 2007 to 2017, the FDA approved 320 and the EMA 268 new drugs. Among the 320 new drugs approved by the FDA, 181 (57%) qualified for at least one expedited program. By contrast, 39 (15%) of the 268 new drugs approved by the EMA qualified for an expedited program. Overall, 31% (84/267) of FDA drug approvals and 31% (83/267) of EMA drug approvals were rated as having high therapeutic value by at least one organization. Among FDA approved drugs with at least one available therapeutic value rating, 45% (69/153) of expedited drugs were rated as having high therapeutic value, compared with 13% (15/114) of non-expedited drugs (P<0.001). Among EMA approved drugs with at least one available rating, a greater proportion of drugs qualifying than not qualifying for accelerated assessment were rated as having high therapeutic value (67% (18/27) v 27% (65/240); P<0.001). This was not the case for conditional marketing authorization (31% (4/13) v 31% (79/254); P=0.98).
Overall, less than one-third of all new drugs approved by the FDA and EMA were rated by any of five
independent organizations as having high therapeutic value—that is, providing moderate or better improvement in clinical outcomes for patients—although expedited drugs were more likely than non-expedited drugs to be highly rated. Policymakers and regulators should implement therapeutic value ratings more broadly for new drug approvals, aligning the evidentiary needs of regulatory approval and reimbursement decisions, and informing patients and physicians about the benefits and risks of new drugs, especially those approved via expedited programs.
An International Review of Health Technology Assessment Approaches toPrescription Drugs and Their Ethical Principles
Prescription drug prices in the US far exceed those in any other country. In response, recent Congressional bills and an Executive Order have proposed benchmarking US prices to those in other countries. In addition, there has been a movement toward comparative effectiveness research and “value-based pricing,” aligning prices with the clinical benefit of the drug. However, such proposals have faced pushback. Conservatives express concern about importation of price controls, whereas advocates of value-based pricing are concerned that international prices may not be sufficient to determine an appropriate price for a new drug. It is important, therefore, to understand what drives price evaluation determinations outside the US.
A major tool for price negotiation internationally is health technology assessment (HTA), a process of evaluating the clinical effects and economics of a drug or its cost-effectiveness. HTA organizations analyze the additional clinical benefit a new drug offers compared to available treatments and the cost difference between the new and old treatments. Though HTA is an empirical process grounded in economic and clinical evidence, it is also inherently political.
A new study by PORTAL researchers in the Journal of Law, Medicine and Ethics aimed to dentify features of HTA with bioethical implications and to describe variations in how different countries have addressed those issues. The HTA methods from a group of countries referenced in a Congressional bill and that are economically similar to the US—Australia, Canada, France, Germany, Japan, and the UK—were studied as well as the Institute for Clinical and Economic Review, a US-based non-profit organization conducting HTA. Ten ethically-relevant features were identified and grouped in three categories: features that impact the calculation of cost-effectiveness, those that effect recommendations, and condition-specific carve-outs. One result with particular significance for the US is the divergent approaches to evaluating drugs for rare diseases. Prices for rare diseases have climbed during the last decade and more drugs have entered the market, putting an affordability strain on payers and on patients who may also face access limitations. Across the international HTA organizations some, as in Germany, only evaluate rare disease drugs if the predicted budget impact reaches a spending threshold; others, including the UK and Japan, increase the acceptable cost level for these drugs, while yet others make no concessions for rarity. Each choice about HTA design affects the results of the evaluation and price negotiations and patient access to the drugs.
There are a range of tested alternatives and each implements a particular value about how to use public
(or private) resources to determine patient access to the drugs. HTA and its recommendations and price negotiations are based on conscious, value-sensitive design choices. Whether the US benchmarks to international prices or adopts a version of HTA, policymakers need to consider which values should be incorporated into determining drug prices and therefore access.
Changwon C. Lee
Biologic drugs are among the most expensive prescription drugs in the US, accounting for nearly 40% of all prescription drug spending. In 2010, Congress passed the Biologics Price Competition and Innovation Act (BPCIA) to create an abbreviated regulatory approval pathway for biosimilars, which are products that show high similarity to “originator” biologics and exhibit no clinically meaningful differences in safety, purity, and potency. By reducing the time and cost of biosimilar entry, the BPCIA intended to promote competition and curb spending. To date, however, the success of the BPCIA pathway has been limited, and only a small number biosimilars are currently available in the US.
A new study by researchers at PORTAL, published in Mayo Clinic Proceedings, estimated the development times of US biosimilars under the BPCIA. Using a commercial pharmaceutical pipelines database, the authors identified 40 biosimilars that initiated phase I or I/II testing in the US between 2012 and 2015 and recorded their trial lengths and phases. The study found that nearly all forty biosimilars underwent phase III testing with an average trial length of 22 months. For 20 biosimilars that had been approved by October 2019, the median time from initiation of phase I testing to approval was 69.9 months.
The BPCIA pathway was intended to accelerate biosimilar approvals, yet in the first 3 years of its implementation, most biosimilars underwent phase III testing and took almost 2 years to complete. Such levels of extensive testing likely contributed to limited biosimilar market entry, limiting price reductions.
There may be opportunities for improving the efficiency of pre-approval testing for biosimilars. The FDA has already made important strides in this regard. If further efficiency isn’t feasible, subsidies for pre-approval biosimilar clinical testing may be warranted to ensure sufficient market entrants and thus improve patient access to affordable biotherapeutics.
Heterogeneity of antidiabetic treatment effect on the risk of major adverse cardiovascular events in type 2 diabetes
A major barrier to effective implementation of favorable findings from trials on anti-diabetic treatments – such as glucagon-like peptide-1 receptor agonists (GLP-1 RA) or sodium-glucose cotransporter-2 inhibitors (SGLT-2i) – into clinical practice is the scarcity of evidence describing the extent to which these results may be generalizable to all patients with type 2 diabetes or whether they may vary across subgroups of the population.
Such variation in therapeutic outcome is called “treatment effect heterogeneity.” Identifying treatment effect heterogeneity in a trial population is necessary to individualize treatment and target the groups of patients that optimally benefit from a specific therapeutic strategy in clinical practice. However, subgroup analyses within a single trial are not usually powered to detect treatment effect heterogeneity.
A new study from PORTAL published in Cardiovascular Diabetology explored whether diverse subgroups of patients with type 2 diabetes (enrolled in clinical trials) appear to have different rates of major cardiovascular events to two important new categories of anti-diabetic drugs: SGLT-2is and GLP-1 RAs. The identification of subgroups of interest emerged from baseline characteristics of the trial population, which have been deemed a priori as potential treatment effect modifiers in trials investigating the association between SGLT-2i or GLP-1 RA drugs and major cardiovascular events.
The authors conducted an exploratory meta-analysis of placebo-controlled randomized trials that investigated products within the SGLT-2i and GLP-1 RA drug classes in participants with type 2 diabetes. The trials need to report major adverse cardiovascular events as a primary outcome, follow-up patients for longer than 6 months, and describe phase 3 trial dosage. The potential modifiers were baseline factors of the trial populations measured at randomization and were classified in four groups: cardiovascular factors (established atherosclerotic cardiovascular disease and heart failure), renal function (estimated glomerular filtration rate, as indicator of chronic kidney disease), cardiometabolic factors (HbA1c, duration of diabetes, BMI and systolic and diastolic blood pressure) and demographic factors (age, gender, race). All potential effect modifiers considered were part of the pre-specified subgroup analyses of the included trials. Ten trials enrolling 89,790 patients were included in the analyses.
The average benefits of SGLT2i or GLP1-RA drugs considering all patients enrolled in the trials, regardless of their different baseline characteristics, resulted in a 11-12% risk reduction of major adverse cardiovascular events. However, subgroup meta-analyses showed a 14% risk reduction of major cardiovascular events in patients with established cardiovascular disease [GLP1-RA: 0.86 (95% CI, 0.80-0.93); SGLT-2i: 0.86 (0.80-0.93)], and no effect in at-risk patients without history of cardiovascular events [GLP1-RA: 0.94 (0.82-1.07); SGLT-2i: 1.00 (0.87-1.16)]. A trend toward larger treatment benefits was observed with SGLT-2i among patients with chronic kidney disease [0.82 (0.69-0.97)], and patients with uncontrolled diabetes for both GLP1-RA or SGLT-2i [GLP1-RA: 0.82 (0.71-0.95); SGLT-2i: 0.84 (0.75-0.95)]. Uncontrolled hypertension, obesity, gender, age and race did not appear to modify the effect of these drugs.
Among several clinically important patient characteristics measured before treatment initiation, history of established atherosclerotic cardiovascular disease appears to be the only modifier of the treatment effect of SGLT2i or GLP1-RA drugs with respect to major cardiovascular events. We observed signals toward larger benefits among patients with baseline chronic kidney disease for the SGLT-2i treatment, and among patients with baseline uncontrolled diabetes for both SGLT-2i or GLP1-RA drugs. Presence of chronic kidney disease and uncontrolled diabetes should be further investigated as potential effect modifiers of the association between SGLT2i or GLP1-RA drugs and major cardiovascular events.
PORTAL Blog posts are authored by PORTAL faculty, trainees, and collaborators.