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tv   Prescription Drug Supply and Costs  CSPAN  May 3, 2018 9:00am-10:07am EDT

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just sort of starting, and one of the first things i said to the companies was i'm not smart enough to understand all your competitive strategies with each other. what i need you to do is go and form a trade association and come back to me with an industry position. i'm not interested in saving any one company or not. i'm interested enough in industry viewpoint. that's in the commerce department can then act on. the forms of groups like the satellite industry association, you know, other groups to go into the department agencies, that's how gets into the interagency is went commerce comes and says we got a problem. defense is where the problem. that's something that's easier for me to deal with. i can hear from industry and i want to hear from industry, but i'm in a position where i first need to respond to what my boss wants and then what the departments and agencies are saying. but they become advocates for an approach that is broadly shared across the industry, then it's
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much, much easier for us to engage. >> well, thank you very much. [applause] .. heavily regulate practices by various players. meanwhile, a lot of large pharmacy benefit managers are in the process of merging with large insurance companies raising new questions how consolidation in the industry will affect consumers. today we'll be flooring these issues with representatives from across the supply chain. including insurers, pharmacists, pharmacy benefit managers, academia and medical practitioners. in a few moments we'll have a
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pharma ceo with a sponsored conversation betwe conversation. and i'll object on stage to introduce our editorial panel led by politico's health care reporter onhe pharmaceutical beat and shel have a state of the pharmaceutical supply chain and what can be done to better control costs. join me in welcoming steve to the stage. [applaus [applause]. >> well, thank you, marty, for that kind introduction. and i want to thank politico for the important covering of health care topics. one of the most important parts of my job i get to travel the country and meet with researchers and member companies and get a chance to see what's next in the science of saving and improving lives. we ask one question more than any other, what if, what if we could bring the blind out of
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the dark or teach our bodies to fight the cancers within them or make cures as unique as every single one of us. well, now, we have a gene therapy that has the potential to treat childhood blindness. we have treatments an immuno therapy taking cells out of the human body, modifying them and sending them back in to cure cancers. thanks to our scientists and researchers, that day is today. what if has become what is. our future promises longer, healthier lives and lower costs, too. today we have a consolidated purchasing environment where three pbm's control the market and leverage effectively and as a result we saw the slowest growth in medicine ascending last year, 0.6% and prices for brand name medicine grew just
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1.9% after discounts and rebates. below the rate of inflation, not medical inflation, but overall inflation. and rebates and discounts are going up, as a result of negotiations, our companies rebate on average about 40% of a list price of a medicine to elements of the supply chain. these rebates and discounts totalled 130 billion dollars last year alone. that's the good news. but not the whole story. the market works to control costs for the health care system overall, but not for patients. one would assume, if costs are slowing, and rebates are growing, that patients out of pocket costs would be declining, but they're not. increasingly insurers are shifting more and more of the cost of medicines to patients. with deductables increasing 300% since 2006. and more and more medicines are being subject to co-insurance instead of more modest co-pays.
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and many patients are paying far more than their insurer for the same medicine. that's unacceptable. some think we have to choose between innovation and affordability. i believe that's a false choice. we can have both. there are market-based solutions to address these challenges and i'll just talk about a couple. first, we need to make sure insurers and pharmacy benefit managers share negotiated discounts with patients. recently united health and aetna announced they'll start sharing some rebates they negotiate. we believe this is a step in the right direction and sharing with patients is an idea that we support not only in the commercial market, but in medicare part d as well and we need to move away from a convoluted system of list prices, net prices and rebates to one that measures values through the eyes of the patient and enables the private sector for new and better ways to pay for medicine.
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in short, the supply chain is complicated, but we must make sure that the patients benefit from the fruits of the competitive marketplace because until we address the costs that patients pay out of pocket, the work of america's health care system isn't done. we have to get this right and i believe we can. it's now my pleasure to introduce two of our great speakers this morning, ian reed is the ceo of pfizer one of the premier biopharmaceutical companies. ian is a 40-year veteran of pfizer having overseen five of the company's global units. during his storied career he's had a seat at the table with deals to every part of the supply chain. dan is president of after ava
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avadlear health and i'll now turn it over to ian and dan. thank you. >> i'm looking for the fireplace, i don't see one so-- >> pretty cold up here. >> you'll warm things up, i know. >> try to. >> why don't we just dig right in. we are going to be talking about the supply chain. you wrote a linkedin essay recently that was focused on the supply chain and you said specifically the u.s. health care system, particularly its cost structure, needs fixing. what specifically were you talking about and how do you think it should be fixed? >> well, i think it's amazing that we never really look and compare our cost structure to europeans. so, if you look at the cost structure of, we spend on health care and europeans spend
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10. a good 8, 7 points of spend. so the 7 points different are hospitals, inpatient and outpatient. the drug budget in the united states is 2% of gdp and in europe where we see it's 1.5. so a good place to start would be asking why do we spend more in hospitals than outpatience? is it because we have sicker patients and our emergency responses and people go to emergency rooms or a poor insurance and product that doesn't meet people's need. i think that's an again, you know, thing -- genuine thing we need to answer. >> the european analogy questions what is the role of the government versus what is the role of the private sector in achieving efficiencies, how do you think about that? >> what you get in europe is rationing lines and who knows about the quality of service that you finally get. i think the issue is, there's
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no shortage of regulations. we have overrated, -- over regulated health care and for me it's the simple thing, how do we get the incentives in the right place. >> where do you go with that? so incentives. what kinds of incentives do you think are missing right now and where should the risks be held? >> let's discuss that, where are most patients held. the final place where the patients are cared for and held for most of their life, 95% of patients stay within the same hospital system within their whole life. as hospital systems integrate, i think the risk needs to be put with hospitals, the providers, to be focused on health care. we talk about health care, so, if we can get the providers focused on insuring the population they serve are healthy, not by mri east they run, injections they do, diagnostics they do, cat scans
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they do, but focused on the health of their patients and pay them for that risk, i think they're written the lines quickly and you get incentives for hospitals to provide therapies that will lower long-term costs and keep people healthy and on the other side, get the private sector in, a lot more strongly into working with their employees to do health or well care. i mean, i don't think incentives are large enough to change the behaviors and the motivations of our colleagues or employees. so, i would like to see a lot more ability for companies to work with their colleagues to give them real incentives and have real data from them to ensure that they are following this wellness program. >> we've recently seen a lot of companies get very engaged in that, ranging from health care companies from medtronic to wal-mart and others, what do you think should be done to
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incent that or is the present system, do you think, kind of giving enough incentives for those kind of activities? >> well, i think that the regulatory problem, the fact that i want to say to my colleagues, you are, you know, you represent this much expense for the business, and that is taking away resources that could be used in research, so, i don't want to give you incentives and not be able to verify because then it becomes incentives i don't think is effective. so if i could structure with my-- with people inside pfizer and say, this is a premium, if you decide to not participate in the program and here is the premium if you decide to let me see your lists and understand where your wait is, let me understand if you're adhering to your medicines and that right now we can't do that. but that type of change will
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allow private industry to refocus on keeping the population healthy. >> that's great. let's get your thoughts on some of the ideas that steve queued with with respect to rebates. the specific idea that the rebate dollars are not funneled back to patients. where do you think that is and how it should be fixed? >> i would repeat these comments i would like see the rebates-- there is a place for volume discounts, a place for negotiations in the marketplace, but i think it's got totally out of control and perversely, what's happening is that the rebates that we give say for specialty products, which are products of high value, so we rebate, they're not getting to the people that need them. they're not getting to the people that take the medicines. they're being used to offset overall premiums. we have got in this country now
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a sort of fascination since obamacare on how low can the premiums go regardless of the the quality of care. so all of these rebates go to lower premiums for healthy people, while the sick people who are taking these mid since pay full boat. it's got to be changed. >> so we have aetna and united health care that made announcement about changing some of their practices on this. how do you think that can be accelerated so that you can get to a place where there's more transparency and the is it i am is returning more to patients? >> well, i think you need an acknowledgment. part of the issue is that the government itself participants in this, in medicare and they receive-- they receive the rebates that are a result of negotiations and they're used to lower premiums, so they also see this as, if the rebate is delivered to the patient, then premiums have to go up. so i think we have to break
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this, this idea that, you know, $2 increase in premiums would effectively per month would allow most people to have very low co-pays on their medicine, the sickest people. >> let's talk a little about some of the other pricing measures. importation of drugs in canada. what are your thoughts on that and why has the industry been opposed? >> well, two reasons we opposed it. one, we have a reasonably safe-- this recent system in the united states for medicines. once you open it up to importation, you lose control of that. and the import from canada, you won't be importing the products that the canadians will be using, you'll be importing shipments through canada from who knows which destination, and the canadians have said that they're not-- they don't verify the shipments that go through canada, they export it elsewhere, so it's a real safety issue and a problem
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of ensuring the drug supply is safe. secondly, it's a -- it's a gimmick. you're importing to the united states a free riding philosophy. canadians and most europeans don't pay their fair share of innovation and importing means we're going to import those bad practices. >> do you think the canadian government would allow importation of drugs back to the united states? >> not of the drugs that supply the canadian market. they'd stop it immediately, as would the u.k., as would europe. >> one of the other hot topics in the supply chains are some of the comments that scott gottlieb has made and i have one quote here which i'll read. patients shouldn't face exorbitant out of pocket cost and pay money where the primary is to subsidize rebates paid to a long supply of intermediate
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arearies. sick people aren't to subsidize the healthy. >> that's the argument i made of subsidizing healthy by lower premiums of lower $2 to $3 and people released crying diseases are paying the rebates. so, once against, it's-- i look at insurance. i don't understand, if you-- most of us insurance our property, cars, probably cars is a bad analogy, we insure our houses. if that burnt downtown you can't afford to replace it, you have good insurance. you need the same thing in health care. if you are unfortunate to get a chronic illness or get cancer, you can't pay for it out of pocket. you need good insurance and that's what we need here. we need a system where the insurance meets the obligation and treats the people the way they should be treated. you know, you look at the drug supply and we get a lot of pressure on drug pricing.
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it's not drug price, it's drug affordability that's the problem. our industry -- i see no signs in our industry in total of rent seeking, an industry that is, making unusually large profits. if you look at the indices in bloomberg, the pharmaceutical indices sits right in the middle. it has a reasonably low return on capital, a low return on investment. the industry's 's are in the middle ofhe bloomberg index, so, pfizer, most pharmaceutical companies p.e. priced earnings sit around 12 to 15. packaged goods companies are at 22. there's no evidence that the industry is, as a total, is rent seeking in its profits, but there is, so individual products are high value and
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expensive because they have to support an eco system. >> let me get one last question in and then we're going to have to close. competition in drug markets, you hear the administration talking about it a lot. what kinds of changes do you think should be adapted to increase innovation and improve competition in the market? >> well, you know, on the generic side you increase competition by ensuring there's faster approval of generics and you look at fast and speedy approval of generic and don't get held up in arcane-- and that's what happens, it's the cost of regulation, it's not -- people abusing the regulatory system. operate other side, in drug discovery, the best way to lower costs is to have more competition. the way to have more competition is to have more drugs approved faster.
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so, that's sort of an economic reply. long-term what we need to say take eight years to develop drugs not 15. we need to speed up and modernize the approval system for drugs. >> great aspirations. very good. thank you very much for the time. >> thank you. [applaus [applause] >> please welcome back, politico editorial director. marty. >> thank you. thanks for that great discussion, we're going to flip the stage here for our next panel. thank you, the pharma for sponsoring the event. don't forget if you have a
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questi question. sara, come on up. >> >> good morning, everybody. i'm politico's health care reporter. as a reminder, for those of you in the room and waving over the live stream, we're going to take questions over twitter, so you can tweet them to #politicohealth and we'll get to some of those later and i'll have a tablet on stage to get those questions. now without further delay i want to welcome our panelists, jerry anderson, a professor of health policy at john hopkins university, bloomberg's school of health. kristen bass, 15 years vice-president and policies and pharmaceutical care association. anthony baretta, senior vice-president in government relations at keiser permanente.
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and stacy, senior in practice of government affairs, and everybody's titles are practically the same. and dr. angus worthing, a partner and clinical assistant professor of medicine at georgetown university medical center. each of our panelists plays a different role and brings a different perspective to the pharmaceutical supply chain so we'll drive right in and you guys have already kind of been warmed up, but just so everybody is kind of on the same page. what we're talking about here is this process of when a medicine comes from the drug manufacturer and goes through the whole process till it gets to the patient and all the players involved from the wholesalers to the pharmacy benefits managers, insurers, to the pharmacist counter or your doctor and then to the patient, and how each part of that plays a role in the cost you're
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charged and the process of getting it to you. we're going to start off with kind after quick fire round so everybody knows one word anticipate, maybe a phrase, but keep it short and fast and go down the line. so, right now there's a lot of focus on the supply chain, in a year or two from now, is it going to be drastically different? start with you. >> i don't expect it will change dramatically, it's been taking a long time to get there, a long time to change it. >> the focus of the supply chain, the supply chain will be largely the same. >> i agree, it's taken a long time to get where we are, there will probably be new models, but overall roughly the same. >> i agree. >> i'm hopeful it's going to get better. >> we've got one outlier here. so we have some pessimists maybe depending how do you think the supply chain is doing right now, but we know that next week the president is supposed to be making some
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announcement around drug pricing and possibly affect this area and one of the things that the administration has already signaled, they're looking at through role making processes, not in a role, but they've asked for comments making about the idea of in medicare, part d, which is the outpatient drug benefit for medicare patients, this idea what they call point of sale rebates of sharing or patients when they go to purchase their medicine at the pharmacy counter, getting some of that rebate back. and when the company gets a discount making sure patients benefit a bit from that discount. start with dr. anderson here 'cause he's our academic. if that policy were to go into effect, what's the impact for patients in the medicare program, how does it affect the insurance companies, is it going to make ultimately a difference for a lot of people in terms of their costs of their medicine. >> so, we modeled that and looked at it from a perspective
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of the specialty drugs, the brand drugs and the generic drugs and most all of the discountry occurred -- discounts occurred in the big specialty drugs. we don't think that most people will end up paying anything for most of the specialty drugs which means you can increase the prices of them dramatically. we don't think it will help much in the price of the generic drugs. even though they're the cheapest they'll get little benefit from these changes. >> there aren't big time generic drugs mostly agreeing with what my colleague said. the rebates are built into the benefits provided to the beneficiaries. the reason you can end up with cost sharing at $10 for generics or $50 for the brand
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name drugs, the premiums are based on what the expected rebates are. by definition, it you get the drugs to the people taking, and offset their premiums, 10% of the people will have a net saving and everybody else in part d will have an increase in cost. and from our perspective and aar p's perspective lower the price of drugs , point of sale. >> and as pharmacist, would it change the work flow for pharmacies or change to implement this point of sale rebate system? >> one of the biggest complaints from the pharmacy and actually it's recognized by cms as well as congress is the retroactive fees that are imposed on pharmacies and it's an arrangement between the pbm and the pharmacy of which the
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patient is charged, pays a co-pay on this certain price and months later, there's a fee assessed back to the pharmacy where that point of sale price is adjusted and the farm sits actually sees less money. and in some cases, they actually see less money than it costs them to provide the drug or purchase the drug. and that fee has nothing to do with what the pharmacist actually paid. in addition, what cms recognized with regard to part d is that co-pay is assessed on what the pharmacist is charged or the point of sale price. so, i do agree, those rebates are higher on brand name, but in the end, even cms recognized the fact that patients are paying a higher percentage, hit the donut hole faster because of these point of sale prices which do not account for the ir or rebates until later.
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>> you want to jump this? >> i do, yeah, speaking about the patient. my patients are pretty sensitive to costs, and so, i was pretty excited by this proposal to pass savings and rebates along to patients because it's heart breaking to have somebody in front of me who we've made a diagnosis after a year or so and they've tried after a year or two less expensive and older drugs for something like rheumatoid arthritis or soristic arthritis and we make a value about their disease activity and come up with a prescription, one of the specialty drugs or expensive drugs, whatever you want to call them and i prescribe the drug and six weeks later and i'm excited to hear how they've been back to work, picking up their hobbies or picking up their grandchildren and they say, no, it was $300 and i couldn't afford it or whatever.
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i appreciate the potential for price pressures that you talk about, but we want to bring it back to the patient and the immediate effect that it might have on somebody who could get their medication. >> fair point. >> the medicare part d situation is a very structured market, it operates in a certain way. people who have very high-- very large drug needs taking very expensive drugs, because of the design of the program, they will almost necessarily pay the same amount out of pocket no matter how they run through the program. so, people with very high drug needs, we need to understand that it's a structured-- it's a structured system and it's less important. i mean, it's obviously, it feels important when you're paying at the counter, but over the course of the year, you're going to be paying what you're going to be paying and it's a question of timing when this is. and in the commercial market if somebody is commercially
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insured, it has an impact what the cost sharing is and we should recognize that. at the same time, the critical component here as krista mentioned, this is a system built up over a long period of time. it's a complex market. the rebates exist to stimulate competition among the manufacturers of different drugs. we need to encourage that and it all hangs off of the price that the manufacturer set. so when you talk about how much this is actually costing, it's very important that we perfect the system that exists and there are improvements that can be made, but the major problem is the prices that are set in the first place. >> and one other point for the audience, rebates are a structure that the manufacturers themselves came up with as a result of a class action lawsuit years ago. rebates are only determined after the fact, after market share has been moved to a given drug. you can only negotiate for a rebate if there's competition
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for that therapy. if there is no competition for that therapy, there's basically no rebate. you could end up with a super expensive drug with no rebate and never help a patient. i want to make sure that folks understand that. >> dr. anderson, i want to go to you, there's been focus on the rebate system and whether it's working well for the patient system for health system, for taxpayers. it was created to partially prevent kickbacks and so forth. is there another alternative instead of maybe even think about point of sale rebates, should we be thinking about something else instead of this rebate system that mighten courage companies to set a lower price for their product, rather than having a list price and then doing the negotiation and having the rebate, which i think confuses a lot of people and makes it difficult to track how the money a flowing? >> well, it confuses all of us.
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you know, the person who is making the decision about which drug i take is my doctor, and so, i want my doctor to have the right financial incentives to give me the drug that is both most effective for me, but also, the least cost. so, for me, putting it into a bundle payment, putting pharmaceuticals in a bundled payment makes the most sense because then the doctor can decide on either part b or part d, which of these drugs. we can also include them into accountable care organizations. so, it's really the doctor that should be making these decisions, not all the middlemen making those decisions for us. >> so, you've brought up medicare part b, that's the -- those are the drugs that doctors provide the patients, inpatient setting, not when you're in a hospital, but when you go for chemotherapy or an infused drug that you can't give yourself. secretary azar, the health and human services secretary has
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sort of teased or signaled over the past few weeks and really since his nomination that he feels like there need to be more market forces or competition brought into part b right now, drugs are reimbursed at sort of a formula of average sales price, plus, 6%, it's a little bit different now because of sequestration. he's mentioned this idea in the trump budget proposal and also mentioned the idea of leaving some part b drugs. into part d, making part-- part b more function in that way. doctor worthing, do you think that's a good idea and how do you see that changing dynamics? your face says it all right now. >> no, but so i want to make it totally clear just about every doctor in the united states, i don't want to speak for everybody, agrees that drug prices are too high in the u.s. on the other hand, talking a little bit about our prior conversation, what does each drug in the united states cost? i don't know. you know, we don't have the
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decisions, we don't have the information to make these rational decisions with our patients, but right now, if i'm taking care of the imagery patient i was talking about with rheumatoid arthritis, he or she has been struggling and we decide they need an expensive drug. if they're in the medicare stem a lot of these people have an easier chance of getting the drug if they get it through the part b system. if we utilize the part d program, because they're able to give themselves this injection at home or administer it to themselves, a couple of things happen. number one, there's a delay to get the drug authorized. it takes two weeks to four weeks. and i have-- there's some friction in the system where i employ people to fill out forms and interact with the pairs. number two, the drug might not get covered because there's negotiation and steps that go through, that patients have to get through to get certain drugs.
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number three, they almost always pay more out of pocket and there's good data from, i think, a study from acumen study that people would pay more out of part d than they would for part b drugs. they go through the donut hole. there's higher amount of cost sharing. so, it's the experience of rheumatologists across the country that the part b system is a lot higher access for patients. i'd be really concerned if we started moving those drugs into part b. >> so, one of the things i think that's important to mention and think about is that in the part b system, doctors are actually-- they're buying the drugs and patients are purchasing from them the way the formula is set up, they make a percentage of what they're prescribing, so there have been questions of whether the incentives are in the right place for doctors. doctor, at keiser, is there anything you'd like to try to put in place to make sure that the doctors are choosing the
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right drug, the best drug for the patient and choosing it based on the best cost through the system? >> i'm a lawyer, but i play a doctor on tv. >> i decided everybody is a doctor and call me doctor and i won't be offended. >> it's really an important question and i think the way that we operate at kaiser permanente, one of the reasons we do a good job on prescription drug management and do as well as we can to manage the cost of prescription drugs, because there's very strong alignment between medical groups and pharmacists who run our pharmacy system, they look very clairfully at what options exist in the marketplace and look at where the opportunities for competition among drug manufacturers and our purchasing people is sent out to negotiate with the drug manufacturers on that basis. one of the things that's important in this is that our
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physicians are not-- do not have incentives to prescribe a more expensive drug for economic reasons. and i do think that in the part b system, i mean, that's clearly a flaw. it's very important that physicians be compensated for their work, for their relations, for their management of the patient. it's very, very hard work and physicians do need to be compensated appropriately for this. having a direct incentive to prescribe a more expensive drug rather than a less expensive drug is something that we should figure out for the benefit of the medicare program and for the parents who are machine, being served by it and frankly, there are probably ways to do that and i think that's what needs to be looked at in this state. >> and i think just to piggy back on the-- the bigger issue is the fact that often drugs are looked at separately than the medical benefit, even in the part b system which is more outpatient
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service, it's still the part b drug spend and when you look at part d, every incentive is to keep the drug spend down, but nothing is looked at as far as the medical benefit, what happens, are they hospitalized more because of some of the drug decisions, so back to, you know, transparency and looking at data. we really need to look across all spend to see what impact drug decisions are having, because just to look at a drug spend, looking at every incentive to keep that drug spend down. what happens, that personal is hospitalized or going to the doctor more frequently. i think it's more important to look at data across medical and drugs. >> staysie -- s stacie has a good point. >> they need the right incentives to keep it. >> if you look at drugs for fees service basis and gets moved in, it doesn't work well.
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so you need the same incentive and you need the same incentive for all drugs, it shouldn't be these drugs get special status and these do, all drugs should be treated equally. >> a couple of you brought up transparency and data. he think probably for consumers, that's one of the most difficult things to understand in that whole supply chain is, what their drug costs, what it costs to them. who, who's playing a role in getting the drug to them. there's been a lot of talk in congress, in state of adding more transparency to the system. dr. anderson, what kind much transparency could the federal government maybe ask of the different players in this supply chain, whether it's insurers, drug companies, and how would that be useful in constructing, perhaps, a system that makers-- works better? >> transparency alone, i don't think gets very far.
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and either to regulate it or have much greater competition is not an effective approach. so what you need to do is premier-- or to put it in with something else, that the states right now are doing. so, one of the things that we worked on in maryland was a rate spending commission where there's very expensive drugs are-- we have to justify, the states wants to justify those prices and it could be used any methodology, but we have to try to figure out how to justify it. it's price transparency with some kind of system which allows either regulation or competition to work more effectively. >> and right now in maryland, i believe, the courts have said at this point that's not constitutional, correct? >> but now it's going to be looked at by the full 4 he circuit so we'll see whether or not the full circuit agrees with two judges. >> that, i think, brings us to an interesting next question, which is what levers does the
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government have, what levers do state governments have, what levers do the federal government have to intervene here and what leathers do you think they should or shouldn't have? >> i would like to give a shout out to three active bills in congress right now because i have looked up and i wanted to look. hr 5343, buddy carter probably one of your members, i think he's a pharmacist, sent in. >> the only one. >> i think. >> he likes to make that known. >> georgia first. s 2533 senator stabenow of michigan, and susan collins, allowing pharmacists to tell their clients, our patients, when 10, 20% of moments when they're getting medicines at the pharmacy it's cheaper to pay cash than to use insurance.
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i think everybody on the panel think that's a good thing and allow that and codify it into law and that seems to be pretty popular and i wanted to plug the bills. >> 11 states have passed laws on that, a gag rule, 11 stes >> we're getting around the country. the next step on that, to my earlier comment just having more transparency in the process. information at my fingertips, what a drug is costing and what it's going to cost to the patient when i'm prescribing it and putting that information into the conversation about risks and benefits in the bigger sense would be great. >> i appreciate the plug. thank you, you shortened my remarks. in the category of active bills, you know, given that i saw recent stats from 2012 data so it's likely higher, the u.s. spends over 600 billion dollars on medication related errors in the health care system. and the fact that no other
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health care professional has more medication expertise than the pharmacist, i think having the pharmacist more involved within providing medication management and type services. so, hr-592, 109 have more than 50% of the senate signed on as well as over 60% of the house, very bipartisan, which allows medicare part b to pay for pharmacist services. we strongly encourage that bill. it happens to focus on those in medically underserved community so it's where there's not enough providers currently. this would help to have a health care professional engaged earlier and in the treatment of a patient and also focused on the management of their chronic disease medication management. >> i wanted to ask you, actually, with all the focus, and cost of medicines these days, has the pharmacist role changed a lot, do you get different inquiries in patients than you used to, how are
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people approaching the pharmacist, or the pharmacy counter differently than they were maybe five, ten years ago when there was les focus? >> well, the advent of insurance and co-pays, you know, 10, 15 years ago, really changed things. you know, patients would come to the pharmacist and think it was the pharmacist changing that price and when they had a really high co-pay or it wasn't covered, you know, it provided a relationship between the pharmacist that was difficult because they were the one relaying the information when it had to do with the insurers. i think the education, health savings accounts and patients realizing the roles of insurers setting that price. you know, drug cost is a huge issue and the pharmacist spends a lot of time trying to find lower cost alternatives for the patients, so, it has changed in the fact of more time is spent trying to find alternative solutions and therapies to the
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patient. but, also, realistically, they spend a lot of admin time on the phone, calling the physician because their drug isn't covered, and/or it's rejected for a certain reason when it's not always clear. it's made it more difficult and time consuming and administratively burdensome. >> in the back before tony, bret and i were talking, on the flip side you mentioned there may be places where you do not want to have too much transparency because you lose out on certain competitive advaages wnou have pa i negotiating with drug compaes for a discount. can you talk about that and go into that a little more about why you think there are areas that should maybe deliberately be a little bit okwe opague.
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>> and you have to maintain what a confidentiality agreement is. there's ways to make sure there's broad transparency around general levels how things are operating inside the marketplace. one of the things that we've faced for many years now in the pharmaceutical market is that those negotiations that we want to have with drug manufacturers are limited because of the regulatory scheme that's in place that creates a price floor under the entire market. you know. in 1990 there was most favored nation provision provided to the medicaid program which eliminated many of the deep discounts that were in the market before that. policies could be changed and modified so that state medicaid and others are freeing up-- >> you're referring to medicare, the best price rules that medicare gets essentially. >> medicare or medicaid. >> medicaid.
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that's 23% discounts or the best price of the market. >> or the lowest price on the private market. >> you would change that how? >> well, sure, you could have a higher flat rebate that basically provides that least same amount of revenue to the states through the medicaid program or providers who benefit from that and negotiate better pricing in the market that could help drive overall prices down, so, we've been operating under this for a long time and it's probably to relook at it. >> so, part of what that is, if the market is trying to move back towards the value based and the shift in the supply chain. right now, if a manufacturer agrees to say, okay, 50% of the time our drug is going to absolutely work and 50% of the time it might not work and you will not have to pay, you will pay zero, we will sends you your money back, for the people it doesn't work with. if it does as much as 50% of the time you immediately run
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afoul of medicaid best price. the cheapest price in the market, the drug is free, so who wouldn't want that, right? so, there needs to be some changes to best price, say to allow to that kind of contracting. >> basically all corporations are living in lake webegone and think they have the best deal. and all the this effort to get the best deal means ultimately france and germany and everybody else pays significantly lower prices than we do. >> if i can go back to the transparency issue briefly. >> sure. >> for some number of years i worked for an insurer, this is a classic example what happens when you have the wrong kind of transparency and fcc talked about this as classic collusion. we had a great idea if we just told the patient which were the
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high cost, high quality hospitals and which were the low cost, high quality hospitals, by definition, if you were a patient, you would say, well, gosh, i'm going to the low cost high quality hospital, right? but the hospitals themselves immediately learned which one they fell into and they immediately the low cost ones said what, are we morons and they raised their prices. it didn't work. tacit example of collusion, that's what happens when you have the wrong kind of transparency. >> and they often talk about prices like a bubble or a balloon and it's hard to make one shift without causing an unintended shift and so forth. and one of the things i definitely wanted to bring up here, we talked a lot about what the white house administration may do in the recent months or years on the topic, but we also have a lot of changes going on within the industry right now. we have some big potential
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mergers, so, we have cvs is looking to buy aetna and then cvs is the biggest pbm and one of the biggest insurers, and others. how is this going to change this whole drug supply chain? what does that hold for the future and what do these mergers mean if they go through? >> simple answer is we don't know. slightly more nuanced answer is, i'm concerned if i'm not insured by aetna or cigna that i'll get the best deals for drugs and i'm concerned if i'm a pharmacist, especially a small pharmacist, then i'm not going to get a particularly good formulary and prices when i'm competing against cvs. >> anybody else want to weigh
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in? do they think that this is going to change sort of the cost for their patients, the benefits for patients? >> i think our concern is always patient access. as there are fewer players in the market, you lose, first of all, from the pharmacist aspect, you lose negotiation power for people to think, oh, you can negotiate your terms with an insurer, and the larger an insurer gets, we found now already they're take it or leave it contracts. so, the negotiation powers always a concern, but patient access. the fact that an insurer can build a network that has, quote, unquote, access, and meanwhile, the patient's pharmacist is not included in the network, and those choices are happening and we're seeing more and more patients unable to go to the pharmacy of their choice. the interesting thing about the potential mergers that they go through is that we've had pbm's
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around for a number of years now and actually the two essentially-- we really have no more big bpm's and it could be a big change for the structure of the industry. is there a reason why we're moving more towards the integration of the pbm with the insurer? >> we're seeing consolidation across the board in the health care industry. i mean, hospitals are consolidating, doctors are joining with hospitals, i mean, this is just part of the they think. we will ultimately have one hospital system and one insurer and it might be the federal government being one insurer, but we're essentially moving in that direction and the same thing is happening in the pbm space. one thing that's possibly different, the american corporation is concerned about the prices that they're paying for pharmaceuticals, and so, specific business group on health and other ones are developing what they call
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waste-free form lear i -- formulary where they're looking for the best clinical evidence and trying to figure out based upon that how do we design the formulary, so, it's a different approach that corporations are doing trying to essentially not eliminate the pbm, but to eliminate some of the incentives. >> not all doctors are joining hospitals. a lot of us are still independent and the-- to get back and sort together multiple parts of the conversation where we talked about doctors getting reimbursed for prescribing expensive medications, at the same time, there's a big shortage of rheumatologists. i'm one of the 4,000 rheumatologists, 4,000 out of a million in the u.s. and where studies show we're going to need to double the amount of rheumatologists by 2030 in order to take care of everybody. meanwhile, those of us in independent practice pay our bills in a capitalist system,
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but we get paid often in a socialist system and that's the way it is with medicare and medicaid. unfortunately, if you reduce that reimbursement, a lot of small practices, rural practices join the hospital where choices go up and send to the hospital or go out of business and move to the city. so i'd hate to see access to care and treatment to go down with some of these pending reforms. >> i think it's a really valid concern, and practitioners have built up their practices over time, based on a set of economics that have been established, based on rules that exist, and it is impossible to simply come in and make one tiny change and say, we're going to take this away and then everything else is going to be the same. it's important to understand that we have a system that exists, it has unintended consequences and needs to be periodically revisited. and at the same time, we should understand there's no such thing as a free ride.
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when we reform we need to make sure we right size the economics, so in this case, for example, physician practitioners are paid appropriately for the services that they're providing and, in fact, you know, in a situation like part b, if you wanted to take out the incentive to prescribe a higher cost drug, instead of a lower cost drug, you should look at it and say, this is what doctors get paid now, let's build a new system that's roughly equivalent to how they're getting paid now, but eliminate the incentive that drives up these other costs so you have to look at the whole. i didn't want to be interpreted as saying, just all of that money comes away from the doctors and everything else stays the same, but like any of these things, and this is complicated, the supply chain is complicated. if we're going to change the regulatory scheme it's going to take time and needs to be done thoughtfully. quick fixes really don't work very well. so, we had need to take the time to be thoughtful policy
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makers. >> perhaps none of you thought we'd have a different system in the next year or two because it takes a lot of time, obviously, going through the rule-making process and the federal government will usually take almost a year or two. we're getting lower on time so i wanted to turn to some audience questions here. you can tweet us at #politicohealth if you want to ask one. they have a question here about drug coupons, a key way for consumers to lower out of pocket costs for drugs, but commercial insurers are increasingly refusing to count these coupons toward a patient's deductible, which could raise that patient's health expenses. is this practice concerning? >> yes. so, this is also known accumulator adjustment program or goes by many names. the expensive drugs that we have prescribed often don't get in the hands of patients unless they have a coupon from the drug maker, manufacturer. in three states, at least, and
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here in the district of columbia, there's a cap on the monthly amount that people are by law allowed to be charged for their medications, so, i'm concerned, number one, personally that that might be illegal for patients to have to pay more than $150 a month, for example, in d.c. also, they're just not going to get their medications if they have to pay super high deductibles. the bigger picture though is pretty disturbing, that hiding, i think, doctors will admit, hiding the high cost of medications from patients tends to increase pressure on prices to go up, and all i know is that i want my patients to get the drugs i prescribe and i would like to leave the complicated economics to the people at the other side. >> you've sort of alluded to it at the end, there's concern on both sides that you know, you want patients to be able to get their drugs and afford their drugs, but there's also been concern that by insurance
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companies the co-pays are used to steer patients to a more expensive drug or a drug they might not otherwise need to take, but then also insurance companies will say, well, we've created these deductibles for a person again to try and steer people to the health spending that makes the most sense for them. >> you've made the argument. >> is there anything-- well. >> is there any way to handle this issue rather than-- i think patients probably feel caught and a bit in the middle here, right? they want to be able to afford and get their medicine. is there another solution to these coupons, rather than the coupons or the drug prices-- >> drug prices to be lower. >> if drug prices were lower, you could have drug benefits that didn't have deductables. >> or high cost sharing.
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>> the coupons are a price increasing enablement system. the entire system is designed to innoculate the decisions to raise prices that's especially what's going on. >> they're illegal in medicare part d. they're considered a kickback and the kickback is obviously, if the manufacturer gives you a coupon, you'llake the drug dasically they're helping themselves, that's the series. >> woo we're talking coupons which are small potatoes compared to patient systems, these are flap philanthropies, charities whatever you want to call them, they're of the top 15 charities in the united states ten of them are patient assistance programs and that's much more important it in the dollar impact than the whole issue of coupons. >> when you're talking patient assistance programs, charities that set up that give medicare patients away and count on
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their drugs and violates the government programs. >> right, so it's a work around to get around that no coupons in the public sector, but it's much more important in terms of dollar impact than the whole issue of coupons. >> essentially for patients, they operate the same way, the effect i have them is kind of felt in the system the same way. >> it's not specific to a drug. >> right. >>, but it is essentially reducing your cost sharing. >> okay. well, we're just about getting out of time today so i kind of want today bring everything together. we've had a pretty wide-ranging discussion from medicare part d to out patient space, part b, called outpatient drugs and thing most people think of them is in in-physician setting. we're talking about mergers with pbm's and health insurers and run the whole gamut. i hope everybody can take something new with them and
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thank you very much for coming. we want to, of course, thank phrma for sponsoring this conversation and please stay tuned and follow politico live for more about it to come. thank you very much. [applause] [inaudible conversations] [inaudible conversations]
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.. >> next, paul clement, and for the bush administration from 2005 until 2008 gives an analysis on the current supreme court term in cases being reviewed. he spoke at the republican national lawyers association annual policy conference at the national press club in washington d.c. this is 30 minutes. >> and now, i cannot think of


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