tv Prescription Drug Supply and Costs CSPAN May 3, 2018 10:30pm-11:34pm EDT
professor at harvard law school. she has argued against the death penalty and a number of cases before the court. she is also a former clerk for former supreme court justice thurgood marshall. kent scheidegger. landmark cases monday at nine in caulk eastern on c-span. follow us on c-span. and we have resources on our website for background on each case, the landmark cases companion book, a link to the national constitution center, and the landmark cases podcast at c-span.org/landmarkcases. talkedth-care analysts about the supply chain for
prescription drugs and how it affects drug prices. the first part of this event includes the pfizer ceo. politico hosted this event at seum in washington dc. : i am politico's editorial director. i would like to thank everybody for joining this event, deconstructing the prescription drug supply change. americans are concerned about the rising cost of drugs, and there is currently scrutiny on capitol hill about the drug supply chain and how that contributes to costs. lawmakers are mulling bills that would more heavily regulate practices by various players along the supply chain. a lot of large
pharmacy benefit managers are in the process of merging with insurance companies, raising questions about how consolidation in the industry will affect consumers. we will explore these issues with representatives from across including chain, pharmacists, medical practitioners. brief, also introduce a sponsored conversation and i will introduce our editorial panel led by politico's health care reporter who is on the pharmaceutical beat. she will talk about what can be done to better control costs. join me in welcoming steve to the stage. [applause] steve: thank you, marti, for that kind in the direction.
i would like to thank "politico" for hosting conversations like today's that cover important health care topics. i get to travel the country and meet with researchers and and get a chance to see what is 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 the dark, or teach our bodies to fight cancers within cures as make unique as everyone of us. we now have a gene therapy to treat childhood blindness. we have an amino therapy where you take cells out of the human body, modify them, send them back into the human body to cure cancers. andks to our scientists researchers, that day is today. what if has become what is? our future promises longer,
healthier lives and lower cost. today we have a consolidated purchasing environment were three pbm's control about 70% of the market. use that leverage effectively and as a result we saw that slowest growth in medicine spending last year, just 0.6%. rice is for brand name medicines grew just 1.9% after discounts and rebates, below the rate of inflation, not medical inflation but overall inflation. rebates and discounts are going up. our company's rebate is on average about 40% of the list price of a medicine, two elements of the supply chain. rebates and discounts totaled $130 billion last year alone. that was 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 that if costs are slowing and rebates are growing that patient costs would be declining. but they are not. insurers are increasingly shifted more of the cost of medicine on to patients, with deductibles increasing 300% since 2006. more medicines are being subject to coinsurance instead of more modest co-pays. and many patients are paying far more than their insurer for the same medicine. that is unacceptable. some think we have to choose between innovation and affordability. i believe that is a false choice. we can have both. there are market-based solutions to address these challenges and i will talk about a couple. first, we need to make sure insurers and pharmacy benefit managers share discounts with patients. recently, united health and at not announced they would share etna announced that
they would share some of the rebates. we believe this is a step in the right direction and we should believe it is taking place not only in the commercial market but in medicare part d as well. and we need to move away from a convoluted system of rebates to one that measures success in the eyes of the patient and enables the private sector to develop forand better ways to pay medicines. in short, the supply chain is complicated but we must ensure we align incentives to ensure patient benefits from the fruits of the marketplace. until then, the work of america's health care system is not done. he have to get this right and i believe we can. it is my pleasure to introduce to speakers. ian reid is the ceo of pfizer. a 40 year veteran ofera pfizer.
he has had a seat at the table negotiating deals with every element of the supply chain. of mendelson is president rppellee or health -- avalie health. dancers on the board of several health-care companies. i will now turn it over to ian and dan. thank you. >> i'm looking for the fireplace. i don't see one. >> it is cold here. >> you will warm things up. >> i will try to. you wrote a linkedin essay recently that was focused on the supply chain and you said specifically, the u.s. health care system's cost structure needs actsing. what were you talking about and
heady think it should be fixed? dan: is amazing that we never even compare our cost structure to the europeans. 70% to 80% gdp on health care and the europeans spend 10%. wouldn't it be good to inquire why and where? much of it is due to hospitals, inpatient and outpatient. the drug budget in the united states is 2% of gdp and in europe it is 1.5%. wouldood place to start be asking, why do we spend more on hospitals and outpatient? is because we have a sicker population? is it because the system is an responsive when we go to emergency rooms? is it because we don't have insurance that meets people needs -- that meets people's
needs? that is we have to answer. ian: what is the role of the government versus the role of the private sector in achieving these efficiencies? dan: part of what you get in lines,is rationing and and i think the issue is there is no shortage of regulations. we have overregulated and overregulated health care, and the problem is we are not getting the incentives right. and to me it is, how do we get the incentives in the right place? ian: what kinds of incentives do you think are missing right now? dan: let's discuss that. where are most patients health? -- where are most patients held? 95% of patients stay in the same hospital system their whole life.
and as hospital systems integrate, i think the providers need to be focused on health care. providersget the focused on ensuring the population they serve are not how many injections they do or how many diagnostics they do or how many cat scans they do, but focus on the health of their patients and pay them for that risk, i think everything aligns very quickly. i think you get incentives for the hospitals and providers to use that will the lower long-term costs, the will to keep people healthy, and i think we have to get the private sector in a lot more strongly to work with their employees for health care, or wellness care. i don't think the incentives are large enough to change the behaviors and the motivations of our colleagues or employees.
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 they are following this wellness program. seen a lot of companies get engaged in that, ranging from health-care companies to walmart and others. what should be done to incentivize that? present system giving enough incentives for those kinds of activities? dan: i think there is a regulatory problem. if i want to say to my colleagues, you will represent this much expense for the business and that is taking away resources that could be used for research. you ann't want to give incentive and not be able to verify, because then it becomes an incentive that i don't think is effective. with i could structure
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 you let me see your lipid levels, the me understand if you are adhering to your medicines, and right now we can't do that. so that type of change will allow private industry to really focus on keeping the population healthy. get your ideas on rebates, and specifically this idea that the rebate dollars are not being funneled back to patients. what are your thoughts on that and how do you think it should be fixed? : i would repeat steve's comments, but i would like to see rebates for the majority, and i think there is a place for volume discounts. there is a place for
negotiations in the marketplace, but i think it is totally out of control. and what is happening is the give, especially for specialty products, which are products of high value so we rebate, they are not getting to the people who need them. they're not getting to the people who take the medicines. they're being used to offset overall premiums. we have got this fascination since obamacare on, how low can the premiums go regardless of the quality of care? rebates go to lower premiums for healthy people, while the sick people who are taking these medicines hateful full boat.icines pay do you think this can be accelerated so that you can get to a place where there is more transparency, and the situation is returning more to patients?
is thatt of the issue the government itself or dissipates in this, in medicare. as they receive the rebates a result of negotiations that they used to lower premiums. see this as, if the rebate is delivered to the patient than premiums have to go up. i think we need to break this idea that a two dollar increase in premiums would effectively allow most people to have very low co-pays on their medicines, the sickest people. ian: let's talk about other pricing measures. importation on drugs to canada, what are your thoughts on that and why is the industry opposed? reasons thate two we oppose it. one is that we have a reasonably safe distribution system in the united states. once you open it up to
importation you lose control of that. say they are imported from canada, you won't be importing a product the canadians would be using, you would be importing trans shipments through canada from who knows what destination. in the canadians have said they don't verify the trans shipments the go through. canada. -- that go through canada. so it is a real safety problem, ensuring the drug supplies safe. secondly, it is a gimmick. you are importing to the united states a free writing philosophy. iding philosophy. canadians and europeans don't pay for their fair share of innovation, and importing is saying we are going to allow this practice is. ian: do you think the canadian government would allow important to the united states? host: not from canadian --
dan: not from the united states -- not from canadian medicine. they would stop it immediately. ian: i have a court here, out ofs shouldn't pay control out-of-pocket costs. sick people aren't supposed to be subsidizing the healthy. i justat's the argument made about rebates, subsidizing premiums oflower two dollars to three dollars and have diseases are paying at the benefit of the rebate. i look atain, insurance and i don't understand. most of us ensure our property, cars, probably cars is a bad analogy but we ensure our houses.
burns down you can't afford to replace it. you need insurance. we need the same with health care. if you are unfortunate and get a chronic illness or cancer, you can't pay for it. you need good insurance. that's what we need here. we need a system where insurance meets the obligations and treats people the way they should be treated. you look at the drug supply, and we get a lot of pressure on drug pricing. it isnot drug pricing, drug affordability that is the problem. i see no signs in our industry, in total, of rent seeking by an is makinghat unusually-large profits. if you look at the indices in bloomberg, the pharmaceutical indices sit right in the middle. low returnasonably on capital, a low return on investment. 's are in thes pe
middle of the bloomberg index. are price-earnings and pfizer's sit at around 12 to 15. packaged goods companies are 22. that theno evidence industry's rent seeking in his profits, but individual products are high-value and expensive because they have to support an ecosystem. competition and drug markets, we hear the administration talking about it a lot. what kinds of changes do you think should be adopted to increase innovation and improve competition in the market? you increase competition by assuring that there is faster approval of generics. and you look at your regulations to ensure the regulations allow fast and speedy approval of generics, and they don't get caught up in arcane regulations.
that's what happening in the united states. most of the generic problems we see our because of the cost of regulation. people are abusing the regulatory system. on the 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. so that is the sort of economic reply. , we need toterm take eight years to develop drugs, not 15. we need to speed up and monitor rise -- and modernize the approval system for drugs. >> thank you very much for your time. >> thank you. these welcome back -- please welcome back politico's marty katie. >> we are going to flip the stage for our next battle.
please welcome sera carlyn smith and the editorial panel. observations, # politicohealth. sarah, come on up. sera: good morning everybody. i am politico's health care reporter. room and of you in the watching the livestream, we are going to take questions over twitter. you can tweak them to #politicohealth and we will get to those later. panelists.elcome our
we are talking about this process, the medicine comes from the drug manufacturer and goes through the whole process until it gets to the patient and the players involved, from wholesalers to insurers to the pharmacy counter or your doctor and then the patient, and how each part of that plays a role, and the costs that are charged and the process of getting it to you. will start with a quick fly around so everybody has a one-word answer or short phrase. keep it fast so we can go down the line. right now there is a lot of focus on the supply chain. in a year or two from now, is it going to be drastically different? will changehink it dramatically. it has taken a long time to get there. it will take a long time to change it. >> the supply chain will largely be the same. >> i agree. it has taken a long time to get
where we are. therewere probably be -- will probably be new models but it will take a time. -- but it will take time to get there. we have some pessimists, maybe, depending on how you think the supply chain is doing next now, but we do know week the president is supposed to be making announcements around drug pricing that will possibly effect of this area. one thing the administration has signaled they are looking up processes,emaking about the idea of medicare part d, the outpatient drug benefit for medicare patients, this idea what they call point-of-sale getting some of that rebate back at the pharmacy counter. so when a drug company gives an insurance company a discount, making sure patients benefit a bit from that discount.
i will start with dr. anderson. if the policy were to go into effect, what is the impact for patients in the medicare program, how does it affect insurance companies, is a going to make a difference for a lot of people in terms of costs of their medicines? >> we modeled that and looked at it from the perspective of specialty drugs, brand drugs and generic drugs. most of the discounts occur in the very expensive specialty drugs. willn't think most people actually end up paying anything for most of the specialty drugs, which means you can increase the prices of them dramatically. we also don't think it will help very much in the price of generic drugs and although they tend to be the cheapest, they will get very little benefit from these changes. >> there are no rebates from generic drugs, number one,
agreeing with most of what my colleague said. the rebates are already built into benefits that are provided to the beneficiaries. the reason you can end up with cost sharing is because you are taking into account the rebates. plus, premiums are set at a level based on what the expected rebates are. by definition if you give rebates back to the very people who are taking drugs that for whom getting rebates back will offset the increase in their premiums, you end up with 10% of the people will have a net savings, and everybody else and medicare part d will have an increase in their costs. from our perspective, the answer is lower the price of the drugs as opposed to giving rebates back at the point-of-sale. stacy, as a pharmacist and
someone who works with would it change the workflow of pharmacies to implement this point-of-sale rebate system? biggest complaints from the pharmacies, and it's been recognized by congress, is the retroactive fees imposed on pharmacies. it is an arrangement between the pbm and the pharmacy, of which the patient is charged, pays a co-pay of a certain price, and months later there is a fee assessed back to the pharmacy, where that point-of-sale price is adjusted and the pharmacist actually receives less money. and in some cases they receive less money than it required them to purchase the drug, and that fee has nothing to do with the drug that the pharmacist actually bought and the price the pharmacist actually paid. that co-pay is assessed on what the pharmacist is charged,
the point-of-sale price. i do agree those rebates are inher on brand names, but the end even cms recognizes that patients are paying a higher percentage, and hit the doughnut hole faster because of these point-of-sale prices that do not rebate that is assessed later. >> speaking about the patient, my patients are pretty sensitive to costs. by this proposal to past savings on to patients, because it is heartbreaking to have somebody in front of me who, we have made a diagnosis and they have tried after a year or two, less expensive drugs, for something like rumor toward arthritis -- for something like rheumatoid arthritis, and that we have a conversation about their medical values, their past
medical history, their disease activity, and we come up with one of these expensive drugs, and i prescribed the drug in six i am excited to hear about how they are doing, their hobbies and the grandkids and whatever, and they say, a was $300 and i couldn't afford it, or whatever. so i appreciate the potential for price pressures you talked but we always want to bring a back to the patient and the immediate effect it might have on somebody, so they can get their medication. >> one thing that is interesting is, we are talking about a couple of different things. the medicare part d situation is a structured market that operates in a certain way. people who have very large drug needs who are taking very expensive drugs, because of the design of the program, they will almost necessarily paid the same amount out of pocket no matter
they run through the program. so people with high drug needs, we need to understand that it is a structured system. it feels important when you are paying at the counter but over the course of a year, you are going to be paying what you are paying and it's a question of timing of when this is. and for somebody who is commercially insured, it has the potential to have more impact than somebody who is cost-sharing ultimately is, and we should recognize that. at the same time, the critical component here is, this is a system built up over a long time, is a complex market, rebates exist to stimulate competition of manufacturers of different drugs, and we need to encourage that. and it all hangs off the price that a manufacturer set. so when we talk about how much this is actually costing, it is important that we perfect the system that exists. there are improvements that can
be made but the major problem are the prices that are set in the first place. rebates are a 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 encourage 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. 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. >> 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 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 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. 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. >> 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 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. [laughter] >> 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
-- very carefully 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 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
patients 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 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. >> 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. 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. i 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. role in getting the drug to -- 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. knowing it but without ability to regulate it or have much greater competition is not an effective approach. so what you need to do is to put it in with something else. 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 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. 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 states. >> 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 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 people approaching the pharmacist, or the pharmacy counter differently than they were maybe five, ten years ago when there was less focus? >> 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 information when it had to do with the insurers. i think the education, health and patients realizeing 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 find alternative solutions and therapies to the 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 advantages when you have payers, in negotiating with drug companies 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 okaywe opague. 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. 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 other providers are either held harmless and free of more negotiations. >> you're referring to medicare, the best price rules that medicare gets essentially. >> medicare or medicaid. >> medicaid. 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 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 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 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 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 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 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, 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. show less text 00:52:23 i think -- >> 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. 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 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 here in the district of columbia, there's a cap on the monthly amount that people are by law allowed to be charged for the medication. 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 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 are 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. >> 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'll take the drug and basically they're helping themselves, that's the series. -- that is the theory. >> we're talking coupons which are small potatoes compared to patient assistance programs. these are billion-dollar philanthropies, charities, whatever you want to call them,
set up by drug companies. are 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 their drugs without violating the drug -- the government program. >> 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. >> 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 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]
clerks on friday, live coverage ona congressional briefing structure. on c-span 2, discussion about the future of the korean peninsula and north korea's nuclear program. live covers beekman -- begins at 9:00 15. 12: 30, british one policy the council on foreign relations. this weekend, on c-span, saturday night at 8:30 p.m., journalists and law experts discuss commitment protections in the digital age. panetta, reince priebus, and carl bernstein and bob woodward on the american presidency and the american dream. night,an 2, saturday
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>> tide did not realize until i began to talk to the asked -- the astronauts how big a role the wives played. all three of them believed, without their wives, they could not have pulled this off. caring's --the most the most daring mission nasa had ever run. it was done very quickly. everything was for the first time. these men needed winds at home who were absolutely supportive. not just supportive, but did not reveal to their husbands how much they were suffering and how terrified they really were. >> q&a sunday night at 8:00 eastern on c-span. rod rosenstein was the keynote speaker at a meeting of lawyers for civil justice. he talked about corporations and the rule of law. this i