Trump’s New Drug Pricing Plan Isn’t ‘The Best Deal’ For Patients

Within days President Trump will unveil a new plan to reduce drug prices.

The proposal would indeed slash Americans’ pharmacy bills— at least temporarily. But those savings would come at the expense of patients’ access to cutting-edge drugs. The reform would also jeopardize future medical breakthroughs.

The administration’s proposal would restructure Medicare Part B, which covers advanced, physician-administered medicines that treat serious chronic diseases like cancer and multiple sclerosis. On average, Part B drugs cost 80 percent more in the United States than in other developed countries. Why do Americans pay more for the exact same medicines?Simple— the United States doe not impose price controls on pharmaceuticals; other nations do. Many foreign regulatory agencies won’t even make medicines available to patients unless manufacturers offer enormous discounts.

As a result, patients in those nations have fewer treatment options. Consider cancer therapies. Ninety-five percent of all oncology medicines approved anywhere in the world between 2011 and 2018 were available in the United States. By contrast, patients in the United Kingdom and France had access to only 74 percent and 65 percent of those treatments, respectively. Inexplicably, the Trump administration wants to copy Europe’s anti-patient policies.

Under the administration’s proposal, Medicare would reimburse doctors based on an “international pricing index”— essentially an average of the prices paid in other countries, including Canada, France, and the United Kingdom. Indexing Part B reimbursements to these countries’ prices would effectively import their access restrictions too. It would deprive the sickest, most vulnerable Americans of their medicines. The proposal would also discourage medical innovation.Drug development is a challenging, expensive endeavor. It costs almost $3 billion, on average, to bring just one new drug to patients. And nearly 90 percent of all medicines that enter clinical trials ultimately fail to win FDA approval. But if the United States adopts price controls, companies won’t pursue as many research projects. The meager potential returns wouldn’t justify the considerable risks. A slowdown in medical innovation would jeopardize U.S. health gains. In the past three decades, cancer death rates have fallen 27 percent. Roughly three-quarters of those survival gains are attributable to new medicines.

By limiting patients’ access to existing drugs and discouraging the development of future ones, the proposal would make it harder for Americans to manage their conditions and avoid costly complications. According to a study by my organization, the Partnership to Fight Chronic Disease, new medicines could avoid $6 trillion in healthcare costs and prevent 16 million deaths by 2030.

The administration’s proposal condemns Americans to the same life-threatening access restrictions that patients in other countries endure. It’s a lousy deal.

Kenneth E. Thorpe is a professor of health policy at Emory University and chairman of the Partnership to Fight Chronic Disease.

Addressing Out-Of-Pocket Costs Key To Health Improvement And Cost Savings

More than 190 million Americans suffer from chronic diseases. For them, healthcare reform isn’t a political football— it’s a matter of life and death.

Unfortunately, both parties keep pushing reforms that won’t improve patients’ lives. One side is focused on making insurance coverage skinnier and cheaper; the other on having the government takeover large segments of the healthcare system, setting prices, and sacrificing innovation and consumer choice.

Both these approaches would make it harder for patients to get the care they need and burden our healthcare system in the long run. To cut costs and help patients save billions, politicians ought to focus on making preventing and managing chronic diseases more accessible by addressing out-of-pocket costs.

Chronic diseases account for 90 percent of all U.S. healthcare spending. Today, six in 10 Americans live with at least one chronic condition.

People with chronic conditions face unreasonable out-of-pocket costs. On average, individuals with two or more chronic diseases spend five times more out-of-pocket than patients without any chronic conditions. People with three or more conditions pay 10 times more.

These out-of-pocket burdens have grown as insurance has steadily shifted more costs onto patients. Because of such trends, average out-of-pocket spending has grown 58 percent over the past decade.

Consider the growth of high-deductible health plans, which typically require

patients to pay thousands of dollars out-of-pocket before coverage begins.

This year, 30 percent of workers have a high deductible health plan compared to just 4 percent in 2006. For people living with chronic conditions, surging out-of-pocket costs often mean delaying or forgoing care altogether.

A recent study showed that even women receiving a breast cancer diagnosis delayed treatment at every step— screening, testing, surgery, radiation, and therapy— when insured under a high deductible health plan.

This harms patients and adds to overall costs. Medication non-adherence alone causes approximately 125,000 deaths and adds nearly $300 billion to America’s healthcare bill annually. In fact, we spend more failing to optimize adherence and medication benefits than we do on drugs themselves. Reducing out-of-pocket costs would improve adherence— thus keeping people healthy, saving money and lives.

As Congress considers legislation to improve our healthcare system, it is shortsighted to focus on just one silo of care in our continuum.

Instead, policymakers should focus on ways to lower out-of-pocket costs for people living with chronic conditions. Improving access to high quality chronic disease care could save our nation $6.3 trillion in spending.

Chronic diseases are the number one cause of death, disability and rising healthcare spending in the United States. The only way to save lives and reduce costs is to invest in better treatment— and address out-of-pocket costs so treatment is accessible to the people who need it most.

Kenneth E. Thorpe is a professor of health policy at Emory University and chairman of the Partnership to Fight Chronic Disease.

Insurance Flip-Flop Hurts Vulnerable Seniors

The vast majority of seniors have at least one chronic condition, and more than two thirds have two or more chronic conditions, so choosing the right coverage is important.

Fortunately, premium prices are expected to remain stable. But out-of-pocket pharmacy costs are expected to rise thanks almost entirely to the benefit design set by many insurance plans. To keep premiums low, insurers are saddling sick enrollees with higher out-of-pocket bills.

Increasing out-of-pocket expenses for patients with multiple chronic conditions is counterproductive.

Higher cost sharing reduces the likelihood of adherence to medication regimens, thus aggravating people’s underlying health problems and driving up costs elsewhere in the healthcare system.

Research shows that non-adherence causes at least 10 percent of hospitalizations and costs the rest of the healthcare system upwards of $289 billion annually. It also puts a higher cost burden on those who need help the most— research has shown that for the sickest, a $1 increase in co-payments results in a $1.78 increase in overall healthcare spending. This especially hurts seniors with multiple chronic conditions.

Health plans are supposed to shield patients from financial ruin when disease strikes. Since the Affordable Care Act took effect, insurers have been prohibited from denying insurance to anyone. Beneficiaries pay a monthly premium with the understanding that their individual health dollars support a larger “risk” pool. Those who are healthy thus subsidize those who are sick, knowing that if they themselves fall ill, they’ll be protected.

When it comes to prescription drug coverage, however, insurers increasingly flip this dynamic. They’re effectively raising costs on the sickest individuals to offer savings to healthy enrollees.

Here’s how. Pharmaceutical companies offer large discounts to health insurers to ensure their drugs are covered by health plans. In Medicare, for example, brand-name drugs are discounted by 30 percent, on average. Last year, the pharmaceutical industry paid out $153 billion in total discounts and rebates.

Insurers keep some of these rebates for themselves and use the rest to lower premiums. That’s good news for healthy enrollees.

But these discounts are not shared directly with patients at the pharmacy. Most insurers require patients to pay co-insurance on brand-name drugs, which is a set percentage of a drug’s sticker, or “list,” price, rather than a percentage of the discounted price the insurer pays.

As a result, sicker patients who fill lots of prescriptions rarely benefit from the massive discounts granted by drug companies. This isn’t how insurance is supposed to work.

The Trump administration recognizes that drug benefit design is undermining the foundational promise of insurance. In its 2019 budget, the administration put forward a plan that would require insurers in the Medicare drug benefit to share a portion of negotiated discounts with patients at the point of sale.

These are encouraging developments. Unless insurers share discounts directly with patients, high cost-sharing requirements will continue to prevent sick enrollees from taking their prescriptions as directed. That means worse health outcomes for those patients— and higher spending for the Medicare program, and thus taxpayers.

Kenneth E. Thorpe is a professor of health policy at Emory University and chairman of the Partnership to Fight Chronic Disease.