Webinar

Reducing the Rx Burden: Pathways to Lower Drug Prices and Increase Access


Time & Location

Dec
11
1:00 pm - 2:00 pm ET

The high cost of prescription drugs continues to be a significant financial challenge for many Americans, with nearly 30% of adults reporting they haven't taken their medications as prescribed due to the cost. Brand-name drugs, which make up over 84% of total drug spending, maintain high prices by extending patents and limiting competition from generics. Join our experts as they explore the future of the Inflation Reduction Act (IRA) and drug pricing, as well as private sector strategies to drive down costs and improve health outcomes.

Speakers discussed:

  • Trends in pharmaceutical innovation and the implications for drug pricing and policy.

  • Strategies used to extend patent protection and how patent reforms can make drugs more affordable.

  • Health plan initiatives and tools to improve member care and reduce the cost of expensive treatments.

0:04

Good afternoon, I'm Cait Ellis, Vice President and Senior Director of Research Programs at the National Institute for Healthcare Management Foundation.

0:12

On behalf of NIHCM, thank you for joining us today for this important conversation on increasing access to affordable prescription drugs.

0:20

We have a prestigious panel of experts with us today to explore the drivers of rising drug costs and share strategies to increase access to and affordability of prescription drugs.

0:30

Before we hear from our panelists, I want to thank the NIHCM team who helped to convene today's event.

0:35

You can find today's agenda, speaker bios, and copies of slides on our website.

0:40

I am now pleased to introduce our first two speakers, Avik Roy and Gregg Girvan.

0:45

Avik is the president and CEO of NIHCM and a well-known expert on prescription drug costs and policy.

0:52

He serves on the advisory boards of several organizations, including the Bipartisan Policy Center and the National Academy of Medicine's Robert Wood Johnson Foundation's Health Policy Fellowship.

1:02

Additionally, Avik is the founding president of the Foundation for Research on Equal Opportunity, also known as FREOPP.

1:10

He is joined by Gregg Girvan, Resident Fellow in Healthcare at FREOPP.

1:14

Gregg brings valuable experience in data, research, and healthcare policy to today's discussion.

1:20

Avik and Gregg will kick off our conversation by sharing some timely research on pharmaceutical innovation and their perspectives on policy solutions.

1:29

Avik, I'll turn it over to you first.

1:32

Thanks, Cait. And I want to also thank NIHCM for supporting this work.

1:39

I'm in this kind of unusual situation where in my soon-to-be former role as president of FREOPP, NIHCM and my predecessor, Nancy Chockley, supported our work, our research on pharmaceutical R &D innovation, which you'll hear about today.

1:54

And now, as of May 1st, I've now become the president of NIHCM and I'm handing over the role of FREOPP president to someone else.

2:01

But today, I'll be presenting to you in my capacity as the president of FREOPP and the organizer of this work along with Gregg Girvan that you'll hear about today.

2:12

And just to give you some context on FREOPP and the research, FREOPP is a relatively new think tank. We're eight years old, a nonpartisan, nonprofit organization that we started in 2016 with the idea of trying to come up with ways to address pressing social challenges including healthcare, in which there was a partisan gridlock or special interest gridlock, where there were reasons why particularly Democrats and Republicans weren't able to work together to solve the problem.

2:43

And our theory was that if you can achieve progressive social outcomes using economic freedom and innovation, maybe you can bring Republicans and Democrats together to address these big challenges, including the affordability of care.

2:56

And so we focus on how to use market-based private sector reforms to benefit or improve the lives of Americans whose incomes or wealth are below the U.S. median.

3:05

And as I mentioned, we're a traditional 501c3 tax exempt organization. So why are we, why did we do this work?

3:14

I spent, before I wandered into the public policy world, I spent a dozen years as an investor in biotech and healthcare companies.

3:22

And one of the things that we observed was that of course healthcare is expensive, but it was expensive in particular ways.

3:28

One of the things you'll hear people say is, well, why do we care about prescription drugs?

3:32

According to the CMS, prescription drugs are not that big of a share of overall healthcare spending.

3:39

But that pie chart that you see there on the left is misleading in two ways. One, it only focuses on retail prescription drugs. So drugs that you get from a Walgreens or a CVS or at a retail pharmacy, not the prescription drugs that are administered in the hospital or in a doctor's office. And the other reason why it's misleading is because this is total national health expenditures, not the health expenditures that people experience if you get insurance from your job through commercial insurance.

4:10

In that setting, actually the share of prescription drugs as a share of overall insurance premiums, it's actually quite high, 24%. And it was just 22% a couple of years ago. So it's growing as a share of private insurance costs and private insurance premiums. And that's a big part of why you hear a lot of people complain about the high cost of prescription drugs. And so just to say, why do we wanna study this particular element of the high cost of prescription drugs? Then I'll hand it over to Greg, is that one thing I observed in my Wall Street days was that you'll hear a lot of people talk about, oh, we need to have more pharmaceutical innovation in the context of the big companies.

4:56

But it was actually all the small companies that were unprofitable that required investment from venture capitalists and hedge funds and other financial entities to support their work because they were unprofitable companies that were developing all the new drugs. The profitable companies weren't developing the new drugs. The big companies like the Pfizer's and the Mercks and the Novartis's, it was typically the smaller companies that were developing the drugs and then getting acquired by the big companies. So this is something that we wanted to investigate. We wanna investigate, okay, you hear the big companies say that if we reduce the prices of old 20 year old drugs that the big companies sell, would that harm innovation from the smaller companies that are actually really the engines? And with that context, I'll hand it over to Greg to talk about the actual study. Yeah, so in this study, in order to answer these questions, we gather data from various sources. We reviewed nearly 430 FDA drug approvals.

5:54

These are the novel drug approvals that the FDA publishes lists of each year for a 10-year period of 2013 to 22. 6:04And financial data, revenue, R &D spend from more than 4 ,000 drug companies. And in addition to that, we then classified these companies by revenue and R &D spending in terms of what the relative size of the company is. And so for emerging drug companies, for example, we classified those as earning $500 million in revenue annually or less, or spending $200 million in R &D or less. was classified as emerging, whereas these large companies are talking about revenues of 10 billion or more. And so we then examined who originated these different drugs versus who marketed the drugs.

6:55

So when we say originated a drug, we mean which company brought that drug into phase one trials. So who invented the drug, synthesized it in the lab, and got it through all the preclinical work that you need to do in order to start trials in human subjects. And so whichever company brought that to the phase one trial, that is the originator of the drug. And then we looked at following approval, who is marketing this drug? Who is actually actively selling it? And so in the next slide, this is really, This next chart here is really the most important chart. If you remember nothing else from the presentation, this is the chart of all charts here.

7:45

And what we found is that large companies are garnering the vast majority of revenue in the industry at 86%, whereas those smaller companies is just a few percent. We're talking about the emerging companies. And then, what's interesting about that, though, is that in terms of R &D spend, you can see that the emerging companies are punching above their weight in terms of the amount of R &D they're conducting, fueled by Wall Street and venture capital, you know, to be able to perform the clinical trials necessary, even though they may not be earning revenue at that time or significant enough revenue to pay for that. And then all the way on the right of that x-axis, you see drugs originated. And this is really the kicker here, is that you can see that with very little revenue and relatively small amounts still of R &D spend, it's the emerging companies that are originating the majority of the drugs in the industry today.

8:56

And so, they are the ones that are particularly innovative, whereas the large companies are not innovating as much as you would expect given their size, their clout, and their ability to not only perform the science in the labs and in the trial space, but to be able to then get it through the FDA approval process. And so then on the next slide, we see this in a different way in terms of the drug approvals. We can see year to year that emerging companies, with the exception of a couple years within the last decade or so, they are originating the majority of the drugs that the FDA considers innovative. And that pace, you know, kind of bouncing between 54 to 60% or so has held really steady since 2016. And so then on the next slide, what we see here is a really interesting pattern that's emerged especially lately in the last few years.

10:12

So, what a lot of folks in the industry will come back with is say, well, okay, the emergent companies are originating these drugs, they may be inventing them in the lab, but then the large companies are necessary to come in with their bags full of cash to be able to take those drugs and get them to the finish line, get them through FDA approval and to be able to market them, that they have the expertise for that. And historically that's been true, and it's still in large measure true today, but what we've seen is a trend shifting away from this model where the little guys are coming up with the ideas and the big guys are bringing those ideas into the marketplace. What we're now seeing is that increasingly emerging firms are going at it alone. They are not only originating these drugs, but they're taking them through the approval process and, in fact, are marketing those drugs.

11:18

And for 2022, that's a pretty surprising statistic for us, that 75% of those drugs are being marketed by emerging companies. We don't know whether that is a trend yet or if that's an anomaly. but more importantly, I think, is looking at that period between 2018 and 2022, we see a major difference where basically the emerging companies are on parity with the large companies in terms of not only originating the drugs, but then marketing them and gathering that revenue themselves without the help of Big Pharma. Avik, it looks like you're on mute right now. This thing keeps prompting me to change my mic. 12:19I was just saying that, you know, why is it that companies are small versus large in terms of their R &D productivity?

12:27

Big companies tend to have a risk averse approach to R &D. They're much more focused on a lot of their R &D spending isn't to develop new drugs. It's to create new indications for their existing drugs. There's always an incentive at larger companies to say, how can we use their R &D in say expensive phase four trials to create a new revenue stream for an existing product. That to them seems lower risk than developing a new drug. So that's one of the reasons why in terms of developing new treatments, you don't see the larger companies engaging in that.

13:01

And then the other element of it is that if you're at a large company, you don't get economically rewarded for your best scientific ideas. You might get a bonus at the end of the year or an employee of the month kind of black.

13:14

At a small company, on the other hand, you might have stock options.

13:18

And so if that startup, small company, becomes successful and goes from zero to a billion dollar company because you developed a new drug, you as a scientist might have life-changing money as a result of that.

13:28

And so the best scientists tend to want to work at startups because they're more economically rewarded for their best ideas at startups.

13:37

So, I'll hand it back to Gregg to talk about what are the policy takeaways, how should policymakers think about these findings?

13:45

Yeah, thanks, Avik.

13:46

And this is really where our study illuminates how the industry is working and why this is important in the context of drug pricing reform that we've seen in the last couple of years.

14:04

If you look at the IRA drug pricing framework, it in its design purposefully targets drugs that are sold by the largest firms.

14:15

If you look at the list of the top 100 or so drugs that are being sold in Medicare, these are drugs that are with big companies.

14:26

And so, the IRA drug price negotiation framework is going to, as a result, target the largest companies.

14:36

And in fact, you look at other provisions in that legislation, and it explicitly leaves out or excludes small biotech firms that aren't earning the kinds of revenues that would be under the IRA framework.

14:58

And so when we conducted this study, we really wanted to see, okay, where is the majority of innovation occurring?

15:10

That was really the central question we wanted to answer.

15:13

And it's with these smaller firms that aren't gonna be touched by the IRA to begin with.

15:18

And so the implication of that is a policy like the IRA is sensible in that it helps to save on Medicare spending, which of course, all of us here know needs to happen, that the financial situation in Medicare is not sustainable.

15:40

But what we can take solace in is that the IRA is going to help with that without targeting the most efficient and most productive part of the innovation ecosystem.

15:52

And so, there are things that Congress can still do to improve the law. There are legitimate concerns about the selection of small molecule drugs on an earlier basis than biologics, that bringing those into parity would incentivize drug companies to develop those on par, though there are other changes that need to happen in existing law to really make that happen.

16:25

But we also believe that the IRA's punitive excise tax can be eliminated, and what we've seen in this first round of negotiations is that the drug companies and CMS can work together in an amicable fashion without this threat that we're going to put this punitive tax on you if you don't come to the table.

16:50

The parties involved want to come to the table and hammer out reasonable prices that both sides can be happy with.

17:01

And then, you know, the other implication here is that because the smaller firms are showing this success, that they're able to bring these drugs to market and market themselves, while still having the option to rely on larger firms to help them with that, venture capital, there's still a lot of money to be made there.

17:27

And the financial rewards still exist there, even with things like the IRA.

17:35

And we've seen through the data that the emerging companies and smaller firms are still very, very productive, even under the reforms that we are seeing today.

17:51

All right, that's the end of our presentation.

17:53

We look forward to your questions and look forward to hearing from everybody else today.

17:56

Thank you. Great, thank you so much, Avik and Gregg, for helping set the stage on pharmaceutical innovation and sharing those key policy takeaways.

18:07

Next, we will hear from Sean Tu, a nationally recognized expert on patent and drug law and professor of law at West Virginia University College of Law. We are grateful to have him with us today to discuss pharmaceutical access and affordability, as well as the patent strategies used to deter generic competition.

18:25

Sean?

Great, can you guys hear me?

Yes, we can.

Okay, excellent.

So I am gonna talk a little bit about affordability, access and innovation in the healthcare system, mainly focused of course on pharmaceutical drugs. And you really cannot address these two topics separately. They all work together. If you can't afford a drug, no matter how well it works, it is 0% effective.

18:55

If a drug company, on the other hand, If a drug company doesn't create the next life-saving drug because it has no incentive to innovate, then you cannot take a drug that doesn't exist. The US drug market, for better or worse, is based on this push and pull of incentives to create new drugs by protecting those drugs through patents, while allowing greater access to those drugs after the patents expire through generic or biosimilar market entry. You know, I'm a University of Chicago graduate and I love this story because it, at its heart, is a story of capitalism working its magic, right?

19:37

Patents allow manufacturers to charge monopoly prices to recoup their research and development costs, shepherd these drugs through FDA approval, which is not a cheap process, and also make a handsome profit. But then after those patents expire, we allow generics or biosimilars to come in. That story of competition drives the price down, way down in some cases, and that allows everyone to gain access to these lifesaving medicines.

20:15

Okay, so I think this talk dovetails very nicely from the last part of the talk, because we have to understand this kind of push and pull. So the first one is, are drug firms profiting? And I think the answer is yes. There's a study done by Fred Ledley in 2020, showing that large pharmaceutical companies compared to other large publicly traded companies are doing very well, right?

20:45

He looked at public companies from 2000 to 2018 and found that the 35 largest publicly traded pharma companies made $11.5 trillion with a gross profit of $8.6 trillion, which was significantly higher than other publicly traded companies.

21:06

And we've also seen, as previously shown, that the median drug launch prices have really increased over the past few years. So in 2008, the median drug launch price was about $2,000. And in 2021, the median drug launch price was about $180,000. I think the drug firms are doing pretty well. On the other side of the ledger is access and affordability. Higher prices for longer periods are associated with real world health consequences.

21:46

Increasing drug prices, which is a boon for pharmaceutical companies, can be a bane for those who are seeking access. And as previously mentioned, US prescription drug prices are a large growing expense for the healthcare system. And the US spends more than any other country for their prescription drugs. I think more than the next two countries combined and our health outcomes are not that much better than some of these other countries.

22:17

Okay, next slide, please. So can I get to the next slide? Okay, great. So what I'm gonna talk about are the patents and we see that once the key patents expire, generics can enter the market. So what do I mean by key patents? I mean the patents on the actual active ingredient. So if you look at the x-axis, the zero point time is the expiration date of that active ingredient patent. And you can see generic market entry occurs pretty close to the expiration date of the key primary patent. It's usually plus or minus three months from the primary patent expiration date.

23:12

Next slide, please. And what does this mean when these key patents expire and you get market entry from generics? This is the graph that I think is really interesting, which is showing, like, capitalism working its magic, right? Here, when you get one or two generics entering the market, prices go down, usually by 10, 15%, it's a modest decrease.

23:42

But when you see four to six manufacturers get onto the market, you see like 50% discounts from the drugs. And when you get seven plus competitors on the market, you see 80 to 90% discounts on the products. This is great for the American consumer. And again, this is a story of capitalism, right? As we get more competition, we get much lower prices.

24:10

Okay, next slide. So brand drug firms, of course, don't wanna see their profits go down. And to stop generic competition, drug firms are using patents in a way that I think they were never intended to be used, which is mainly to extend market exclusivities. And what I'm gonna briefly talk about, again, very high level, are three main strategies used by brand firms to delay or deter generic competition.

24:39

The first one is evergreening. This is where you add new patents that extend the life of your market exclusivity beyond the primary patents expiration date. The second strategy is patent-figuring. This is where you get lots of patents directed to the same product. Typically, these patents have the same expiration date, but simply having a lot of patents to the same product increases the risk and cost of entering the market.

25:09

And you know, the problem here is if the drug only makes 10 to $50 million a year, a lot of that revenue might be eaten up by my litigation and clearance costs. If that's the case, if I'm a generic firm, maybe I just avoid going onto the market for that particular drug. And finally, product hops. This is where you get a change in the product. And sometimes you even pull the old product so that you force consumers to use, to move from the cheaper non-patented product to the more expensive new patented product. And that causes the price to go up quite a bit.

25:49

Okay, next slide. I'm gonna start with, I think evergreening is a pretty simple kind of idea, which is adding new patents that add life to the primary patent and that deters or delays generic entry. Patent tickets are a little bit different.

26:09

Patent tickets are dense patent portfolios that have overlapping patent claims directed to the same product. Again, I think this is a function of, as Avik had said, the kind of risk averse nature of these big companies where they're repurposing or figuring out ways to repurpose their old drugs. And so a lot of these patents are secondary patents that are less innovative than the new molecular entity. And they don't significantly disclose anything new beyond the previous invention.

26:50

So examples of patent tickets include different methods use, for example, maybe treating really bad heart disease to treating slightly less bad heart disease to preventing heart disease, we might see changes in the dosage form. So like one milligram twice a day to two milligrams once a day, making an extended release formulation of the drug, or changing the route of administration from like an oral to a topical to an injectable, or changing the drug form from like a capsule to a tablet to an injectable. These are all ways you can patent protect the same drug and try to make it harder for generics to enter the market. These incremental innovations, they're technically different, but they may not be adding anything to the original disclosure. So really the part of the question that I'm posing here is should we be giving a separate patent and monopoly rights to these really non-innovative disclosures? And why are we paying monopoly prices for these incremental innovations?

28:03

Next slide, please. So here what I have is an example of a patent ticket. This is an actual patent ticket. This is Allergen's Restasis product. It's a billion-dollar product. The active ingredient I know it is cyclosporine, which has been around since 1983. So this drug is 40 years old, and Restasis in 2017 alone made $1.4 billion.

28:36

That's $3.8 million a day, all right? And here's what we have. We had the first patent to an emulsion comprising cyclosporin A and then all of these other excipients associated with the drug. We get another patent that's a method of increasing tear production in the eye comprising administering cyclosporin A and this formulation. A third patent, a method of treating dry eye disease comprising administering this product.

29:09

And then finally a method of treating keratoconjunctivitis sicca comprising, administering this product. And what is keratoconjunctivitis sicca? It's dry eye disease, right? So this is an example, I think, of overprotection in really creating a patent ticket, which makes it much more costly, much harder for generics to come on the market.

29:38

And this was like, it's a billion dollar product. If I can delay the drug for even just 10 days, that's almost 30, 40 million dollars. Definitely worthwhile. How do I know that this patent think it was important to them? Well, Allergan actually transferred their rights to the St. Regents Mohawk tribe. Why? So that they could try to use sovereign immunity to protect these patents.

30:06

So that didn't pass the lab test, But it delayed the entry of the generic for a little while. And again, at $3.8 million a day, that makes it worthwhile.

30:18

OK, next slide. People are using these patent tickets, right? In the year 2000, there was only two patents per active ingredient. Nowadays, or in 2019, there were six. And now it's over seven patents per active ingredient and that's what's causing some of this problem.

35:09

For our final presentation, we will hear from Mary Beth Erwin, Vice President and Chief Pharmacy Officer at Blue Cross Blue Shield of Massachusetts. Mary Beth will be sharing their efforts to improve access to high-cost drugs, including strategies to address affordability, manage costs, and improve health outcomes. Mary Beth? Thanks for the time today, and I really appreciate all the insights from my fellow speakers and really highlight some of the key factors that we're trying to tackle from a practical and day-to-day approach of managing pharmacy benefits for a health plan. So, as the Chief Pharmacy Officer at Blue Cross in Massachusetts, I'm really responsible for the medication management strategies and all of our operations that manage drug trend and utilization.

35:56

And that's just not in the pharmacy benefit, it's also across the medical benefit. Putting it into perspective, you know, of the total spend that our health plan sees, about 30% is dedicated to medication spend in the outpatient setting, you know, probably about two thirds of that in the pharmacy benefit and maybe a third in the medical benefit. But the trends on those are both rapidly increasing and really taking up larger and larger shares of our overall claim spend. And the areas that my previous panelists spoke about are really areas that are driving why some of the prices are expensive, why we have difficulty really reining in affordability and have to use a lot of levers that are abrasive or cause disruption in the market to be able to help manage some of that spend.

36:48

So I'm gonna spend a couple of minutes today talking about some of the foundational levers that we have to employ from just an overall pharmacy management strategy and then talk a little bit more about some of the innovation that Blue Cross Massachusetts has been involved in as we try to tackle some of these really high cost drugs and key therapies and be prepared as that pipeline continues to grow. Go to the next slide. So, from a foundational perspective, health plans like Blue Cross Massachusetts address rising drug costs by employing several levers that can include contracting, formulary and utilization management, clinical programs, and member experience strategies that help us address any of the costs that are happening in pharmacy benefits.

37:39

They really aim to ensure cost-effective and clinically appropriate access to medications while also maintaining quality of care, which ultimately can lower that overall healthcare cost more durably over time. I'll highlight a couple of levers here that we have traditionally used. One of the key ones is our pharmacy benefit manager or PBM contracting. It's a key lever to help us negotiate anticipated pricing for not only our overall book of business, but as well as being a key vendor partner that helps administer the pharmacy benefits to all across our entire book of business and really supporting our employer group clients as well.

38:19

So, PBMs can offer things like pharmacy networks, manufacturer contracting, claims processing, clinical programs and other operational services that really ensure that broad access to medications, timely access, safety and clinical monitoring, and give some financial certainty around what some of the pricing may look like as all of these new entrants come to market or as new dynamics make it into the market or new regulations come that we have to address. PBMs do hold a lot of influence over the pharmacy value chain. And I think this has been highlighted broadly across the industry over the past several years, but they do still remain key partners for health plans like Blue Cross Massachusetts to be able to offer a competitive pharmacy benefit to our employer group.

39:02

Some of the other levers we would be looking at, clinical and formulary management. Formulary really taking those drugs that are coming out of the manufacturers and being able to negotiate PBMs and health plans, negotiate with manufacturers for placement on formularies and coverage, and it helps us prioritize the most cost-effective therapy in any given category. A tiered formulary system is commonly employed where medications are bucketed into different tiers based on their cost, their effectiveness, the availability of therapeutic alternatives in that same category. And are, you know, by encouraging that use of a lower tier medication and promoting generic options, biosimilars, that's how we would help manage our costs and maintain affordable coverage for our members. And then on top of that, we would be looking at clinical management strategies.

39:55

And we really believe that these play an important role in improving adherence to medications, which is key. You know, any medications that are used to help delay or treat chronic conditions, help reduce other medical costs, as well as prevent disease progression. So we want to make sure that we are improving that adherence. We also want to make sure we're optimizing anyone's use of their medications to really eliminate as much waste as possible in the system.

40:20

So, these programs would be focused on ensuring that members are receiving the right medication at the right time and the right dose. And some of these kinds of programs could be medication therapy management where pharmacists are working with members to review their medications and looking for potential barriers to accessing medications, whether it be cost or side effect management, and making sure that their therapy is the most effective for them.

40:45

We have integrated care management and high-cost claim management where pharmacists are embedded with our care managers to treat specific conditions, chronic conditions like diabetes and asthma or hypertension to really help with that medication management component and help navigate any barriers to care that members may be identifying and help intervene with their providers if clinical conversations need to occur. The other levers on the page, I'll get into a little bit more as I move through, so I'm gonna move to the next slide.

41:20

So kind of moving into a little bit more of our clinical management tools, really trying to ensure that members are taking their medications as prescribed, as intended. They are, we're reducing waste in the system and that members are having appropriate access to these drugs.

41:38

I'd say these are not new strategies. These are strategies that have been around for a long time, but they are foundational to be able to maintain that baseline management of drug costs across the benefit And are the, again, the foundation for what we need to build on to help manage the newer high-cost drugs that are coming to market and that we need to be planning for. They're used to control utilization, which, and, you know, ensuring that right drug at the right time. But this is where the abrasion comes in, and this is where they've been increasingly the target of scrutiny and reform at all levels because they create, you know, delays in access to care or questions around the therapeutic appropriateness of the products that are considered the preferred agents.

42:27

So this is an area that, while it is strong and foundational for, I would say, the majority of pharmacy benefit managers, the majority of health plans administering a pharmacy benefit, these tools are really under fire without a lot of solutions to be able to replace how the management of these tools can afford us. So a few examples really stem from that overall bucket of prior authorization. This is really requiring the doctor to attest to certain clinical factors before getting approval for payment for a drug. There are flavors of this throughout all the clinical management programs. The prior authorization may be diagnosis or lab results focus. Step therapy is subset of that is exactly what it sounds like.

43:10

Trying a first line agent before before you moving on to a second or third line agent, you know, generally more cost-effective or For that condition for the broad population and then moving into other options Quantity limits and dose optimization are similar Really making sure that They're they're really considered safety edits that we're not going above an FDA labeling without some clinical discussion or rationale around that and that in ways that we can help mitigate some of the waste, making sure that if there are, say, two strengths of a single drug, somebody's taking two of the same drug, we could roll that up into a higher dose and do a single dose for that. So those tools are really important for us, but they are, again, under a lot of scrutiny and really not finding a solid replacement across the board. But they are that kind of stick approach that really causes that abrasion. And then as a regional health plan who administers medical and pharmacy benefits, we have a really strong provider network, especially here in Massachusetts.

44:18

We have a broad contracted provider network. We have very good working relationships and collaboration with our health plans to really work through pharmacy specific topics that we communicate to them. We work with academic detailing partners. We use EMR access and really, you know, ongoing conversations and collaboration with our provider partners to really gain that valuable insight into what's happening in the market, what treatment standards look like, and to help manage our changes in coverage by notifying them in advance or providing, you know, specific practice information that will help them manage their patients, our members into any kind of upcoming changes.

45:03

Next slide.

45:06

So specialty pharmacy is a unique subset of this. There's really no industry standard definition of specialty, but in general, it is a complex administration, chronic condition requires a drug that requires specific education or storage, high cost, and they really fall into some of these more less common conditions. And just to put specialty pharmacy in context for a specialty pharmacy benefit like ours, more than 60% of our pharmacy spend is in a specialty medication, and it's representing less than 2% of our membership. So it's a hugely impactful area. This is an area where biosimilars and such are such a key tool that we have been anxiously awaiting and all of the patent information that was just presented is really things that we've been struggling with for a long time to try and be ready for these biosimilars.

46:02

So we have a comprehensive management strategy around this using a lot of the tools I already talked about, but also really thinking about how can we get to the right sites of care for this and trying to move drugs that can be self-administered out of the medical benefit and have them administered through a pharmacy benefit and getting agreement to move from higher cost sites of care to lower sites of care, like home infusion or in-home treatment. So those are some of the standards that we use in specialty management because this is where the pipeline is on the pharmacy benefit side, and like I said, where the bulk of the spend happens. I can go to the next slide. So outside of these standard tools that we have been employing for years, Blue Cross Massachusetts, along with four other health plans, back about four years ago, really started having conversations around how could we manage pharmacy in a different way in partnership, and so the five plans came together.

47:06

We served about a total of 20 million members and really entered into this new organization that we have founded called EVIO. And we were doing this to recognize the way that medications get to patients needed significant reform, the rapidly rising drug costs and the complexities that cause all the abrasion for patients to get to their needed treatment was really going to be unsustainable. And we were looking to how we were going to help manage that pipeline. So again, there are five of us who are invested into EVIO as an independent entity that's helping us try and lead this transformation.

47:44

And it's focused on medication management across both benefits, pharmacy and medical because of the growth on both sides. Really, the EVIO's role for us is to offer solutions to each individual plan of the five plans to help complement our existing pharmacy program and really meet the goals that we are trying to get to and really meet the plan need. EVIO has built advanced analytics. They've built contracting capabilities at a bigger scale and digital tools that have helped us move forward in some of the value contracting that we are most interested in. So using things like real-world evidence and value-based contracting with manufacturers to be able to get different value out of the supply chain just outside of just standard formulary placement and unit cost.

48:39

Since EVO was formed over the past couple of years, they, along with a lot of other BLU's affiliated companies have stood up now Synergy Medication Collective. And this is, again, across different parts of the BLU system. And Synergy is focused on improving affordability access to costly medication specifically in the medical benefits. So these would be drugs that are injected or infused by a health care professional in a clinical setting versus something you would get in your retail pharmacy.

49:09

Synergy's goal is really to reduce medical benefit drug costs by establishing a more efficient contracting model based on its collective reach and engagement with pharmaceutical manufacturers and other parts of the pharmaceutical supply chain. So, the core philosophy for them is really to prioritize partnership and transparency and be able to ensure access to affordable treatment across this large population. So, really focused again on that medical benefit and helping to control the spend on that side, which has, up to this point, has had less levers to pull than the pharmacy benefit side has had.

49:44

Next slide.

49:48

Okay. I think I'll just focus on one thing that, you know, folks definitely hear about are cell and gene therapy products. So these are products that have come to market and these are your two, three, almost four million dollar single drug administration. And this has been a new territory which as a clinician is extremely exciting for the innovation for these rare conditions, previously untreatable conditions, but as on the flip side of having to manage the cost and spend of these, you know, cell and gene therapies at that price tag have been very concerning for health plans and employer groups.

50:28

So, you know, they really stand differently from a traditional drug treatment because they're really complex to administer, to manufacturer, they have exceedingly high costs and they have these special challenges across the continuum because they often are done in a facility.

50:46

They need to be, you know, there are definite services, support services that go around that. There's a lot just to get to a patient to be taking these, taking these therapies and then the cost of those therapies.

50:59

So Synergy, one of the things that they have really helped support our plans with has been, you know, risk protection and value-based contracting.

51:09

So really thinking about this in a financing way, you know, kind of analogous to stop-loss and helping our accounts be able to have some protection if one of these patients were to be within their employer group, and also value-based contracting to really put some risk at the pharmaceutical manufacturer level to say, yes, these products are effective, and yes, they have the durability that we would expect them to have for something at this price point that is potentially curative for these really rare conditions. So this is just another way we're trying to address the exceedingly high cost and potential catastrophic costs that for an employer group may see if they had a population that would need to make access of these cell and gene therapies. Probably in the interest of time, I think I'll end it there and turn it back.

52:07

Thank you so much, Mary Beth for sharing those tactical approaches and strategies that Blue Cross Blue Shield of Massachusetts is using to manage rising drug costs and increase access for your members. I will at this time invite the rest of our panelists to come back on video. We will use the remaining time to engage in a Q &A session with our audience. For our audience, please continue to submit your questions in that Q &A panel and we will get to as many as we can in the next few minutes.

52:33

To start, Sean, I know you referenced some other countries when sharing comparisons about patent volumes. We've had some questions come in about what we can learn from other countries. Are there lessons that the United States can learn from other countries with lower drug prices and related? do you think the international reference pricing policy will be back on the table?

52:53

I will open this up to any of our panelists that are able to chime in on this question. So I would, great question. I would point you to a journal article published by a colleague of mine, two colleagues of mine, Bernard Chow and Rachel Good. It was an article published in the Journal of Law in biosciences, and it was called a biologic patent.

53:21

They get an American problem. And what they do is compare the UK, Australia, Canada, France, and a couple of other European countries, and look at the patent portfolios for biologics and how these things are being used to kind of delay biosimilar entry in the US compared to other countries and they go through every biologic that's been approved here in the US, which is like a dozen or so biologics and compare them against what happened in other countries. International reference pricing, I think is a great idea. I think it's off of the table in the Trump administration.

54:06

Not only did they take it off the table, but they erased every mention of it from their websites, from what I understand. So I think it's probably off the table. I think it's a good idea because it actually spreads the cost across other countries. We pay more than any other country when it comes to these new pharmaceutical drugs. And we basically subsidize the rest of the world. And the question is, why is it that we should have to pay for this kind of a loan?

54:39

Shouldn't the rest of the world, the industrialized world, help pay for these drugs? That's my two cents. Would anybody else like to chime in on that question? Gregg, you've done a bunch of work on this. Cait, I was just going to mention that this is something, as far as the international reference pricing, this is something that we've done some work on.

55:07

And we would tweak what the previous Trump administration had tried to do though, in that we would include countries in calculating that, that use more of a free market type system in order to price those drugs or to make those drugs available. You look at countries like Germany or Denmark, they have policies in place that allow more drugs to launch there. Germany allows a short time period where the drug can really launch there at any price, and then it enters into negotiations.

55:47

But there are other countries around the world that have more free market-oriented policies around drug pricing that we would sort of include the mix that would more reflect the values of U.S. health care. But I think one of the other things to mention too is that, you know, Sean was mentioning about biologics and the way patents are enforced in Europe. Another big difference there is in getting biosimilars to market, and in fact a couple years ago, the European Union again out ahead of the US on this, they as a scientific matter designated all biosimilars as interchangeable. And that of course allows, depending on the local country authorities, it allows biosimilars to be automatically substituted at the pharmacy level.

56:51

And while the FDA has been moving more in this direction this year, they have relaxed some of the requirements around switching studies, for example, in order to prove that a biosimilar is interchangeable. Europe is still ahead of that. They've gone ahead and just said, look, we've had 15 plus years of experience with biosimilars.

57:14

We know they're just as effective and just as safe as reference biologic products. There's no reason for us to stand in the way of the biosimilars being able to gain market share.


57:26

And so we in the U.S. should follow suit on that, because from a scientific standpoint, we can't find a difference between biosimilars and reference biology products, and once we do that, then each of the state laws, they're basically geared now toward, well, if a biosimilar is designated as interchangeable, it can be automatically substituted in the pharmacy level, which is going to build market share for biosimilars. It's going to encourage more activity there for future reference biologics that come off patent, and it's going to help drive those prices down. Great, thank you. We'll try to get in one more question quickly. We've had quite a few questions come in around GLP-1s.

58:14

How do the high cost of GLP-1 weight loss drugs impact patient access, but then also the overall financial burden on the healthcare system.

58:22

How do we ensure affordable access, but also think about the broader healthcare system? Is anyone able to address that briefly in the last moment? Okay, I can take that, at least our experience. This is probably the number one conversation that we're having across our organization because it is that unique situation that we're in.

58:45

We're in a pretty high cost drug for a massive utilization population for a condition that across the country, we're all really suffering with.

58:55

So it is that conversation around how can you allow access to people who could really benefit from this drug?

59:02

How can you make sure that they stay on them so they get the effectiveness of it? And because the science is out there around how long you need to be on these medications and how can we afford it for not only our own book of business, but as on behalf of our employer groups? And there's no easy answer for this one.

59:18

Without more competition in the marketplace and bringing down the drug prices on the individual claims level, there's really, the standard tools we have are all either, plans that cover it are facing really strong financial pressure, plans that do not cover it are facing a lot of requests to really make sure that they do, and employers are really asking for this drug because they do see the benefit for their employees, their employees are wanting it.

59:43

So it is a very, I don't have a good answer, but it is something that all our health plans are struggling with depending on which side of the coin that you're on.

59:52

And again, without the drug prices coming down, really this is going to continue to be a struggle as these drugs continue to gain market share.

1:00:03

Great, thank you, Mary Beth. Unfortunately, we are out of time today. I would like to thank our excellent panel of speakers for being with us and sharing their valuable work and perspective, and thank you to our audience for joining this discussion.

1:00:15

Your feedback is really important to us, so please take a moment to complete the brief survey, which will open on your screen after the event.

1:00:22

Thank you all so much for joining us today.

1:00:26

Thank you.

1:00:29

Thanks very much.


Avik Roy

NIHCM Foundation

Mary Beth Erwin, MPH

Blue Cross and Blue Shield of Massachusetts

S. Sean Tu, JD, PhD

West Virginia University College of Law

Gregg Girvan, MPP

The Foundation for Research on Equal Opportunity


 


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