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Prescription drug prices in the US are opaque.
We lack basic information about how much a given drug actually costs.
In a new paper @NEJM w/ @bnrome #JerryAvorn @akesselheim, we argue that this may be changing.
below. https://www.nejm.org/doi/full/10.1056/NEJMp2033734#.X_-S7iq9IHI.twitter
We lack basic information about how much a given drug actually costs.
In a new paper @NEJM w/ @bnrome #JerryAvorn @akesselheim, we argue that this may be changing.
below. https://www.nejm.org/doi/full/10.1056/NEJMp2033734#.X_-S7iq9IHI.twitter
First, why the secrecy?
Manufacturers set list prices of drugs and then negotiate confidential discounts (i.e. rebates) to reduce the “net” prices paid by insurers.
List prices are publicly known.
But net prices are not.
2/17
Manufacturers set list prices of drugs and then negotiate confidential discounts (i.e. rebates) to reduce the “net” prices paid by insurers.
List prices are publicly known.
But net prices are not.
2/17
Just before the presidential election, the Trump administration announced completion of a new rule requiring insurers to disclose net prices:
The “Transparency in Coverage” Final Rule.
3/17
https://www.cms.gov/newsroom/fact-sheets/transparency-coverage-final-rule-fact-sheet-cms-9915-f
The “Transparency in Coverage” Final Rule.
3/17
https://www.cms.gov/newsroom/fact-sheets/transparency-coverage-final-rule-fact-sheet-cms-9915-f
The rule requires wide-ranging disclosures across the healthcare system.
For prescription drugs, insurers must publish list prices and historic net prices online and provide patients with real-time estimates of cost sharing.
4/17 https://www.healthaffairs.org/do/10.1377/hblog20201101.662872/full/
For prescription drugs, insurers must publish list prices and historic net prices online and provide patients with real-time estimates of cost sharing.
4/17 https://www.healthaffairs.org/do/10.1377/hblog20201101.662872/full/
Now, the question is: does this rule really matter?
Trump is about to leave office.
The rule will almost certainly be challenged in court.
Isn’t this just another midnight action that will ultimately be abandoned by the Biden administration or overturned in court?
5/17
Trump is about to leave office.
The rule will almost certainly be challenged in court.
Isn’t this just another midnight action that will ultimately be abandoned by the Biden administration or overturned in court?
5/17
We argue that transparency may be different.
First, there is bipartisan support. @JoeBiden himself has championed similar efforts—e.g. in a joint policy statement with @BernieSanders.
6/17 https://www.npr.org/2020/07/08/889189235/democratic-task-forces-deliver-biden-a-blueprint-for-a-progressive-presidency
First, there is bipartisan support. @JoeBiden himself has championed similar efforts—e.g. in a joint policy statement with @BernieSanders.
6/17 https://www.npr.org/2020/07/08/889189235/democratic-task-forces-deliver-biden-a-blueprint-for-a-progressive-presidency
Second, unless Congress seeks to undo the Final Rule—which may be difficult given the bipartisan support for transparency—President Biden would have less than a year to complete a new rulemaking process.
7/17
https://crsreports.congress.gov/product/pdf/IN/IN11539
7/17
https://crsreports.congress.gov/product/pdf/IN/IN11539
Third—and this is the crux of our argument in the perspective @NEJM—the “Transparency in Coverage” rule is likely to survive court challenge.
It avoids prior legal pitfalls and relies on a set of arguments that courts have found persuasive.
8/17
It avoids prior legal pitfalls and relies on a set of arguments that courts have found persuasive.
8/17
We examine rulings on other transparency initiatives to explain why.
We focus on AHA vs. Azar. At issue was a rule requiring hospitals to publish payer-specific negotiated prices online.
9/17
https://www.cadc.uscourts.gov/internet/opinions.nsf/CCDF215AFCAF25F98525864D005716BC/$file/20-5193-1877500.pdf
We focus on AHA vs. Azar. At issue was a rule requiring hospitals to publish payer-specific negotiated prices online.
9/17
https://www.cadc.uscourts.gov/internet/opinions.nsf/CCDF215AFCAF25F98525864D005716BC/$file/20-5193-1877500.pdf
In AHA vs. Azar, the courts rejected the 3 central arguments raised by the American Hospital Association:
1. The rule did not violate the statutory authority of HHS.
2. It did not violate the first amendment.
3. It was not arbitrary and capricious.
10/17
1. The rule did not violate the statutory authority of HHS.
2. It did not violate the first amendment.
3. It was not arbitrary and capricious.
10/17
Importantly, in rejecting AHA’s arguments, the courts required little evidence that transparency would actually lower prices or facilitate patient decision-making—which remains an unsettled empirical question.
11/17
11/17
Rather, the courts deferred to the common-sense analysis and predictive judgment of HHS—which included “general economic principles” and a few “specific price studies in support of its theory.”
12/17
12/17
Though the decision in AHA vs. Azar does not by its terms extend to retail prescription drugs, the “Transparency in Coverage” rule, which does, could be upheld on the basis of similar legal reasoning.
13/17
13/17
The “Transparency in Coverage” rule may thus have a different fate from many of Trump’s other 11th-hour orders and rules related to drug-pricing.
See @RESachs @Health_Affairs for analysis on why other 11th-hour drug-pricing initiatives may fail.
14/17 https://www.healthaffairs.org/do/10.1377/hblog20201122.298613/abs/
See @RESachs @Health_Affairs for analysis on why other 11th-hour drug-pricing initiatives may fail.
14/17 https://www.healthaffairs.org/do/10.1377/hblog20201122.298613/abs/
What exactly will this mean for drug prices?
It is difficult to predict. @ateevm @Michael_Chernew #AnnaSinaiko provide a helpful review @NEJM of existing empirical work in “Promise and Reality of Price Transparency.”
15/17 https://www.nejm.org/doi/full/10.1056/NEJMhpr1715229
It is difficult to predict. @ateevm @Michael_Chernew #AnnaSinaiko provide a helpful review @NEJM of existing empirical work in “Promise and Reality of Price Transparency.”
15/17 https://www.nejm.org/doi/full/10.1056/NEJMhpr1715229
As Biden takes office, the Trump-era transparency initiatives will continue to be litigated.
With slim Democratic majorities in the House and Senate, meaningful drug-pricing reform may be difficult to pass.
16/17
With slim Democratic majorities in the House and Senate, meaningful drug-pricing reform may be difficult to pass.
16/17
But, amid inconclusive evidence for drug pricing transparency, one thing is clear: drug prices are too high in our current, opaque system, and a new approach is needed.
17/17
17/17
