As Hollywood celebrated its biggest night of the year, The Week That Was recognizes some outstanding dramas in healthcare. PBMs, the longtime Hidden Figures of the pharmaceutical supply chain, get some unwanted spotlight for alleged clawback practices. A former Bush Administration official claims that those who think drug importation will save money are in La La Land. And industry execs met to discuss how to address costs while protecting innovation, come Hell or High Water. Read on for highlights in The Week That Was…
PHARMA’S LEADING MEN TAKE THE STAGE WITH PRICING SOLUTIONS
With increasing regularity, pharma execs have been defending the industry, making pricing pacts, and offering ideas to address costs; this past week was no exception. In an interview with CNBC, Bayer CEO Werner Baumann noted that his company prices drugs, “in line with their innovation potential and in line with the competitive environment.” Saying that, as a total share of healthcare funding, pharmaceutical pricing hasn’t really changed since the ‘60s, he suggested that President Trump develop “a better understanding of the overall healthcare market, the industry and what is driving cost up really.” Also weighing in, Allergan CEO Brent Saunders proposed that POTUS consider waiving federal antitrust rules that currently prohibit drug makers from discussing pricing as a step toward transparency.
It’s no secret that pharma is fighting a war of PR as much pricing, prompting industry leaders to showcase that they want to be part of a system-wide solution. In yet another move to demonstrate a willingness to advance payment and delivery system improvements, PhRMA kicked off its “Value Collaborative,” an initiative to develop new approaches to paying for medicines and furthering measurement to better assess value. Notably, this event includes leaders from PhRMA, ASCO, CancerCare, GlaxoSmithKline, as well as a former Anthem CMO. However, our research shows that pharma is considered one of the most “opaque” industries, with many questions left unanswered due to “proprietary” or “competitive” concerns. While a good start, industry-led efforts like this are going to be viewed with suspicion unless more stakeholders—the decidedly critical ones—are invited to the table.
PBMs PAINTED AS VILLAINS IN ‘CLAWBACK’ DRAMA
Receiving some unwanted spotlight, PBMs are in the hot seat for adding “clawback” practices in pharmacy contracts that drive up costs to patients. Bloomberg interviewed local pharmacists, who noted that the co-pays negotiated by PBMs are often more expensive than paying for a generic medicine out-of-pocket. To make things even thornier, the pharmacy’s agreement with the PBM often prohibits pharmacists from telling customers about these “clawbacks” (i.e., the revenue the PBM gets from the co-pay above the cost of the drug). With clawbacks generating hundreds of millions of dollars in PBM profits, the scrutiny over the practice is only escalating: since October, at least 16 lawsuits have been filed against PBMs for “defrauding patients through racketeering, breach of contract and violating insurance laws.”
The piece demonstrates the significant disconnect between consumers and the U.S. healthcare system. Many consumers don’t know what PBMs do, if they are even aware that they exist. But now that these formerly behind-the-scenes agreements are taking stage front-and-center in the courtroom, we expect the pressure on PBMs to heat up. What does that mean for pharma? Expect more populist “us” vs. “them” rhetoric from PBMs, as demonstrated by the recent Express Scripts trend report. We advise being prepared for (and relentless in) communicating the value medicines bring—and meeting with patient advocates to discuss that value face-to-face.
DRUG IMPORTATION: NOT A CONTENDER FOR BEST FOREIGN FEATURE
Last week, the debate on drug importation resurfaced when former Bush Administration official Peter Pitts urged elected officials, including POTUS, to negotiate trade deals that eliminate price controls rather than focusing on drug importation. According to Pitts, legalizing importation won’t have significant cost savings for the U.S.; rather he believes that price controls imposed by other countries stifle innovation and shift a “disproportion share of the burden of funding research” to American consumers. The pushback comes as the Safe and Affordable Drugs from Canada Act of 2017, recently reintroduced by Sen. John McCain (R-AZ) and Sen. Amy Klobuchar’s (D-MN), sits with the Senate Committee on Health, Education, Labor, and Pensions.
We’ve seen a series of actions from both sides of the aisle related to drug importation, including a failed bill sponsored by Sen. Sanders (D-VT), as well as Sen. Grassley (R-IA), Sen. McCain, and Sen. Klobuchar collectively urging DHHS Secretary Tom Price, who has previously side-stepped the issue, to fast track the importation of prescription drugs from Canada. Given the complexities of importation, it may be quite some time (if ever) before elected officials see eye to eye on any particular piece of legislation. This doesn’t mean that pharmacos are in the clear. Debate heats up when drug prices hit the headlines: the DHHS call to action came just days after Marathon decided to charge $89K/year for a drug readily available in Europe and Canada for about $1200. For companies gearing up for approval, seek to avoid stoking the fire by understanding areas of risk, considering public perception of your price, and proactively addressing concerns in launch communications.
PRICING’S NEWEST BEST SUPPORTING ACTORS
Of note, coverage this week introduced a new patient advocacy group, Patients for Affordable Drugs (PFAD), an independent national patient organization focused exclusively on driving policy changes to lower the price of prescription drugs. The group, which vows to “fight a rigged U.S. pricing system,” won’t accept financial support from “organizations that profit from the development and distribution of prescription drugs.” PFAD has accepted funding from the Laura and John Arnold Foundation, the founder of which, John Arnold, was featured in a Bloomberg piece. Arnold is shaping up to be a major player in the pricing/value dialogue, as he is also a significant contributor to the Institute for Clinical and Economic Review (ICER).
The pricing debate typically pits pharma against payers and /or policymakers; as these stories demonstrate, the level of politics, policy, and frankly philosophy behind drug pricing is incredibly complex and the influencers in the conversation go far beyond the Beltway or the boardroom. In this contentious environment, the watchword for drug makers is transparency. Publicly disclose donations, vary your donations across advocacy groups, and be upfront about enlisting the support of consultants when promoting the value of medicines. The best way to avoid media scrutiny is by providing all of the facts up front.
While last night was Oscar’s night, Tuesday’s State of the Union is the event of the season for politics buffs like TWTW crew. They may have had Jimmy Kimmel, but we have Paul Irving.
Until next week,
– The Issues Management Practice @inVentiv Health PR