Can Public Policy Control Rising Drug Prices? The Houston Economics - PowerPoint PPT Presentation

Can Public Policy Control Rising Drug Prices? The Houston Economics Club November 7, 2018 #BakerHealth Vivian Ho, PhD James A. Baker III Institute Chair in Health Economics Director, Center for Health and Biosciences Professor, Department of Economics at Rice University Professor, Department of Medicine at Baylor College of Medicine

Outline • What is the problem? • Policy Options • Legislation • Expert Recommendations • Trump Administration

National Health Expenditures 14.0% $4,000 Total Expenditures Percent Change from Previous Year Percent Growth $3,500 12.0% $3,000 10.0% $2,500 8.0% Billions $2,000 6.0% $1,500 4.0% $1,000 2.0% $500 $0 0.0% 1960 1970 1980 1990 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* 2018* * projected

National Health Expenditures 16.0 Hospital Care Average Annual Percent Change from 14.0 Physician and Clinical Services Epipen $349 12.0 Prescription Drugs 10.0 Daraprim $750 Previous Year Epipen $461 8.0 6.0 4.0 2.0 Epipen $608 Epipen $264 0.0 * projected

Medicare Trustees Estimates for ‘17-’27: Average Annual Growth in Medicare Beneficiary Costs for Part A, Part B, and Part D Between 2017 and 2027 5.4 4.6 3.7 Part A Part B Part D Per beneficiary spending: 2017 $5,160 $5,915 $2,110 2027 $7,443 $10,004 $3,296 Source: 2018 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplemental Medical Insurance Trust Funds

National Health Expenditures 40.0 Hospital Care Physician and Clinical Services Prescription Drugs 35.0 30.0 Percent Distribution 25.0 20.0 15.0 10.0 5.0 0.0 1960 1970 1980 1990 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Old drug price inflation - Valeant Pharmaceuticals

Average Annual Prescription Drug Price Change vs. Inflation 2006-2015 Source: Trends in Retail Prices of Prescription Drugs Widely Used by Older Americans: 2006-2015, AARP Public Policy Institute 2017.

Annual Percentage Change in Retail Prices by Drug Type, 2006-2015 Source: Trends in Retail Prices of Prescription Drugs Widely Used by Older Americans: 2006-2015, AARP Public Policy Institute 2017.

Commonly Prescribed Drugs for Seniors The top 20 most commonly prescribed brand-name drugs for seniors in Medicare Part D in 2015 were: Advair Diskus Nexium Restasis Ventolin HFA Crestor Nitrostat Spiriva Handihaler Voltaren Gel Januvia Novolog Symbicort Xarelto Lantus/Lantus Solostar Premarin Synthroid Zetia Lyrica Proair HFA Tamiflu Zostavax Source: US Senate Homeland Security and Government Affairs Committee, Minority Office, March 2016

Popular Drug Price Change vs. Inflation Source: US Senate Homeland Security and Government Affairs Committee, Minority Office, March 2016

Total U.S. Prescriptions of Most Commonly Prescribed Brand-Name Drugs Product 2012 Prescriptions 2017 Prescriptions Prescription Difference Percent Change (U.S. Total) (U.S. Total) (2012-2017) (2012-2017) Ventolin HFA 17,414,376 27,069,765 9,655,389 55% Proair HFA 24,873,170 25,977,546 1,104,376 4% Synthroid 23,073,988 18,411,640 -4,662,348 -20% Lantus/Lantus Solostar 18,558,937 17,004,123 -1,554,814 -8% Advair Diskus 17,018,219 10,700,788 -6,317,431 -37% Lyrica 9,114,028 10,373,276 1,259,248 14% Januvia 8,893,922 9,913,198 1,019,276 11% Symbicort 5,246,325 9,888,532 4,642,207 88% Xarelto 1,078,207 9,593,823 8,515,616 790% Spiriva Handihaler 9,625,240 5,759,976 -3,865,264 -40% Novolog 3,385,303 5,045,237 1,659,934 49% Restasis 2,818,474 3,037,271 218,797 8% Nexium 22,021,459 2,246,968 -19,774,491 -90% Tamiflu 3,313,707 2,143,796 -1,172,911 -35% Premarin 5,223,690 2,046,125 -3,177,565 -61% Voltaren Gel 2,954,278 1,964,665 -989,613 -33% Zetia 7,915,532 1,730,633 -6,184,899 -78% Crestor 25,337,566 1,604,070 -23,733,496 -94% Zostavax 2,291,538 1,344,617 -949,921 -41% Nitrostat 4,273,413 309,442 -3,963,971 -93% Total 214,434,372 166,165,491 -48,268,881 -33%

Prescription Drug Demand Price P 2017 P 2012 D Quantity Q 2012 Q 2017

Prices Matter

Historical prices for one week of treatment with Enbrel and Gleevec 15

Declining value Prices of Gleevec vs. iPhone over time $3,000 $2,500 Price of $2,000 iPhone/GHz with contract Cost ($) $1,500 AWP of 1 week $1,000 treatment of 400mg Gleevec $500 $- 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Year

Value (benefits in relation to costs) declining

Why we should care – patient access Access Spending

https://drugpricinglab.org/tools/dpl-policy-tracker/

Drug Policy Legislation Introduced since 2015 Policy Legislators McCain (R-AZ), Franken (D-MN), Klobuchar (D-MN), Sanders (I-VT), Allow Importation / Re ‑ importation Ellison (D-MN) Cruz (R-TX), Smith (D-WA), Stivers (R-OH), Brown (D-OH), Franken (D-MN), Klobuchar (D-MN), Shrander (D-OR), Sanders (I-VT), Vitter Boost Generic Competition (R-LA), Leahy (D-VT), Collins (R-ME), McKinley (R-WV), Goodlatte (R- VA) Wyden (D-OR), Franken (D-MN), Sanders (I-VT), Lance (R-NJ), Reduce Branded Monopolies Ryan (R-WI) Ban/Restrict DTC Advertising DeLauro (D-CT), Franken (D-MN) Franken (D-MN), Wyden (D-OR), Sanders (I-VT), Baldwin (D-WI), Require Price & Cost Transparency Durbin (D-IL), Perlmutter (D-CO), Collins (R-GA) Use Value-based payment Ryan (R-WI), President Donald Trump Apply Price Inflation Limiters Franken (D-MN), Wyden (D-OR), Brown (D-OH), DeLauro (D-CT) Let Government be the Purchaser Sanders (I-VT), Baldwin (D-WI), Franken (D-MN), Klobuchar (D-MN) Legislate Access to Treatment Sanders (I-VT) Require Rebates to Mcare/caid Sanders (I-VT)

Released: November 30, 2017

NASEM Rec A: Boost Generic Competition • Pass legislation to eliminate pay-for-delay practice. • Stop brand-name drugs from unfairly restricting access to samples that generic makers need to formulate competing drugs.

https://www.communitycatalyst.org/doc-store/publications/top-20-pay-for-delay-drugs.pdf

May 17, 2018 http://www.centerforbiosimilars.com/news/fda-names-companies-that-restrict- access-to-drug-samples-for-generic-testing November 8, 2017 https://www.raps.org/regulatory-focus%E2%84%A2/news-articles/2017/11/gottlieb-end-the- shenanigans-on-delaying-generic-drug-competition

Requested Listed Drug Inquiries Drug Company # Inquiries Absorica (isotretinoin) Ranbaxy 5 Exjade (deferasirox) Novartis 6 Letairis (ambrisentan) Giliad 10 Revlimid (lenalidomide) Celgene 13 Source: https://www.fda.gov/Drugs/DevelopmentApprovalProcess/HowDrugsareDevelopedandApproved/ApprovalApplication s/AbbreviatedNewDrugApplicationANDAGenerics/ucm607738.htm

NASEM Rec B: Let Government be the Purchaser • Because prices tend to be lower when the purchaser has bargaining power that is at least comparable to that of the seller, the United States could achieve lower prices for prescription drugs by consolidating bargaining power… • The law bars the govt. from negotiating drug prices for Medicare Part D. • Other countries are able achieve lower prices through regulations and negotiation. • But U.S. policy makers were lobbied heavily by drug companies.

https://www.drugwatch.com/featured/us-drug-prices-higher-vs-world/

NASEM Rec C: Require Greater Price and Cost Transparency Source: National Academies of Sciences, Engineering, and Medicine. 2018. Making medicines affordable: A national imperative.

Source: National Academies of Sciences, Engineering, and Medicine. 2018. Making medicines affordable: A national imperative.

Source: National Academies of Sciences, Engineering, and Medicine. 2018. Making medicines affordable: A national imperative.

Source: National Academies of Sciences, Engineering, and Medicine. 2018. Making medicines affordable: A national imperative.

Source: National Academies of Sciences, Engineering, and Medicine. 2018. Making medicines affordable: A national imperative.

Source: Kaiser Health News, May 30, 2018

Frequency and Mean Overpayment Among Pharmacy Claims with Patient Co-pay, 2013 Frequency of Drugs No. of Claims Claims % with Mean overpayment All 9,539,846 22.94 7.69 Generic 7,295,525 28.17 7.32 Brand 2,244,321 5.95 13.46 Source: Van Nuys K. et al, JAMA 2018.

NASEM Rec G: Modify the 1983 Orphan Drug Act • Cures for rare diseases – those affecting “less than 200,000 persons in the United States” and for which “there is no reasonable expectation that the cost of developing and making available in the United States a drug for such disease or condition will be recovered from the sale in the United States.” • Health Promotion and Disease Prevention Amendments of 1984, Public Law 98-551, 98 Stat 2815 (1984), § 4.

Benefits to Orphan Drug Makers • 7 add’l years of patent protection. • Expedited regulatory review process. • Including fewer patients required for clinical trials. • Tax credits to help support drug testing. • Orphan drugs have higher prices.