Leveraging Purchasing Power to Address Drug Costs Michelle Mello, - PDF document

6/23/18 Leveraging Purchasing Power to Address Drug Costs Michelle Mello, JD, PhD 1 Disclosure Consultant to CVS Caremark on formulary design issues (June 2018-) 2 1

6/23/18 Recommenda<on: Consolidate and apply governmental purchasing power, strengthen formulary design, and improve drug valuaIon methods Actor(s) Implemen<ng ac<on Congress Allow HHS to directly negoIate prices with drug manufacturers and suppliers, including acIng on behalf of any state agency that wants to parIcipate. 3 Recommenda<on: Consolidate and apply governmental purchasing power, strengthen formulary design, and improve drug valuaIon methods Actor(s) Implemen<ng ac<on Congress Allow HHS to directly negoIate prices with drug manufacturers and suppliers, including acIng on behalf of any state agency that wants to parIcipate. Congress Authorize HHS, other agencies, and associated private payers to expand flexibility in formulary design, including selecIve exclusion of drugs. Congress Amend the Medicaid Drug Rebate Program to allow for exclusion of certain drugs from coverage. 4 2

6/23/18 Recommenda<on: Consolidate and apply governmental purchasing power, strengthen formulary design, and improve drug valuaIon methods Actor(s) Implemen<ng ac<on Congress Allow HHS to directly negoIate prices with drug manufacturers and suppliers, including acIng on behalf of any state agency that wants to parIcipate. Congress Authorize HHS, other agencies, and associated private payers to expand flexibility in formulary design, including selecIve exclusion of drugs. Congress Amend the Medicaid Drug Rebate Program to allow for exclusion of certain drugs from coverage. HHS Test and refine methods for determining the “value” of drugs and idenIfy approaches to support value-based payments, formulary design, and negoIaIon of prices. CMS Expand demonstraIon projects tesIng alternaIve payment models for drugs. 5 Current landscape: negoIaIon 6 3

6/23/18 Current landscape: negoIaIon — Strengthen negoIaIon power of Part D plans — Up to 5 Medicaid demonstraIon projects of closed formularies — Move certain injectable or infusible drugs from Part B to Part D 7 Current landscape: value-based payment — Various forms tested in private plans — Fueled by ICER’s work — Blueprint calls for (more) experimentaIon in Medicare and Medicaid, including value- and indicaIon-based pricing — Success depends on ability to exclude 8 4

6/23/18 Key evidenIary needs — Robust projecIons of savings from direct price negoIaIon (esImated at $15 - $300 billion) ◦ Which drugs should be subject to negoIaIon? ◦ What pricing model should be used to guide decisions? — Further simulaIons of cost and access impacts of various VBP frameworks, including power to exclude ◦ Strategies for dealing with uncertainIes at launch Ime 9 What the Commifee didn’t recommend — Direct price controls — Drug reimportaIon — Banning DTCA — Exercising march-in rights 10 5