July 27, 2021

Drug Pricing Reform: Never Out of the Headlines

Image of dollar bills laying on a table

American politicians have been aware of, and looking for solutions to, drug pricing and affordability issues for literally decades. When it comes to share of income, the burden of healthcare costs is the largest for Americans who have the lowest incomes. And 17%, or 56 million Americans, can be considered “medically disenfranchised,” with inadequate access to a primary care doctor. Americans exist in a state of healthcare disparity, and four recent events illustrate just how volatile and pressured the healthcare system is right now.

What’s happening?

  • The first recent event was covered in our May article “$ To Switch,” where we explained how Cigna was offering patients $500 incentives to switch medications. This new tactic illustrates the lengths to which payers are going to increase the use of biosimilars, and it previews what we can expect when Humira faces biosimilar competition in 2023. We can also expect other health plans and pharmacy benefit managers (PBMs) to make this approach part of their own toolkits if it proves to be successful.
  • The second and third events were outlined in a July JAMA Health Forum article by Dr. Michelle Mello of Stanford and Dr. Stacie Dusetzina of Vanderbilt. In their letter, “Drug Pricing Reform in 2021 – Going Big or Going Bipartisan?” they pointed out that the COVID-19 vaccines, and the controversial approval of aducanumab for the treatment of Alzheimer’s disease, represented polar opposites in terms of drug pricing reform. In the case of the vaccines, the U.S. government lowered risk by supporting trials, guaranteeing contracts, and negotiating a lower price. In the case of aducanumab, it was developed through traditional processes and will be priced traditionally at, as they put it, “whatever the market will bear.” 
  • The fourth recent event was an Executive Order signed earlier this month by President Biden on “Promoting Competition in the American Economy.” Drug pricing, generics and biosimilars, patent laws, and healthcare availability are all specifically identified in the Order as in need of remedy (along with many other issues throughout all sectors of the American economy). While these are not new issues, this administration is particularly driven by politics to make substantive change – not least because this is one of the very few issues at present that has bipartisan support. The U.S. Department of Health and Human Services (HHS) has been given 45 days (from July 9) to submit a plan that addresses the issues noted above. In the meantime, legislation (S. 1428) has been introduced to ban “pay for delay” deals.  

So What?
Drug pricing is not going to disappear from legislators’ desks, and even big-business-friendly politicians have pharma in their sights. The majority of new products coming to market are specialty drugs targeting rare diseases and new breakthrough approaches to cancer treatment – but innovation comes with large price tags. The stakes are higher; budgets aren’t getting bigger; and, unfortunately, many patients remain uninsured.

What Now?
In May, we said “Reviewing and evolving your marketing mix and messaging to be more nimble is called for. Consider the prominence and focus of your patient-support tools and whether you’re prepared to quickly react,” and that is even more urgently needed today.

It would behoove brands to be more mindful in establishing their launch prices, and to consider the short- and long-term ramifications of their pricing decisions. Now, more than ever, a critical eye will be required, with recognition that discounts, rebates, and PBM and payer controls will likely all be increasing.

About the Author: Mike Motto is SVP, Market Access, at Intouch Group.