With all the news coverage of high-dollar prescription drugs these days, it’s not hard to imagine many patients feeling pangs of concern as they approach the pharmacy counter: Will the medications I need be available? Will they be covered by insurance? If not, will they be affordable?
A recent National Institute for Health Care Management Foundation webinar examined the future of prescription drug costs and access issues faced by Americans, and how obstacles may be removed so people can get the medicines they need.
Here are some key takeaways from the panelists:
- Avik Roy, president and CEO of NIHCM and president of the Foundation for Research on Equal Opportunity, noted that the percentage of prescription drug costs as a share of overall insurance premiums is rising – it currently stands at 24%, compared with 22% about two years ago.
- Gregg Girvan, resident fellow in health care at FREOPP, joined Roy in presenting the organization’s opinion that although large, established pharmaceutical companies generate the lion’s share of revenue in the industry, smaller, emerging firms actually have the edge in terms of innovation – a trend that may offer answers to the rising cost of drugs. “With very little revenue and relatively small amounts still of R&D spend, it’s the emerging companies that are originating the majority of the drugs in the industry today,” Girvan noted. “They are the ones that are particularly innovative, whereas the large companies are not innovating as much as you would expect given their size, their clout, and their ability to not only perform the science in the labs and in the trial space, but to be able to then get it through the FDA approval process.”
- Roy and Girvan noted that instead of collaborating with large firms to help them bring new medications to the market, smaller emerging firms are increasingly doing all of the heavy lifting themselves, from originating a product to gaining approval for it, then marketing it and reaping the revenue it generates.
- Roy and Girvan said FREOPP reviewed 428 FDA drug approvals over a nine-year period and found that startups and small firms were responsible for an increasing share of new medication development. In 2022, the breakdown of companies developing new drugs was 54% emerging firms, 13% small to medium firms and 32% large firms. That’s compared with 50%, 15% and 35%, respectively, in 2013.
- Mary Beth Erwin, chief pharmacy officer for Blue Cross and Blue Shield of Massachusetts, discussed how a multipronged approach can help keep costs under control for covered patients. The approach includes pharmacy benefit management contracting, formulary and clinical management, a “paying for performance” strategy and value-based contracting. Erwin emphasized the importance of both strong clinical management and comprehensive specialty management to ensure patients get appropriate care. Erwin also discussed clinical tools the company is using to encourage plan members to take their medications as intended, helping to improve access and reduce waste in the system.
- S. Sean Tu of the West Virginia University College of Law examined how the patent environment affects new drug development strategies and pricing. Tu explained how patenting initially allows makers of new drugs to recoup their research and development expenditures, move the products through the FDA approval process and make a profit. “But then after those patents expire, we allow generics or biosimilars to come in,” Tu said. “That story of competition drives the price down, way down in some cases, and that allows everyone to gain access to these lifesaving medicines.”
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