Insurance lobby: Let's beat government to drug cost reform

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The top health insurance lobbyist in the country says stakeholders are at a “crossroad” on addressing the growing cost of specialty medications themselves before the government steps in.

During a panel discussion Wednesday, Karen Ignagni, president of America’s Health Insurance Plans, said insurance companies, drugmakers and pharmacy benefit managers have been able to work well together to resolve issues in the past. Specialty drugs, however, such as Gilead's hepatitis C-fighting Sovaldi, which costs $1,000 a pill, have forced the issue.

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“We need to sit together to begin talking about this before the government has to,” Ignagni said.

She warned the increasing cost of drugs like Sovaldi threatens to “blow up” budgets for families, employers and state Medicaid funds.

Ignagni said there are a few areas where government can step in to help reduce the cost of drugs, such as requiring comparative effectiveness research to help decide how much a medication is really worth.

She also said while drugmakers often use the high cost of research and development as a reason to justify the price of their drugs, she implied it may be worth looking into how much of that is spent on research and how much is spent in other areas such as marketing.

John Castellani, president of the Pharmaceutical Research and Manufacturers of America, and Steve Miller, senior vice president of the pharmaceutical benefit management company Express Scripts were among the panelists at the discussion hosted by the Atlantic.

Castellani noted it takes over a billion dollars to get a drug to market, which means drugmakers have to set their prices at a level to recoup their investment. He also implied there needs to be a renewed look at how the insurance model was structured as drug co-pays tend to be much higher as a percentage than other insurance co-pays.

“I agree we have to solve this because when you look at burden of chronic disease…we are going to be overwhelmed with cost of managing acute care,” he said.

Castellani said while new technologies and regulations have helped the pharmaceutical industry bring drugs to market faster, more needs to be done to reduce their research and development burden.

“We need an innovative regulatory process that recognizes we don’t operate in the same way we did 40 years ago,” he said. “One of the parts we have to focus on is bringing the regulatory process with us.”

Miller agreed advancements in science and new regulations have led to drugs getting to market sooner but noted that isn’t reflected in drug prices.

“We need efficiencies to actually result in lower prices,” he added. “I agree with John we have to have innovation, but we also need lower prices.”

Three Democrats on the House Energy and Commerce Committee, including Ranking Member Henry Waxman (D-Calif.), wrote to Gilead raising the same issues in March.
 
Specifically they asked what formula Gilead used to determine the cost of Sovaldi, what discounts the company was offering, how it was factoring in Food and Drug Administration-expedited review of the drug into its cost, and the potential public health impact if insurers refused to offer the drug.

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