Health policy in 2017: Innovation, value and access

By Dan Leonard, National Pharmaceutical Council President

This commentary was originally published in the Chain Drug Review.

Dan Leonard

For the past two years, organizations in the private and public sectors have been working to develop tools to support value-based health care and evidence-based medical decision making. In 2017, these efforts will take on an even greater urgency, driven by the ongoing, accelerating progress of biopharmaceutical research and development.

As more — and more effective — treatments for devastating illnesses enter the marketplace, it is vitally important to ensure patient access to these treatments within a system that rewards health care quality instead of incentivizing a greater quantity of health ­services.

In the past five years, over 70 new oncology products have been approved for use, including some that are lengthening the lives of patients with the most lethal forms of cancer, and there are numerous medications in various stages of clinical development and testing. This progress is being mirrored in the battles against a host of other diseases, from Alzheimer’s to diabetes to autoimmune illnesses.

As we see the development of innovations that will extend and improve lives, the focus of our work at the National Pharmaceutical Council (NPC), as well as the work of many health care stakeholders, will involve optimizing patient access to quality care and engaging in dialogues about the determination of value.

Assessing full value of therapies

Much of the discussion about drug innovation in political and media circles tells an incomplete story. There is a disproportionate focus on one drug and its immediate price tag upon entering the market (often, incorrectly focusing on a drug’s list price instead of the actual price paid after discounts and rebates).

What is lost when we focus solely upon price are the societal gains occurring as a result of biopharmaceutical progress, such as a 23% decline in the cancer death rate since 1991 and a 46% reduction in mortality from heart disease over a 20-year period.

In the United States, we need to do better than the example already set by several European countries that have focused heavily on the up-front cost of treatments. We can see, for example, the impact of the restrictions imposed by the United Kingdom’s National Institute for Health and Care Excellence (NICE). Almost 80% of cancer medicines reviewed over the past seven years by NICE include some form of access ­restriction.

The effort in our country to develop frameworks with which to effectively assess value is a process still in its infancy and one in which multiple organizations from various health sectors are involved. As these assessment tools continue to evolve, NPC has developed a set of recommended guiding practices for patient-centered value assessment.

The guiding practices set forth some basic guideposts to help developers, such as making sure input from patients and other stakeholders is fully incorporated, using established methods and transparent models and assumptions, using sound, high-quality evidence and including a broad array of factors that matter to patients and society, among other practices. It’s also become clear that multiple frameworks will be needed to address different questions for different end-users. But the frameworks are still works in progress and should not be used until they address the guideposts mentioned, otherwise patients could suffer.

Yet one federal program, the Centers for Medicare & Medicaid Services (CMS), has proposed changes to the Medicare Part B drug payment model that references the use of untested value assessment frameworks. This demonstrates the importance of developing well-conceived, patient-focused value assessments that take the full value of treatments into account, rather than simply placing a disproportionate emphasis on cost issues.

In 2017, we need to make significant progress in how we assess the value of new, innovative treatments in a way that enhances health system value while providing patients access to life-extending and life-enhancing medicine.

Elimination of low-value ­practices

As health care leaders seek to make the essential transition to value-based care, there are alternatives to wring unproductive costs out of the system that don’t involve restricting patient access to innovative, quality care. Reducing low-value care is one effective way.

Research has shown that an estimated $765 billion is wasted annually in health care expenditures, such as unnecessary procedures. Identifying wasteful or unnecessary medical tests, treatments and procedures has allowed physicians to make better decisions about a patient’s care plan based on their unique situation and contributed to a reduction in the cost of care.

Now, however, there is a need to move forward and understand where the new consensus exists on defining and measuring other areas of low-value care. Three areas of consensus to begin further efforts to reduce low-value care while improving quality and lowering costs are addressing medical errors, which are the highest-priority reduction; pricing failures; and overuse and ­overtreatment.

While more work needs to be done to identify and reduce low-value care, it’s clear that a significant portion of health care spending could be reduced without undermining the right patient care. By identifying and taking these corrective steps and gaining hundreds of billions of dollars in savings, we will have more resources at hand with which to link all Americans to high-value clinical care.

Problem of cost-related ­nonadherence

For several years, we’ve seen a growing trend in which health care payers are attempting to control pharmaceutical spending by increasing consumer cost-sharing, imposing higher deductibles and co-pays without regard to a specific drug’s clinical benefit. Studies have shown that as consumers are asked to pay more dollars out of pocket for their medications, the percentage of patients who do not adhere to their physician’s directives with regard to their prescription drugs will increase. Medication nonadherence is among factors driving health care cost escalation, as it leads to more hospital readmissions and worsening health outcomes.

To address these costs and nonadherence issues, we’ll need to have a larger discussion about how to develop consumer cost-sharing approaches that are more dynamic and value-focused, thus encouraging an appropriate use of prescription drugs that can reduce overall health care expenditures by improving population health.

Under one such approach, the level of consumer cost-sharing for higher-cost medication should be aligned with the clinical value — not solely the price — when lower-cost alternatives do not produce the desired patient-centered outcomes. This approach recognizes that in an age of precision medicine and targeted therapies, it makes little sense to use cost-sharing structures to force a patient to use a lower-cost drug that may not be effective in achieving desired clinical outcomes.

Under a “reward the good soldier” dynamic model, payers would encourage first-line use of lower-cost therapies when clinically indicated. If first-line therapy is not effective, however, cost-sharing levels are lowered for the second-line or third-line treatment. An approach like this promises to improve patient outcomes and, for the payer, achieve more efficient use of dollars by matching the right drug with the right patient without financial penalties.

Moving forward, we must see innovation not just in laboratories, but also in health care payment and delivery structures.

Critical need to share real-world evidence

To bring greater value into our health care system and create structures that will protect patient access to effective therapies, we need to utilize evidence on how treatments work, or don’t work, in the “real world.” Unfortunately, we’re still burdened by antiquated Food and Drug Administration rules and practices that restrict the kind of communications — on the benefits, risks and costs of new treatments — between manufacturers, providers and payers that are essential to determining value.

We shouldn’t, for example, expect a health insurer to establish formularies without having comprehensive knowledge of a drug’s projected efficacy and potential economic impact. Doing so can create distortions in pricing and undermine efforts to direct patients toward high-value treatment options. Taking a more holistic approach — developing high-quality information about new products, evaluating that data, and making it available to all stakeholders engaged in health care payment and delivery — will bring greater benefits to patients. Bringing the rules currently obstructing this approach into the 21st century should be a priority in the coming year.

In 2017, NPC will be focused on challenges related to innovation, value and access. The innovations emerging from America’s biopharmaceutical laboratories have the potential to transform medicine and significantly improve patient care. This won’t happen, though, unless we take the right steps to ensure patient access to these breakthrough therapies, doing so within a value-based health care system.

Dan Leonard is president of the National Pharmaceutical Council (NPC), a health policy research organization based in Washington, D.C.