OR WAIT 15 SECS
Volume 38, Issue 6
Weighing the crossover effect of US’s new pricing blueprint.
Now Donald Trump has at last made his pitch to tackle the challenge of paying for drugs in the US, speculation is rife about what the impact could be around the world-and healthcare payers in Europe are combing through his 44-page blueprint to see if any of his ideas might be worth a try locally.
That’s no surprise. The pressures on health authorities are pretty similar everywhere: how to meet the growing cost of drugs without bankrupting the system. Do Trump’s ideas have any relevance for Europe? Is there any value in a transatlantic transfer of thinking?
The heavily-branded proposal-“American Patients First: The Trump Administration Blueprint to Lower Drug Prices and Reduce Out-of-PocketCosts”-is prefaced by a characteristically assertive quote from the President, but one that is bound to ring some bells in Europe too: “I have directed my Administration to make fixing the injustice of high drug prices one of our top priorities. Prices will come down.”
Trump has hitched that familiar accusation of unjust drug prices to his own populist approach, so as to present himself as the defender of the victims of drug industry injustice.
His senior health official faithfully follows the same line in his introduction to the proposal-and also sounds some notes that are frequently heard in Europe too. Alex Azar, newly recruited from Eli Lilly as secretary of the US’s Health and Human Services (HHS), echoes the criticisms of the system he was a part of until only weeks ago: “Too often, this system has not put American patients first. We have access to the greatest medicines in the world, but access is meaningless without affordability.”
And some of the top challenges that the proposal identifies are also habitual elements of the narrative in Europe: high list prices for drugs, payers ill-equipped to negotiate, and “a new era of high-cost drugs lacking competition.” The pharma industry stands accused by Trump and his administration of “shifting its attention to high-cost drugs that face little to no competition, because they offer the freedom to set high launch prices and increase them over time.”
In view of the overlaps between the American and European diagnoses, the remedies canvassed inevitably display some superficial common points. The Trump agenda includes promoting the availability and use of generics and biosimilars-through “educating clinicians, patients, and payers about biosimilar and interchangeable products.” In similar vein to European health authorities, it speaks warmly of boosting “physician and patient confidence in biosimilar and interchangeable products” to increase market acceptance.
The Trump agenda envisions improving the accuracy of drug-spending data, including through tighter requirements on manufacturers to report their prices. And closely linked to the pricing system, the blueprint highlights preventing manufacturers from “gaming of regulatory processes” and the need “to address abusive drug pricing by manufacturers”-all well-rehearsed ideas in Europe.
But it is in the area of tackling high-cost drugs that the ostensible similarities are most evident. The blueprint notes that regulations governing the price of prescription drugs “have not kept pace with the availability of new types of drugs, particularly higher-cost curative therapies intended for use by fewer patients.” This mirrors
closely the spirit of the views expressed by EU health ministers-notably in mid-2016-that new medicines “pose new challenges to individuals patients and public health systems, in particular regarding the assessment of their added value, the consequences for pricing and reimbursement, the financial sustainability of health systems, their postmarket surveillance, and patient access and affordability.” The same concerns have emerged repeatedly and insistently across a swath of EU policy pronouncements since then.
Matching many of the EU suggestions for responding to these challenges, the blueprint lists a series of possible actions to obtain greater control over drug spending. They range from indication-based pricing to outcomes-based contracts and long-term financing models.
Reflecting some of the current EU discussions of horizon-scanning, the blueprint explains that “budgets may be challenged when a new high-cost drug unexpectedly becomes available in the benefit year.”
Consequently, “long-term financing models are being proposed to help states, insurers, and consumers pay for high-cost treatments by spreading payments over multiple years.” It also buys into the still-embryonic European discussion of value-based healthcare, and focuses on “improving price transparency” as “an important part of achieving this aim.”
Not all of the blueprint is so closely aligned to the concerns prevalent in the EU. The profoundly different nature of the US healthcare system means much of the blueprint’s discussion is irrelevant-on issues such as requirements to include list prices in advertising, or adjustments to Medicare accessibility.
And even where the diagnoses appear to coincide, the proposed remedies spring from very different contexts-most obviously because the US boasts one health authority with executive power over an entire country, in contrast to 28 distinct governments with national sovereignty over drug pricing, and a European-level authority with virtually no powers in the health arena. In addition, the level of detail in the blueprint’s recommendations is not always adequate to judge on their feasibility or relevance to the European market.
However, two other factors set the US approach so far apart from the situation in Europe that comparison becomes almost meaningless.
One is the curious contention that US drug prices are too high because prices elsewhere in the world are too low-based on the belief that “foreign governments are free-riding off of America investment in innovation.” “Other countries are not paying an appropriate share of the necessary research and development to bring innovative drugs to the market,” says the blueprint-and the loosely-argued justification for this belief invokes an amalgam of “foreign government threats of compulsory licensing or IP theft,” “austerity measures in most European countries,” “price disparities in the international market,” “the growing use of external reference pricing,” and “threats of market lockout.”
The flaws in both the reasoning and the ambition have rapidly been pounced on by many commentators, who have pointed out that it is far from clear how much leverage the US might have in obliging other countries to raise drug prices, or even how close the causal link is between the prices that drug companies can get abroad the prices they charge in the US. And as James Love, the American consumer guru who is no fan of the drug industry, also observed: “The higher foreign prices are, and the harder it is to obtain low-cost generics outside the United States, the easier it will be to charge higher prices in the United States.”
The other major differentiating factor, that stands in stark contrast to the European situation is the level of animosity, even hostility, directed at the pharma industry in the official US pronouncements. Azar has been particularly dismissive of the drug industry in his remarks. “I’ve been a drug company executive-I know the tired talking points: the idea that if one penny disappears from pharma profit margins, American innovation will grind to a halt. I’m not interested in hearing those talking points anymore, and neither is the President.” In his new position, Azar seems determined to settle scores in pursuit of the populist agenda set by his new boss in the White House: “If industry isn’t willing to work with us to lower prices, President Trump and his administration will keep turning up the pressure-until the system finally puts American patients first,” he said.
Such personalized animus and such coarsely-phrased ultimatums are alien to European officials, even when they express concerns over drug industry performance. Nor does it seem particularly effective, even in the US. Drug company shares rose sharply in reaction to the Trump plan. Right now, the US approach contains little that might be directly applicable in Europe’s bid to keep a hold on drug spending.
Paradoxically, the worst that European drug firms may fear as spillover from the blueprint could turn out to be some official pressure to raise rather than to lower their prices! Trump that!
Reflector is Pharmaceutical Executive’s correspondent in Brussels