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This STAT piece about how to think about the final government-set prices under the IRA is a worthwhile framework for thinking about the final numbers. The article suggests that the prices can be seen through four prisms: Does the government save money? Do consumers benefit? Do the prices reflect value? How do the prices stack up with international prices?
While those are (mostly) interesting questions to ask, I’m less enthralled with how STAT tried to answer them:
The does-the-government-save-money question is tough. No one is quite sure what the net prices are, so while that’s a good yardstick, in theory, it’s going to be hard to call balls and strikes in practice.
STAT’s thinking on how consumers will be affected is a big miss. STAT suggests that the story here is all about whether prices get so low that premiums go down, which is the wrong way of looking at things for a couple of reasons. First, the law was designed so that savings from “negotiations” funded other things, such as the out-of-pocket cap, so suggesting premiums are a measure of “negotiation” success is really off-base. The big question around consumers is whether PBMs will deliver IRA savings to the patients themselves, and that deserved a mention.
The value question is a great one. I wish there were more value assessments to draw upon here (the only one that STAT cited was ICER’s work on Elilquis/Xarelto), because my guess is that most of these medicines are absurdly cost-effective at their current net price. The IRA is not designed to reward value, and that’s one of the law’s bigger weaknesses. It’s nice that STAT flagged it, but — practically (and unfortunately) — it’s a moot point.
It’s probably not even worth talking about international reference pricing as a way to assess U.S. price controls. Different systems, different values, different tradeoffs, etc. have always made these kinds of comparisons fraught. I’d just as soon ignore this altogether.
Adding to the opacity of the exercise, the government won’t provide its thinking on these topics until next year, so we’ll be left guessing about what CMS ended up weighing most heavily.
Mark Cuban doesn’t need me to do his PR, but I feel compelled to push back on Mark’s behalf on this kind-of-strange STAT First Opinion yesterday by a couple of smart guys, Penn’s Zeke Emanual and Hopkins’ John Connolly.
The general argument is that while Cuban’s company may be a key to reducing drug shortages, he can’t touch the core issue with pharmaceutical prices.
I get where the authors are coming from, but Cuban is doing three interesting things on drug pricing that ought not be dismissed:
He’s being transparent on pricing of generic drugs. Emanuel and Connolly may not think that’s a big deal, but it’s allowing all kinds of analyses that showdcase exactly how broken the PBM model is when it comes to generic drugs. (The 46Brooklyn report last week being the most recent example.)
He’s trying to disrupt the brand marketplace. Cuban is giving a platform to those trying to create a low-cost, cash marketplace with medicines like the branded cash-only diabetes med Brenzavvy or its Humira biosimilar. Without Cuban, it’s hard to see how those experiments happen.
Cuban and his executives are able to use their experience to lobby for more fundamental changes in the system, not as outside agitators but as people who can see the system up close.
Sure, Cuban is not going to suddenly make rare disease drugs available for pennies a day. But suggesting he “won’t fix drug costs” is a pretty narrow way to look at what’s going on over there.
n.b. This is where I note that Cuban is not the first or the only person out there making these points or pushing these kinds of experiments, though he is the highest profile. Props to the other pharmacists exploring this road.
There are a couple more stories out on how the IRA won’t be that bad, one from Reuters and one from WSJ. I wrote about this at length yesterday, so I won’t waste your time with a detailed redux.
Just keep in mind three facts that are generally missing from these stories:
No one ever expected huge near-term impacts for the first 10 meds.
Where those near-term impacts exist, they’ve been modeled in. In other words, some companies will take a hit, but that’s baked into analyst expectations.
Every single CEO that has commented on this issue has taken pains to point out that long-term incentives are still mucked up.
Elsewhere:
The UK’s NHS isn’t going to reimburse for AstraZeneca’s Enhertu breast cancer drug, which has shown truly blowout data. According to the Financial Times, the decision is based, in part, on the way that the country’s cost-effectiveness body, NICE, thinks about disease severity. When I wrote above about the complications of using international reference pricing in the United States, this was the kind of thing on my mind. Can you imagine a situation in which American patients would be OK being denied access to the best breast cancer medicine in a generation?
Boehringer Ingelheim filed an appeal in its IRA case. This is not surprising, but it’s potentially important because their appeal will be heard by a different circuit than any of the other appeals.
The Boston Globe editorialized against PBMs. I’m not sure that’s news, but it only adds to the sense of surround-sound here. It’s hard to imagine PBMs wriggling out of legislative attacks. (Though it’s not hard to imagine PBMs working around a new regulatory regime.)
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