Drug pricing reform is in the news again this week as the Medicare Payment Advisory Commission (MedPAC) voted unanimously April 6 in support of the Commission’s multi-part Part B recommendations that include a Drug Value Program (DVP) with elements that align with President Trump’s interest in requiring drug companies to bid for government business.
“Despite Trump’s outreach to industry leaders and declaration of support for reducing drug prices, any attempt at price reform will be hard fought,” Jessica Turgon, MBA, ECG Management Consultants, told attendees last week at the ACCC 43rd Annual Meeting, CANCERSCAPE. The “how” of executing drug pricing reform will be “impressive,” Turgon said. She outlined five possible reform scenarios for lowering U.S. drug costs. The unknown: which reforms will the Administration stick to the most?
Add to the mix, MedPAC’s recommendations for reducing spending in Medicare Part B. (Spending has gone up 9% every year since 2009, Turgon noted, which is not sustainable.) Briefly put, MedPAC’s recommendations fall into two track recommendations:
Track 1: Improve the average sales price (ASP) system.
Track 2: Establish a Drug Value Program
For this voluntary program, Medicare would contract with private vendors to negotiate prices for Part B drugs using tools like a formulary. The Drug Value Program vendor would negotiate directly with drug manufacturers. Providers would purchase all DVP products at the price negotiated by their DVP vendor. Medicare would reimburse providers for the DVP-negotiated price AND reimburse DVPs an administrative fee with a shared savings opportunity.
What Cancer Programs Can Do Now
What seems certain is President’s Trump continued interest in drug pricing reform. How (or if) reform is executed remains to be seen. MedPAC serves in an advisory role to Congress on Medicare issues—and whether Congress will consider MedPAC’s recommended changes to Part B is also uncertain. In the face of the many uncertainties surrounding drug pricing reform, cancer programs can still take proactive steps to address the rising cost of drugs, Turgon said. To do so, she suggested that cancer programs:
Final takeway: “Run your hospital-based cancer program as a private practice and know where your costs are,” Turgon advised.
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