Exam 1 - Powerpoint 5 Flashcards
Recent Trends in US Spending
Net spending increasing over time
US vs. Peer Nations Drug prices
US generally spends more than peer nations on drugs
Drug spending growth contributors
Population growth Overall inflation in the economy More prescriptions per person Changes in the specific drugs being prescribed Drug-specific price inflation
why spending growth charts unstable for drugs vs other health care
Due to randomness of patent expires for blockbuster meds, new drug approvals
Drugs that account for much of RX spending growth
Specialty Medications spending increasing a lot
Pharma Industry for prices being reasonable
Progress and innovation = more lives saved and longer life
drugs save money preventing hospital costs
research and whole process risky, costly
Firms want profits, incentives investment
Most filled scripts are generics, insurers shifting med cost onto patients more and more
Window for peak brand pricing is small, then prices fall
US Drug Prices vs Other Countries
Our generic prices are much lower, than other countries but our brand prices are higher
Due to generic markets being competitive
Why patients concerned about drug prices
Drugs = most common way patients interact with Healthcare system
OOP spending on drugs is largest category of OOP spending
Issue of generic prices being too low
Can lead to shortage
Not enough profit margin to incentivize companies to get involved, leads to potential shortages if issues arise
Vaccine shortages
on average, 13% chance of vaccine shortage each year
research shows that if vaccines priced about $50/dose then much less prone to shortage
Private sector; Drug Cost Control
Increase patient cost sharing
Create barrier for patients, including tiered programs, prior auth, step therapy
PBMs negotiate discounts and rebates from manufacturer for preferential treatment in insurers formularies
Public Sector; Drug Cost Control
Medicaid and VA pay drug prices no greater than best private price by law
Medicaid and VA can negotiate more due to size, pay about 40% below Medicare D prices
Medicare Part D cant negotiate prices
New approaches to Drug Cost Control
Reference pricing
Value-based contracts
Indication-specific pricing
Reference Pricing
Commonly used by other countries
1 drug in each class is set as a reference, and that drug the patient will pay a standard copay. If you choose higher priced drug, patient pays standard price plus the difference between that drug and the reference price
Firms will compete to offer lower prices that attract patients
Internal reference pricing
insurer will not pay more than a set amount for any drug in a class, any extra costs are borne by the patient, pushing them towards cheaper medication
