The Permanente Federation Reasons for Hope? Consumer Outrage, Physician Anger and State Efforts to Address Predatory Pricing Sharon Levine MD The Permanente Federation June 15th, 2017

We’ve been at this a long time… 1959-1963 Kefauver Commission hearings: excess profits of the US Pharmaceutical companies at the expense of US consumers “ Witnesses told of conflicts of interest for the AMA whose journal received millions of dollars in drug advertising and was, therefore reluctant to challenge claims made by drug companies” “..frenzied advertising campaigns designed to sell trade name versions of that could otherwise be prescribed under generic names at a fraction of the cost “..marketing of new drugs that were no improvements on drugs already on the market, but heralded as dramatic breakthroughs without proper concern for effectiveness or safety

Kefauver – Harris Drug Act of 1962 A modest proposal for reform Require proof of efficacy and safety prior to FDA approval – for the first time Require drug advertising disclose accurate, accessible information about side effects Prohibit the marketing of generics, under a new name, as expensive brand drugs Kefauver “accused of expanding the power of government excessively, interfering with the freedom of doctors and patients, and threatening the viability of the pharmaceutical industry” – appeared likely to fail Thalidomide disclosures, end of 1961, saved the legislation

What hasn’t changed since 1962? Egregious pricing and excess profits at the expense of US consumers Conflicts of interest Frenzied advertising campaigns Aggressive pricing of “breakthrough drugs” which offer marginal improvements

What has changed since 1962? Consumer attitudes Physician attitudes Impact on State and Federal budgets – forced choices between education, infrastructure and drug costs for state employees and Medicaid beneficiaries

Consumer Attitudes: Growing frustration with the impact of drug prices on out-of- pocket costs and insurance premiums over the last two decades 2002 AARP Survey: Americans 45 and older 92% concerned/72% very concerned about impact of drug prices on employer-sponsored coverage; 84% “make generics more available”; 81% “close loopholes preventing generics from coming to market”; 24% “unable to afford a prescription” 2003: passage of the Medicare Modernization Act 2010: passage of the ACA, gradual closure of the “doughnut hole”….

Consumer Attitudes: 2016-2017 Rx drug prices “too high” – 84% Financial burden too great – 62% Financial tradeoffs as a result of cost of Rx drugs – 77% Rx prices result of “pharmaceutical company monopolies”: 73% agree Rx drugs have brought health and productivity gains: 70% agree Rx drug pricing needs “major reform” to address “out of control pricing”: 83% agree Who is to blame: PHRMA, 65%; Govt, 12%; Insurers 6% 62% have stopped taking a Rx drug because of cost

Patients for Affordable Drugs National organization focused exclusively on achieving policy changes to lower the prices of prescription drugs Educate, activate and mobilize patients in support of change at the Federal and State level Advocacy through collecting and sharing patient stories Founded and initial funding by a cancer patient, David Mitchell; no funding from organizations that “profit from the development and distribution of prescription drugs” www.patientsforaffordabledrugs.org

Changing Physician Attitudes Important: 86% of consumers report “favorable image” of their physician, 51% “very favorable” Shift in position of organized medicine and specialty societies Bundled payments, alternative payment models (APMs), CMS focus on Part B drugs, and the human toll on vulnerable patients significantly impacted by their piece of the cost The Sunshine Act (Grassley), and Open Payments Database Significant change in employment status of physicians: from self employed (2015 <20% in 1-2 person practices; 35% in groups of >100) to employment by hospitals, large practices – institutional policies, including conflict-of-interest policies

Oncologists leading the way Oncology drugs a “poster child” for “because we can” pricing More effective, with occasional genuine breakthrough therapies Many more with marginal improvements for astronomical prices

Good News/Bad News

Value in Cancer Care Consortium Launched at ASCO June 2017 Development of “value-oriented regimens” Driven by concern about “Grade 5 Financial Toxicity”, and the enormous “side effects” on cancer patients: > Personal bankruptcies 3-4 times greater in 20 to 50 yo’s with cancer, compared to age, sex and geography matched controls > Increased debt load > Financial sacrifices (HA Jan 2016) > Medicare patients with cancer, on average, spend 25% household income on cancer treatment (JAMA Oncology 11/2016)

Value in Cancer Care Consortium Lower drug costs without taking on the issue of drug pricing Phase IV studies to identify opportunities for lower dosage, fewer doses, shorter duration of therapy, increased bioavailability with food and/or pharmacokinetic enhancers, use of therapeutic substitution without sacrificing quality outcomes Looking for 50% or more cost savings -

Action at the State and Federal level Majority of the action so far at the state level, and “action” defined as introduction of legislation 31 bills introduced in 18 states this year, addressing transparency > Transparency for all drugs priced over a certain level > Transparency on price increases > Transparency/justification for a list of state-selected drugs > Transparency/justification for drugs in a certain class, e.g. diabetes drugs in Nevada

TRANSPARENCY

PRICE REGULATION

PHARMACY BENEFIT MANAGERS

STUDY

OTHER

VOLUME PURCHASING

COMPILATION

So, the question is – is there reason for hope that these and other efforts will bend the curve, and lessen the burden of drug pricing in the US?