1. Title text here Consumer Perspective on Containing Drug Costs Leigh Purvis, Director, Health Services Research

2. Overview AARP 2 Why do prescription drug issues matter to AARP? AARP perspective on specific issues Outlook for the future

3. Older adults use a lot of prescription drugs Older adults use more prescription drugs than any other segment of the population Chronic conditions are highly prevalent among older populations AARP 3 Percent of population

4. AARP 4 Treatment costs can be extraordinarily high Many new products are entering the market with extremely high prices (e.g., Sovaldi) o Annual costs can range from $25,000 to $400,000 o Increased focus on biologics, orphan drugs, personalized medicine Patient population sizes are growing o New cholesterol medication for ~10 million patients  Expected cost: $10,000 per year

5. AARP 5 Medicare can lead to high cost-sharing Part B beneficiaries are responsible for 20% of their prescription drug costs o Part B does not cap out-of-pocket spending Part D plans are increasingly using coinsurance o Cost-sharing is considerably higher than employer-sponsored plans o Out-of-pocket spending is limited by catastrophic cap  However, still responsible for some cost-sharing in catastrophic (e.g., Humira is still over $100/month)

6. Private insurance is following Part D’s lead An increasing number of employer-sponsored plans have created a fourth or even higher tier of drug cost sharing o The average copayment for a fourth-tier drug is $83 and the average coinsurance is 29% Most exchange plans rely on coinsurance for drugs on Tier 3 and 4, which can result in extremely high cost-sharing o Average coinsurance for Silver and Bronze plans is 40%, some as high as 60% The “relatively low” cost-sharing for expensive specialty drugs is threatening to increase cost-sharing for non-specialty drugs AARP 6

7. Patient assistance programs are not a cure-all While helpful, programs can be less than generous Patient assistance programs typically do not help insured patients and have very low income thresholds o Some also require beneficiaries to spend a certain amount of their income before they can participate Each pharmaceutical company has its own qualifications, forms, processes for refills, and rules for re-qualifying o Companies can have a different program for every drug they manufacture with different eligibility requirements for each drug AARP 7

8. Overview Why do prescription drug issues matter to AARP? AARP perspective on specific issues Outlook for the future AARP 8

9. AARP’s long-standing areas of interest Tracking drug price trends Increasing generic utilization Secretarial negotiation Rebates for Medicare Part D low-income subsidy beneficiaries Pay for delay AARP 9

10. AARP perspective on biologics and biosimilars AARP 10 AARP strongly opposes providing brand-name biologic manufacturers with 12 years of data or market exclusivity AARP also believes that evergreening should be prohibited o Manufacturers should have to demonstrate a clear, significant clinical advantage over the reference product in order to receive an additional period of exclusivity Different INNs could lead to prescriber and patient confusion and possibly impact patient safety State legislation: If FDA deems interchangeability between products, the process for biosimilar substitution should be the same as the process for traditional generic products

11. AARP perspective on efforts to limit cost- sharing Complicated issue since we focus on beneficiaries and government programs o Long-term/broader implications are often pushed aside Very little evidence higher-cost drugs are better than less expensive existing alternatives If effectively tie plans’ hands, they will find another way to limit access o Growing concerns about access/discrimination due to formulary design AARP 11

12. AARP perspective on efforts to increase innovation Incentives for innovation need to be appropriately balanced with ensuring that new treatments are safe, effective, and affordable to consumers FDA’s approval times are consistently faster than its regulatory counterparts in other countries Concerns about safety of products approved under some form of priority review As long as drug manufacturers continue to charge excessively high prices, Congress should ensure that measures to extend drug manufacturers’ monopolies and increase the financial burden on taxpayers and government programs are extremely limited AARP 12

13. Overview AARP 13 Why does do prescription drug issues matter to AARP? AARP perspective on specific issues Outlook for the future

14. Key word: unsustainable The costs associated with prescription drugs are not sustainable for patients or payers Efforts to reduce costs could save taxpayer-funded programs like Medicare and Medicaid billions of dollars Many patients will be unable to afford their prescription drugs if competition does not provide some level of price relief Medical advances are meaningless if no one can afford to use them AARP 14

15. AARP 15 Leigh Purvis Director, Health Services Research lpurvis@aarp.org AARP Public Policy Institute www.aarp.org/ppi Twitter:@aarpdrugwonk www.Facebook.com/AARPpolicy Blog: www.aarp.org/policyblogwww.aarp.org/policyblog