State agency examines pricing of drugs

Health Policy Commission solicits advice from experts

FOUR EXPERTS on prescribing, paying for, and manufacturing pharmaceuticals on Tuesday offered the state’s Health Policy Commission a series of recommendations on how to curb rising drug costs, but first they had to hash out whether pharmaceutical prices were a serious problem.

Over two days of hearings on health cost trends, the Health Policy Commission heard lots of testimony about spiraling drug prices. A report by the state’s Center for Health Information and Analysis, for example, said health care spending in Massachusetts hit $57.4 billion in 2015, of which $8.1 billion, or 14 percent, went for drugs. The report also noted that drugs accounted for $756 million of the $2.1 billion in spending growth in 2015.

But Lisa Joldersma, vice president of public programs with the Pharmaceutical Research and Manufacturers of America, downplayed the numbers.  She noted the center’s report indicated only one-third (actually 36 percent) of the 2015 spending increase could be attributed to drugs. And she said the center’s numbers didn’t reflect manufacturer’s rebates.  “I want to urge that we please talk in facts,” she said.

Drug pricing panel included, from left, Dr. Deborah Shrag, medical oncologist at Dana Farber; Rick Weisblatt,k chief of innovation at Harvard Pilgrim; Gregg Meyer, chief clinical officer at Partners HealthCare; and Lisa Joldersma of the Pharmaceutical Research and Manufacturers of America.

Drug pricing panel included, from left, Dr. Deborah Shrag, medical oncologist at Dana Farber; Rick Weisblatt, chief of innovation at Harvard Pilgrim; Gregg Meyer, chief clinical officer at Partners HealthCare; and Lisa Joldersma of the Pharmaceutical Research and Manufacturers of America.

Her comments didn’t sit well with the three other members of her panel or with the commission. Several commission members half-jokingly said they hoped she was being paid well for having to make the case that pharmacy spending was reasonable. Commission member Ron Mastrogiovanni said the prices charged by drug makers represented by the Pharmaceutical Research and Manufacturers Association were extreme. “You’re begging for federal regulation,” he said.

Commission member Dr. Don Berwick said it was offensive how the manufacturer of the EpiPen had hiked the price of the allergy injector by more than $500 over the last seven years.  He said even the price of insulin was rising dramatically. “It’s courageous of you to show up here,” he said to Joldersma.

Rick Weisblatt, chief of innovation at Harvard Pilgrim, said drugs represent 25 percent of the insurer’s total medical cost, and the numbers are rising at double-digit rates. He conceded that the price of Sovaldi, a drug that can cure hepatitis C, went from $85,000 in its first year of release to $65,000 in the second year to $35,000 now. “That’s a negative trend, but it’s not reasonable pricing where it began and where it ended,” he said.

Dr. Gregg Meyer, chief clinical officer at Partners HealthCare, recited a host of figures indicating that drugs were eating up more and more of the medical spending pie. He also said generic drugs are no longer an answer for controlling health care costs because their prices are also rising fast. “We don’t deliver savings from them anymore,” he said.

To reduce spending on drugs, the panel offered a number of suggestions:

Weisblatt said Harvard Pilgrim is experimenting with outcome contracting for drugs, where manufacturers are compensated based on the results their drugs deliver. He said the insurer has deals with Amgen, Novartis, and a third manufacturer, as well as several others in the works.

Meyer said Partners is increasingly saying no to prescribing costly medications that don’t yield value. He complained that Partners also tried to restrict distribution of Sovaldi to those patients who most needed it, but was overruled by the state. Marylou Sudders, the state secretary of health and human services and a member of the commission, said the federal government required all patients to be treated the same when it came to Sovaldi, a decision she characterized as the correct one.

Meet the Author

Bruce Mohl

Editor, CommonWealth

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

Dr. Deborah Shrag, a medical oncologist at Dana Farber Institute, told the commission that patients who receive prescriptions should be monitored more closely to track a drug’s effectiveness. She said drugs go through clinical trials and are deemed effective for hundreds of patients. Once the drug wins approval, it is often prescribed for thousands of patients, many of whom have very different medical situations. Better tracking would help determine which patients the drug would help and which ones it wouldn’t, she said.

Both Meyer and Shrag said they could better control health care costs if they knew how much a drug would cost a patient when they are writing a prescription. Commission member David Cutler said state law requires that information to be available, but Meyer and Shrag said it’s not. Weisblatt said the information is available to the patient but not the health care provider. Weisblatt and Meyer agreed to work together to make the information available.

A California ballot question would require state agencies to pay the same price for prescription drugs that the Veterans Administration pays. Cutler suggested the Health Policy Commission should recommend similar legislation for Massachusetts, but commission chairman Stuart Altman said he worried that drug manufacturers would respond by hiking the prices that commercial customers pay. Joldersma suggested Altman was correct, likening the California ballot question to squeezing a balloon at one end, forcing the other end to bulge.