State shouldn’t define pharmaceutical ‘value’

Baker drug-pricing proposal is shortsighted

THERE’S A REASON that Americans get access to new cancer medicines two years earlier, on average, than patients in Europe: prices in the United States respond to medical needs and market demands, not public commissions using inflexible formulas.

Unfortunately, Gov. Charlie Baker’s budget proposal fails to take this into consideration and could put cutting-edge treatments out of reach for Massachusetts’ most vulnerable patients.

The proposal unveiled in January would allow Massachusetts to negotiate directly with manufacturers for supplemental rebates to MassHealth, the commonwealth’s Medicaid program. If the government deems savings still to be insufficient, it could take further action.

It was written in good faith; we all want to increase value for patients, improving quality, reducing waste, and lowering costs. But Baker’s proposal misses the mark because it lets the government define “value,” which leads to a one-size-fits-all solution.

The analyses that inform the governor’s determination of value do not account for critical clinical differences among patients, to say nothing of their personal preferences. That could deny patients access to important treatment options. If this policy becomes law, it will insert the government between patients and their doctors, impeding individualized treatment decision-making and discouraging innovation.

We know that’s not what Baker intends. No one wants to deny patients access to life-saving options or to disrupt the patient-physician relationship. But those are precisely the side effects this proposal threatens, especially among our most vulnerable populations.

The biopharmaceutical industry supports commonsense reforms that are driven by what patients need – all patients, not just those covered by MassHealth.

Federal law already mandates that MassHealth must receive the best price for drugs. And supplemental rebate agreements between manufacturers and government are frequently negotiated to ensure a medicine’s preferred status on a Medicaid drug list. Massachusetts’ procurement laws may need improvement, but we should not allow any government entity to define value and force biopharmaceutical innovators to disclose proprietary information. Such action could put the 300,000 jobs supported by the biopharmaceutical industry at risk.

There are better ways to lower health care spending. For example, health services that are proven to provide little or no benefit to a patient are a major driver of inefficiency and an untapped opportunity to save money. The Health Policy Commission noted in its February 2019 report that it has studied low value care. In the cross section of claims studied, nearly 800,000 low value services were identified, accounting for nearly $80 million in health care spending.

Health conditions such as cancer, diabetes, and heart disease are the leading causes of death and disability in the United States. They account for about 90 percent of health care spending. If we want to get serious about tackling the single biggest cost driver behind costs, we need to ensure patients get the proper medicine at the right time.

In fact, medicines are this country’s best chance at tackling the biggest driver of health care costs: chronic disease. Treating them can lower costs elsewhere by reducing later hospitalizations, nursing home admissions, and physician visits.

Meet the Author

Leslie Wood

Deputy vice president of state policy, Pharmaceutical Research Manufacturers of America
As states continue to feel pressure to contain health care spending, it is tempting to reduce care of any kind. But the Baker proposal is short-sighted and will not lead to a long-term solution or to better outcomes for patients in Massachusetts.

We can lower health care costs without risking access to lifesaving treatments or the kind of innovation that makes these treatments and cures possible. We look forward to working with Gov. Baker and legislators in the commonwealth to do just that.

Leslie Wood is deputy vice president of state policy at the Pharmaceutical Research Manufacturers Association, or PhRMA.