Time and time again, across numerous market sectors, artificially setting prices using foreign reference pricing has been unsuccessful. And when applied to pharmaceuticals, it could ultimately harm patients and undermine the administration’s important goal of “Making America Healthy Again.” Government price setting, whether it’s called International Price Indexing (IPI), Price Caps (PC), or Most Favored Nation (MFN) has failed to either adequately control prices or support the industry it is foisted upon.
Some of the unintended, but predictable effects of this pricing policy approach are:
- Erosion of the targeted industry
- Blunting innovation of important and novel therapies
- Stagnation in new product introductions
- Decreases in quality and product availability
- Over-reliance on low-end, often offshore suppliers, for either final products or their components.
Most importantly, these strategies have historically failed because the established prices are artificial to the US environment and fundamentally antithetical to our overarching system of free markets. There is also the potential for a poorly administered MFN approach to adversely impact the repatriation of pharmaceutical manufacturing within the United States. This policy could also dampen the ability of the pharmaceutical industry to meet unprecedented health challenges with innovative technologies or to continue innovation across therapeutic sectors, particularly in supporting development of personalized pharmaceutical care.
There is, however, one important component of the current Executive Order that offers a ray of hope: the novel idea to establish a mechanism through which American patients can buy their medications directly from manufacturers at an MFN price, thereby bypassing middlemen. If successful and administered in a transparent, free-market way, this has the potential to address many of the cost-driven access hurdles that have burdened some of the most important and innovative pharmaceutical technology and products.
Healthy Men, Inc. continues to believe that free-market based solutions—in combination with innovative pharmaceutical supply chain and patient-centric distribution models—are optimal. To this end we offer the following:
Six Key Principles to Sound Prescription Medication Pricing and Access Reform
- Prioritize Straightforward and Effective Reforms
Create systems and procedures that are simple, transparent, understandable, and effective. This is of paramount importance to restoring patients’ faith in a system that has become mysterious, veiled in secrecy, and overly complex and convoluted.
- Ensure That Cost Reductions Are Passed to Patients
Any reforms that allow patients to purchase medications directly from manufacturers must ensure adequate procedures to promote safe use and patient instructions. They must also honor the tenet that was at the forefront of establishing the current system by returning the lion’s share of cost savings—whether from contract-rates, rebates, price concessions, or whatever—to the patient. Furthermore, the goal of reform should be to reduce patient out-of-pocket expenditures for prescription medications from current levels, rather than just holding the line on costs that are already problematic for many. Returning cost savings to insurance companies and PBMs (most of which are interlaced) or any other entity other than the patient is wrong.
- Allow Markets (Not Government) to Reduce Prices
Pricing models and mechanisms should be market based. Establishing arbitrary price targets using reference standards that are not applicable to the needs, wishes and way of life of American patients undercuts fundamental principles of free markets.
- Protect Access to Care
Pricing reforms must be such that they do not impede access to treatments. A “Rob-Peter-to pay-Paul” strategy that imposes short-term caps at the expense of significantly higher premiums or more restrictive access has not worked. If caps are instituted, they should be designed in a way to reduce out-of-pocket expenses without compromising other core elements of prescription care or access.
- Preserve the Provider/Patient Relationship
Access to the full spectrum of medications and innovative therapies should not be restricted by limited formularies or an undue trial-and-error process. The selection of therapeutic alternatives must honor the wishes and values of patients within a system that keeps the patient-healthcare provider relationship as the focal point of treatment decision making.
- Ensure Safeguards for Drug Use and Patient Instructions in Any Direct-to-Patient Distribution Practices
Pharmacists play an important role in the current prescription medication distribution system. It is essential to guard against harmful interactions between medications or disease conditions and to ensure that patients and caregivers can get unbiased, accurate, and personalized information about how to take their medications safely and properly. These safeguards must be a core component of any process to allow patients to buy medications directly from manufacturers.
These six principles have one commonality: keeping patients’ long-term best interests in focus. In the end, that will fulfill the ethical and social obligations of providers, government, and health benefit managers and enhance the care of patients.
