[Ip-health] The HHS press release on Trump's drug pricing announcement involving an International Pricing Index (IPI)

James Love james.love at keionline.org
Fri Oct 26 07:00:11 PDT 2018


On the geographic area of the Trump proposal, I'll offer a few comments.

First off, given the laser targeting of tax breaks in the Trump tax bill
and the GOP redistricting skills, I think people should be a bit wary of
the random nature of the selection of geographic areas,   But even if that
is not political, there are some other obvious issues.

In the UK, where reimbursement decisions have be decentralized to some
degree, there is quite a bit of unease over zip code determined access.

If the international reference prices (IPI) is used for half of the
country, but not the other half, there will be cases where the drugs are
not going to be available or have a very high co-payment in some geographic
areas, but the drugs will be available in others, where reimbursements are
not constrained by the IPI.

My wife was diagnosed with breast cancer in 2010, when she was 52, close to
the median age for breast cancer patients, and about 13 years before she
would be covered by Medicare.  So this is not yet relevant for her, but the
drug she takes now, Kadcyla/TDM1, is one that has been identified as a
target therapy for the IPI.  In the UK.  Roche just let women die when they
were in the wrong zip code.   So what will women do if they can't get a
drug like Kadcyla/TDM1, if they are in the wrong zip code?  And, also, just
imagine how this plays out when some patients are under 65 (a majority of
patients for most cancers), and they get a drug, but people on medicare
part B, don't get the exact same drug, because their reimbursements are
constrained by the IPI in Part B.

Jamie




















On Thu, Oct 25, 2018 at 4:52 PM Baker, Brook <b.baker at northeastern.edu>
wrote:

> This is a geographical experiment, with the method for picking geographies
> not finalized, but perhaps by lottery.  Since the International Pricing
> Index experiment is only for Medicare physician administered medicines,
> it's actually quite a modest experiment with savings of $3.4 billion a year
> (thought the price reductions will be phased in over this time period
> suggesting that the final year's discount may be higher).  Still, this is
> less than 1% of annual U.S. revenue to manufacturers (including both
> monopoly protected and generic meds).  Given that price inflation of list
> prices is 10% (likely less after intermediary discounts), general increases
> in the prices of existing medicines will more than counteract Trump's
> "savings."
>
>
> Professor Brook K. Baker
> Health GAP (Global Access Project) &
> Northeastern U. School of Law, Program on Human Rights and the Global
> Economy
> Honorary Research Fellow, Faculty of Law, Univ. of KwaZulu Natal, SA
> 400 Huntington Ave.
> Boston, MA 02115 USA
> (w) 617-373-3217
> (c) 617-259-0760
> (f) 617-373-5056
> b.baker at neu.edu
> ------------------------------
> *From:* Ip-health <ip-health-bounces at lists.keionline.org> on behalf of
> James Love <james.love at keionline.org>
> *Sent:* Thursday, October 25, 2018 2:36:09 PM
> *To:* Ip-health
> *Subject:* Re: [Ip-health] The HHS press release on Trump's drug pricing
> announcement involving an International Pricing Index (IPI)
>
> This is going require a little bit of explanation:
>
> "The move from current payment levels to payment levels based on
> international prices would be phased in over a five-year period, would
> apply to 50 percent of the country, and would cover most drugs in
> Medicare Part B, which includes physician-administered medicines such
> as infusions."
>
>
> On Thu, Oct 25, 2018 at 2:32 PM James Love <james.love at keionline.org>
> wrote:
>
> > This is it.  Jamie
> >
> >
> >
> https://na01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.hhs.gov%2Fabout%2Fnews%2F2018%2F10%2F25%2Fhhs-advances-payment-model-to-lower-drug-costs-for-patients.html&data=02%7C01%7Cb.baker%40northeastern.edu%7Cd5257b528b6c43c42d7908d63aa8eb46%7Ca8eec281aaa34daeac9b9a398b9215e7%7C0%7C0%7C636760894511523701&sdata=B67JaeUc2KQnCsvxSSfwnwiIHCE7JUvZU3v2ZRtgEqU%3D&reserved=0
> >
> > FOR IMMEDIATE RELEASE
> > October 25, 2018
> > Contact: HHS Press Office 202-690-6343, media at hhs.gov
> >
> > HHS Advances Payment Model to Lower Drug Costs for Patients
> >
> > The International Pricing Index (IPI) Model would lower costs for
> > physician-administered drugs by resetting Medicare payments based on
> > international prices and introducing competition
> > On Thursday, the U.S. Department of Health and Human Services, through
> the
> > Centers for Medicare & Medicaid Services (CMS), announced and sought
> input
> > on a new “International Pricing Index” (IPI) payment model to reduce what
> > Americans pay for prescription drugs.
> >
> > Under the IPI model, described in an Advance Notice of Proposed
> Rulemaking
> > (ANPRM), Medicare’s payments for select physician-administered drugs
> would
> > shift to a level more closely aligned with prices in other countries.
> > Overall savings for American taxpayers and patients are projected to
> total
> > $17.2 billion over five years.
> >
> > “President Trump promised that he would bring down drug prices and put
> > American patients first,” said HHS Secretary Alex Azar. “With this
> > innovative approach, he is now proposing historic changes to how Medicare
> > pays for some of the most expensive prescription drugs, securing for the
> > American people a share of the price concessions that drug makers
> > voluntarily give to other countries.”
> >
> > “In an era where the pharmaceutical industry is pricing drugs at levels
> > approaching a million dollars—and jeopardizing the future of our safety
> net
> > programs—the time has come to fix the perverse incentives in the Medicare
> > program that are fueling price increases,” said CMS Administrator Seema
> > Verma. “I appreciate President Trump and Secretary Azar’s bold leadership
> > to lower seniors’ prescription drug costs and provide relief.”
> >
> > The move from current payment levels to payment levels based on
> > international prices would be phased in over a five-year period, would
> > apply to 50 percent of the country, and would cover most drugs in
> Medicare
> > Part B, which includes physician-administered medicines such as
> infusions.
> > The model would correct existing incentives to prescribe higher-priced
> > drugs and, for the first time, address disparities in prices between the
> > United States and other countries. Since patient cost sharing is
> calculated
> > based on Medicare’s payment amount, patients would see lower costs under
> > the model.
> >
> > Physicians currently purchase the drugs that they administer to patients
> > and receive payment from Medicare for those drugs at an amount equal to
> the
> > average sales price plus an “add-on” fee. The add-on is calculated as a
> > percentage of the average sales price of the drug.
> >
> > This creates several problems. First, the dollar amount of the add-on
> > increases with the price of the drug, which encourages prescribing
> > higher-cost drugs. Second, Medicare accepts sales prices for Part B
> drugs,
> > with no negotiation. Together, this results in higher out-of-pocket costs
> > that burden American seniors.
> >
> > The pharmaceutical industry offers deep discounts abroad while taking
> > advantage of the payment system in Medicare Part B which drives the cost
> in
> > the U.S., even though Medicare is the world’s largest drug purchaser. The
> > IPI model would take on this issue and pay vendors for Part B drugs at a
> > level approaching international prices.
> >
> > For the first time in Medicare, the IPI model would create a system in
> > which private vendors procure drugs, distribute them to physicians and
> > hospitals, and take on the responsibility of billing Medicare. Vendors
> > would aggregate purchasing, seek volume-based discounts, and compete for
> > providers’ business, thereby creating competition where none exists
> today.
> >
> > Under the model, instead of the current percentage-based add-on payment,
> > physicians and hospitals would receive a set payment amount for storing
> and
> > handling drugs that would not be tied to drug prices. Therefore, the IPI
> > model would remove the financial incentive to prescribe higher-cost
> drugs.
> > The model also frees physicians from having to “buy and bill” high priced
> > drugs, which creates financial risk that jeopardizes their practice and
> the
> > ability to serve their community.
> >
> > The agency is considering a randomized approach to determine which
> > geographies in the country would participate in the model.
> >
> > The IPI model would achieve several goals:
> >
> > Reduce costs for Medicare beneficiaries, and thereby increase adherence
> > and access to prescription drugs.
> > Introduce competition to the system of paying for physician-administered
> > drugs by bringing in private-sector vendors.
> > Reduce providers’ burden and the financial risk associated with managing
> > drug inventories, so physicians can focus on patient care.
> > Maintain financial stability for physicians while removing incentives for
> > higher drug prices.
> > Address the disparity in drug prices between the U.S. and other
> countries.
> > Reduce costs to the American taxpayers and Medicare beneficiaries who
> fund
> > these programs.
> > The ANPRM ensures an open and transparent approach with opportunity for
> > public input. CMS will carefully review comments and is considering
> issuing
> > a proposed rule for the IPI in the spring of 2019, with a potential model
> > start in spring 2020.
> >
> > For a policy brief on the ANPRM, please visit:
> >
> https://na01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.hhs.gov%2Fabout%2Fleadership%2Fsecretary%2Fpriorities%2Fdrug-prices%2Fipi-policy-brief%2Findex.html&data=02%7C01%7Cb.baker%40northeastern.edu%7Cd5257b528b6c43c42d7908d63aa8eb46%7Ca8eec281aaa34daeac9b9a398b9215e7%7C0%7C0%7C636760894511523701&sdata=OsH44JMhKOWWNQ59c9ajcdHtSTSmWl393FAESMiUcQw%3D&reserved=0
> >
> > For a fact sheet on the ANRPM, please visit:
> >
> https://na01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.cms.gov%2Fnewsroom%2Ffact-sheets%2Fanprm-international-pricing-index-model-medicare-part-b-drugs&data=02%7C01%7Cb.baker%40northeastern.edu%7Cd5257b528b6c43c42d7908d63aa8eb46%7Ca8eec281aaa34daeac9b9a398b9215e7%7C0%7C0%7C636760894511523701&sdata=wFOJGQpy7dPKTnvA%2F2%2BlgP7n%2FcuQ%2BGV1fc9LIb4vLco%3D&reserved=0
> >
> > Comments on the ANPRM will be accepted until December 24, 2018 and may be
> > submitted electronically through the CMS e-Regulation website at:
> >
> https://na01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.cms.gov%2FRegulations-and-Guidance%2FRegulations-and-Policies%2FeRulemaking%2Findex.html%3Fredirect%3D%2FeRulemaking&data=02%7C01%7Cb.baker%40northeastern.edu%7Cd5257b528b6c43c42d7908d63aa8eb46%7Ca8eec281aaa34daeac9b9a398b9215e7%7C0%7C0%7C636760894511523701&sdata=6kUenZrr8%2BcnM95FLvdhIyOIGJw%2BUtj2lyUtNWcAVkg%3D&reserved=0
> >
> > The ANPRM can be downloaded at:
> >
> https://na01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.cms.gov%2Fsites%2Fdrupal%2Ffiles%2F2018-10%2F10-25-2018%2520CMS-5528-ANPRM.PDF&data=02%7C01%7Cb.baker%40northeastern.edu%7Cd5257b528b6c43c42d7908d63aa8eb46%7Ca8eec281aaa34daeac9b9a398b9215e7%7C0%7C0%7C636760894511523701&sdata=tetAgoySx6F3T3AIc2BgLBQIhnRJ2zTNAqHapxD%2FCWs%3D&reserved=0
> >
> > ###
> > Note: All HHS press releases, fact sheets and other news materials are
> > available at
> https://na01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.hhs.gov%2Fnews&data=02%7C01%7Cb.baker%40northeastern.edu%7Cd5257b528b6c43c42d7908d63aa8eb46%7Ca8eec281aaa34daeac9b9a398b9215e7%7C0%7C0%7C636760894511523701&sdata=d70z0C9MpTJdf1ZRzM1cj0X8ypQFePVQ6d8qV2R7Dkw%3D&reserved=0
> .
> >
> >
> > Last revised: October 25, 2018
> >
> > --
> > James Love.  Knowledge Ecology International
> >
> https://na01.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.keionline.org&data=02%7C01%7Cb.baker%40northeastern.edu%7Cd5257b528b6c43c42d7908d63aa8eb46%7Ca8eec281aaa34daeac9b9a398b9215e7%7C0%7C0%7C636760894511523701&sdata=AQtvtwrB5u7g7umcj3JgIKqmZgetidanrVNRRiu82l4%3D&reserved=0
> <
> https://na01.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.keionline.org%2Fdonate.html&data=02%7C01%7Cb.baker%40northeastern.edu%7Cd5257b528b6c43c42d7908d63aa8eb46%7Ca8eec281aaa34daeac9b9a398b9215e7%7C0%7C0%7C636760894511523701&sdata=%2FyGXP6NfOzpvxqOZr6TCVTyIu288hdq0K6yQhX2qApU%3D&reserved=0
> >
> > twitter.com/jamie_love
> >
>
>
> --
> James Love.  Knowledge Ecology International
>
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> >
> twitter.com/jamie_love
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-- 
James Love.  Knowledge Ecology International
http://www.keionline.org <http://www.keionline.org/donate.html>
twitter.com/jamie_love


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