John M. O’Brien, recently appointed president and CEO of the US National Pharmaceutical Council, calls for innovation in benefit design reform to match the unparalleled speed and ingenuity with which the biopharmaceutical industry developed vaccines and therapeutics to combat the COVID-19 pandemic.
The biopharmaceutical industry developed COVID-19 vaccines and treatments at stunning speeds over the past 18 months, building on decades of dedicated work by scientists, doctors, and researchers in the drug industry. The pandemic spurred a focused and collaborative approach to innovation that delivered lifesaving health care interventions when we needed them the most. Now, we need this same kind of focused effort from all health care stakeholders to innovate on how we pay for vital medicines.
Innovative treatments can improve the quality of life for patients, but only if they have access to them. Research from the National Pharmaceutical Council (NPC) published in the Journal of Managed Care & Specialty Pharmacy showed that U.S. physicians attributed the majority of improvements in outcomes for patients with debilitating conditions to pharmaceutical and biopharmaceutical innovations, far ahead of other medical interventions.
Spending on these innovative treatments pays off — both in terms of patient health and financially. Between 1995 and 2015, total costs for chronic conditions including HIV, ischemic heart disease, and lung cancer went up, but when adjustments for inflation and disease prevalence are made to get a more accurate picture of per-patient costs, spending actually fell, even as outcomes improved, according to NPC research.
Yet, outdated health insurance benefit designs often create barriers that limit patient access to innovative, high-value medicines. It’s virtually undisputed that the current health care system is crushing patients with high out-of-pocket costs for needed medications.
Poorly designed insurance hurts not only a patient’s bank account, but also their overall health. A study from the UC Davis Institute for Population Health Improvement showed measurable differences in five-year relative survival for cancer patients based on what kind of insurance they have.
More broadly, one-size-fits-all benefit designs aren’t aligned to the reality that patients with the same condition may require different treatments based on their biology, comorbidities or other factors.
Insurers also should consider patient views and experiences when designing their benefits, much like biopharmaceutical companies do when designing clinical trials. A study by NPC and Tufts Medical Center’s Center for the Evaluation of Value and Risk in Health showed almost half of the health plan decision-makers surveyed reported never having engaged with patients when developing coverage policies.
Most Americans get their health insurance through their employer, so we must also ensure employers understand that helping their employees get better access to high-value care does not have to equal increased costs.
Some employers are already implementing an important change to lower out-of-pocket costs for employees. Thanks to a change in IRS rules, employers offering high-deductible health plans with health savings accounts can now cover an expanded list of preventive services and medications before patients meet their plan’s annual out-of-pocket deductible. Nearly half of all large employers have taken this step, recognizing potential savings not only for patients, but in downstream costs such as hospitalization and emergency department visits. To more fully understand the impact of this rule, NPC is conducting research to update uptake trends, learn about barriers to uptake, and gauge interest in expanding coverage to additional high-value services.
Despite this clear need for innovation in health payment mechanisms and benefit design, almost all of the public policy discussion on health spending is focused on drug pricing, even though drug spending in the U.S. accounts for less than one-fifth of total health care spending.
To patients, drug costs aren’t calculated by government or plan actuaries but by what they are asked to pay at the pharmacy counter. Many of the solutions currently being debated — such as price or spending limits focused only on drugs — may do very little to help patients dealing with costs at the pharmacy counter. A recent NPC-Xcenda survey of decision-makers at payers and pharmacy benefit managers showed that only 25% said they would pass along savings from a government-mandated drug discount to patients in the form of lower copays, and nearly 75% said a hypothetical 15% reduction in drug prices would be unlikely to change or broaden Part D coverage for medications on their formulary.
In addition, government-imposed budget caps to limit spending growth that solely focus on pharmaceuticals would lead to worse patient health outcomes compared to aggregate health budget caps, according to NPC research released earlier this year.
Our focus should always be on what works best for the patient. Viewed through that lens, two actions are necessary: 1) we must continue to develop the biopharmaceutical innovations that have made such a dramatic impact on patient lives around the globe and 2) we must find new ways to make sure patients have access to these treatments.
All parts of the health care system need to work together to deliver on these fronts. That work will bring us a healthier world.
