Health Care Reform May Drive Down Specialty Drug Costs Through Competition

More biosimilar approvals may lead to lower costs.

There is much uncertainty surrounding health care legislation, as lawmakers debate how best to reform the Affordable Care Act (ACA), especially since the American Health Care Act was recently pulled due to a lack of support from lawmakers.

Due to the costly nature of specialty drugs, and President Donald Trump’s vow to lower drug costs, specialty stakeholders have been concerned over what this means for the industry. In an interview with Specialty Pharmacy Times, Blair Childs, senior vice president, public affairs at Premier Inc, discussed the implications of the new legislation for the healthcare world and specialty pharmacies.

SPT: What improvements in health care are needed that were not addressed by the ACA?

Childs: A hospital today has to work with 120,000 pages of regulations, at least. All of this talk from Trump about regulatory reform is needed. Secondly, the stimulus bill right before the ACA created meaningful use with $30 billion going to [electronic health record] EHR companies. What that did was create an incentive for the EHR companies. They were successful in part because health systems were required to have a full electronic health record system. The stimulus funds went to the vendors, and it created an abnormal customer-vendor relationship in health care. The customer is essentially dependent on the vendor to avoid a penalty. It created an inability to create pressure on the EHR vendor to drive the vendors to do what you need done. What you need to get done as a health care provider is to get your data out to other parts of your system, which is difficult and expensive because this data exists in proprietary systems and the EHR vendors own the keys. This has caused much higher costs for providers and much less use of their own data because of this policy.

SPT: What should be at the forefront of new health care legislation?

Childs: We need to get rid of the abuses by a handful of pharmaceutical companies that reduces competition in the market, like the use of REMS to prevent a product from getting onto the market; the use of orphan drug status to gain additional exclusivity on a drug that really should not be an orphan drug in the traditional sense; the use of citizens’ petitions to delay the introduction of new products or to keep exclusivity. Otherwise, we will cause a backlash against pharmaceutical companies that are generating life saving medicines and threaten our country and health care system, because we cannot afford the escalating costs.

More incentives are needed to encourage providers to move to alternative payment models — that’s the ACOs and bundled payments. We need to get rid of burdensome regulations that impede an effective health care system and cause a lot of extra work. I also mentioned interoperability, the issue of how do you get information in and out of your EHRs because of the misaligned incentives created by the stimulus plan. So, more incentives for organizations to go to alternative payment models, more competition in the pharmaceutical industry, elimination of antiquated fee-for-service oriented laws that impeded change, and better use of the data health systems have, which is basically taking away the arrangement that exists today that gives EHRs over health care providers.

SPT: How could health care reform impact drug costs?

Childs: We’re going to have a big challenge with personalized medicines. They’re still going to be charging a lot for those medicines in the future, but I think you’re going to see faster movement to generics and biosimilars. You’re not going to be able to game the system to gain extra time of with product exclusivity. The pharmaceutical industry has to come up with new products to get the dollars much more than just optimizing the products they have today, which is what is occurring today. It’s going to be a more competitive market where we still have the benefits of innovation, so companies will still be focused on driving more product innovation that truly saves lives and makes lives better.