Saturday, July 9, 2016

Mass. is leader in efforts to rein in soaring drug prices

SAN FRANCISCO — Massachusetts is again a forceful presence at the annual Biotechnology Industry Organization’s convention, underscoring the state’s undisputed status as a hub for drug discovery.
But as the gathering opened here this week, the Bay State also emerged as a focal point in the growing backlash against soaring prescription drug prices, which can run tens of thousands of dollars a year for mass market medicines and hundreds of thousands for rare-disease therapies.
While the cost-containment campaign is raging nationally, Massachusetts has grabbed the spotlight on several fronts:
 State Senator Mark C. Montignyisproposing sweeping provisions to rein in drug prices.
 Attorney General Maura Healey is pressing Gilead Sciences Inc. to cut the price of its hepatitis C treatments.
 And a Boston watchdog group is leading the charge to set “value-based” prices for new medicines.
Dr. Steven D. Pearson, president of the group, known as the Institute for Clinical and Economic Review, said the state’s new fixation on drug affordability “fits with the Massachusetts role historically” as a laboratory for innovations, such as universal health care, that later go national. “Other states look to Massachusetts,” he said.

The clamor from industry critics has remained largely in the background in recent years at the BIO event, where thousands of biopharma executives swap business cards, negotiate partnerships, and trumpet the virtues of their state or country to expanding companies.
This year, bowing to the reality that the affordability push is gaining traction and could eventually affect the economics of the industry, BIO has scheduled more than a half-dozen sessions on drug pricing. The issue will also be discussed at several affiliated events, including a program at the 1,500-square-foot Massachusetts pavilion on the exhibition floor.
“It’s not surprising this is bubbling up in Massachusetts,” said Leora Schiff, principal at Altius Strategy Consulting in Somerville, who is tracking the rise of new pricing models in an effort to help life sciences clients navigate a changing environment. “While there are different interests, there’s a recognition that this is a problem that is bigger than all of us. And we have to solve this problem without killing innovation and without bankrupting the health care system.”
Biopharma leaders have long contended that drug prices are only one part of overall health care spending, saying their treatments save money in the long term by keeping patients out of hospitals. But with new specialty therapies spurring larger price increases in recent years — total US drug spending climbed 8.5 percent to a record $310 billion last year, according to the research firm IMS Health — the industry’s argument has proved less persuasive.
The backlash has been fueled by health insurers struggling to pay for costly new hepatitis C and cholesterol-lowering drugs, reports of companies raising their prices annually for existing drugs, and speculators, such as Martin Shkreli, former chief executive of Turing Pharmaceuticals, buying medicines and quickly jacking up the prices.
Presidential candidates Hillary Clinton, Donald Trump, and Bernie Sanders have also lambasted the industry on pricing.
In Massachusetts, drug costs have become the fastest-growing component of health spending, rising 13 percent statewide in 2014, the most recent year for which data are available, according to the state’s Health Policy Commission. The bill proposed by Montigny, Democrat of New Bedford, would require drug makers to divulge manufacturing, advertising, and research costs while disclosing federal research outlays and prices charged in the United States, compared with other countries.
Similar “transparency” bills have been filed in other states. But the Massachusetts bill would go beyond the others by giving public health programs rebates on some expensive medications, relief from what Montigny calls “skyrocketing drug costs” from “greedy corporate interests subsidized with taxpayer money.”
The bill has drawn attention — and opposition — from national drug industry lobbyists, who are also scrambling to fend off a California ballot measure that would limit state drug outlays to what the Department of Veterans Affairs pays.
“Massachusetts is a leader in dealing with the drug-price issue,” said Garry South, lead strategist for Californians for Lower Drug Prices, the committee leading the ballot initiative campaign and one of many out-of-state activists tracking the activity in the Bay State.
Healey has trained her guns on Gilead, the largest US biotech and one of the few with no significant presence in the Bay State. In a January letter, the attorney general warned the Foster City, Calif., company that it faces possible legal action unless it lowers the price of two popular hepatitis C medicines: Sovaldi, which costs $84,000 for a full 12-week course of treatment, and Harvoni, which costs $94,500. Healey said the prices “may constitute an unfair trade practice in violation of Massachusetts law” because they are too expensive for many patients.
Lawyers from Healey’s offices met with Gilead representatives in March but have reached no resolution. “Our discussions with the company remain ongoing,” said Jillian Fennimore, a spokeswoman for the attorney general.
Montigny’s bill, which was debated by the Legislature’s Joint Committee on Health Care Financing in April, was sent to the Rule Committee last week, though Governor Charlie Baker has expressed doubt that it will ever reach his desk.
But the biopharma industry harbors no illusion that the issue is going away.
“A lot of people are feeling anxious and concerned,” said Susan Garfield, principal in the life sciences advisory practice at the consulting firm Ernst & Young in Boston, who noted that even insured patients have been paying more out of pocket for their medicines because of increased “cost sharing” in their health plans. “It’s a reflection of the uncertainty people have about a health care system that feels opaque and not transparent, so they think it’s not fair.”
To counter that perception and implement pricing standards more akin to those employed by European government agencies, a number of US groups have begun experimenting with formulas to link the cost of medicines to how well they work to improve a patient’s condition. The efforts, variously called pay for performance or value-based pricing, seek to contain prescription drug prices after decades in which companies could charge whatever the market would bear.
Medical associations like the American College of Cardiology and the American Society of Clinical Oncology have proposed value frameworks, as has Memorial Sloan Kettering Cancer Center in New York. But the most closely watched proponent of value-based pricing is Boston’s Institute for Clinical and Economic Review. Funded by the Houston-based Laura and John Arnold Foundation, the group has been publishing studies analyzing the comparative effectiveness and potential budget impacts of drugs and drug candidates nearing approval by the Food and Drug Administration.
Thus far, the studies’ impact has been limited to heath insurers using them for ammunition in negotiations with drug makers. But the ICER approach could gain influence next year if Medicare, the federal agency that insures older Americans, begins looking to them — as it has suggested — in developing value-based pricing for drugs administered by physicians.
“I do think the drug companies feel the environment has shifted,” said ICER’s Pearson, a lecturer at Harvard Medical School’s department of population medicine who also serves as visiting scientist at the National Institutes of Health. “They don’t have the same pricing power.”
Consumer advocates say the pushback against high drug prices is welcome, but they see little impact so far on what ordinary patients have to pay out of pocket or through insurance.
“This issue has been building for several years, but we haven’t seen action yet” in moderating prices, said John Rother, president of the Washington-based National Coalition on Health Care, which represents 85 consumer groups, health care providers, and insurers. “This is a national issue, and it’s not going to be resolved at a state-by-state level.”

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