Understanding Payer Perspectives on Value in the Use of Pharmaceuticals in the United States.

BACKGROUND: In recent years, value assessment frameworks have been introduced to inform discussions about how to define and assess value in the U.S. health care system. However, there is uncertainty as to how value assessment frameworks and other approaches to achieve value such as outcomes-based contracting are perceived and used in coverage decisions. OBJECTIVE: To understand how U.S. payers determine value in the use of pharmaceuticals and how it differs from payers outside the United States. METHODS: Qualitative in-depth phone interviews with 13 executive-level public and private U.S. managed care representatives and 6 health technology assessment advisors outside the United States were conducted from September to November 2017. RESULTS: Despite various mechanisms used by U.S. payers to assess value, no consistent definitions of value were provided, and U.S. payers felt limited in what they can do to achieve value in pharmaceutical decision making. Value assessment frameworks are not formally considered in formulary and reimbursement decisions but are used as a reference as they become available by most or all U.S. health plans. U.S. payers expressed concerns, including limited control over pharmaceutical pricing and budget caps, and limited ability to use incremental cost per quality-adjusted life-year thresholds. Outcomes-based contracting could have some utility in specific cases where the treatment has a particularly high cost and a clear outcomes measure, but payers indicated that outcomes-based contracts can be difficult to operationalize, and determination of savings was uncertain. Payers outside the United States-who are enabled by government health care bodies, policy tools, and analytical frameworks that have no counterpart in the United States-have a wider array of instruments at their disposal. U.S. payers were largely open to learning from other health care systems outside the United States, particularly the German health care system, where patient-relevant benefit compared with a predetermined treatment comparator is the primary determinant for price negotiations. CONCLUSIONS: Although there is interest in including value assessment frameworks during the decision-making process in the United States, there are significant challenges to operationalizing them. The current environment in the United States restricts payers' ability to make favorable contracts with manufacturers, and changes to the U.S. health system design are needed to facilitate this effort. Adoption of a value assessment framework in Medicare or Medicaid would accelerate adoption of these tools by private payers in the United States. DISCLOSURES: This study was conducted by RTI Health Solutions under the direction of The Pew Charitable Trusts and was funded by The Pew Charitable Trusts. Vekaria is employed by RTI Health Solutions. Reynolds and Coukell are employed by The Pew Charitable Trusts. Brogan and Hogue have nothing to disclose.

Estimated Changes in Manufacturer and Health Care Organization Revenue Following List Price Reductions for Hepatitis C Treatments.

Importance: Pharmaceutical manufacturers rarely reduce drug list prices, but 3 expensive treatments for hepatitis C experienced significant list price reductions in 2018. Understanding the impetus for these price reductions could inform policies to reduce drug spending. Objective: To estimate the differences in manufacturer and health care organization revenue from the Medicare Part D program following list price reductions for hepatitis C treatments, accounting for manufacturer discounts to eligible health care organizations under the 340B drug discount program and manufacturer rebates to pharmacy benefit managers. Design, Setting, and Participants: A cross-sectional analysis of Medicare Part D claims for hepatitis C treatments in 2016 was conducted. Data analysis was performed in February 2019. Using the observed price changes from 2018, manufacturer and 340B health care facility net revenues for each drug were estimated before and after the price change based on 2016 use, adjusting for estimated 340B health care organization discounts and pharmacy benefit manager rebates. The 340B health care organizations include hospitals, clinics, and other organizations that meet federal standards to participate in the 340B program and were actively enrolled in the 340B program from January 1 to December 31, 2016. Manufacturer discounts to 340B health care organizations are based on the price of a drug before rebates to pharmacy benefit managers, and a reduced list price would reduce discounts to 340B health care organizations. Health care organization-level claims data were obtained from the Medicare Part D Provider Utilization File, and health care organizations were matched to Health Resources and Services Administration Office of Pharmacy Affairs Information System to identify 340B-eligible health care organizations. Eligible claims included claims for ledipasvir with sofosbuvir (Harvoni; Gilead Sciences Inc), sofosbuvir with velpatasvir (Epclusa; Gilead Sciences Inc), and elbasvir with grazoprevir (Zepatier; Merck). Health care organizations were considered 340B eligible if their practice address was a registered 340B entity for the entirety of 2016. Main Outcomes and Measures: Discounts to 340B health care organizations and pharmacy benefit managers for each drug before and after the price change were the primary outcomes. Other outcomes included per-treatment and aggregate manufacturer and 340B health care organization net revenues for each drug before and after the price change and the share of claims prescribed by 340B health care organizations for each drug. Per-treatment manufacturer net revenues were estimated for 340B health care organizations, non-340B health care organizations, and a weighted average revenue across health care organization types. Results: The 3 hepatitis C treatments evaluated had 30% to 41% of claims prescribed by 340B-eligible health care organizations, greater than the 14% 340B prescribing rate for all Medicare Part D drugs. Based on use data from 2016, list price reductions for hepatitis C treatments in 2018 were estimated to have increased aggregate manufacturer net revenues for 3 treatments by $181.9 million-a 28% increase. Aggregate 340B health care organization net revenues were estimated to have been $181.9 million lower-a 74% decrease. Conclusions and Relevance: List price reductions for hepatitis C treatments may have increased drug manufacturer net revenues, owing in part to lower discounts provided under the 340B program and the high share of sales subject to those discounts. Policymakers should consider the role of 340B discounts when evaluating policies to reduce drug spending.