Prices and complications in hospital-based and freestanding surgery centers.

OBJECTIVES: To quantify differences in prices paid and procedural complications incurred in hospital outpatient departments (HOPDs) and freestanding ambulatory surgery centers (ASCs). STUDY DESIGN: Observational study using deidentified 2019-2020 insurance claims from Blue Cross Blue Shield insurance plans nationally, with information on prices paid and complications incurred for colonoscopy, knee or shoulder arthroscopy, and cataract removal surgery. METHODS: The data include 1,662,183 patients who received a colonoscopy, 53.5% of whom were treated in HOPDs; 259,200 patients who underwent arthroscopy, 61.0% of whom were treated in HOPDs; and 173,664 patients who had cataract removal surgery, 34.7% of whom were treated in HOPDs. Multivariable linear regression methods were used to identify the associations between HOPD and ASC site of care, prices, and complications after adjusting for patient demographics, risk, and geographic market location. RESULTS: After adjusting for patient characteristics, risk, and geographic market location, prices paid in HOPDs were 54.9% higher than those charged in ASCs for colonoscopy (95% CI, 53.6%-56.1%), 44.4% higher for arthroscopy (95% CI, 43.0%-45.8%), and 44.0% higher for cataract removal surgery (95% CI, 42.9%-45.5%). Adjusted rates of complications were slightly higher in HOPDs than ASCs for colonoscopy over a 90-day interval but similar over the 7- and 30-day intervals. Rates were statistically and clinically similar between the 2 sites of care for arthroscopy and cataract removal. CONCLUSIONS: The higher prices charged in HOPDs for the 3 ambulatory procedures were not balanced by better quality-as measured by rates of procedural complications-compared with procedures performed in nonhospital ASCs.

Hospital Prices for Physician-Administered Drugs for Patients with Private Insurance.

BACKGROUND: Hospitals can leverage their position between the ultimate buyers and sellers of drugs to retain a substantial share of insurer pharmaceutical expenditures. METHODS: In this study, we used 2020-2021 national Blue Cross Blue Shield claims data regarding patients in the United States who had drug-infusion visits for oncologic conditions, inflammatory conditions, or blood-cell deficiency disorders. Markups of the reimbursement prices were measured in terms of amounts paid by Blue Cross Blue Shield plans to hospitals and physician practices relative to the amounts paid by these providers to drug manufacturers. Acquisition-price reductions in hospital payments to drug manufacturers were measured in terms of discounts under the federal 340B Drug Pricing Program. We estimated the percentage of Blue Cross Blue Shield drug spending that was received by drug manufacturers and the percentage retained by provider organizations. RESULTS: The study included 404,443 patients in the United States who had 4,727,189 drug-infusion visits. The median price markup (defined as the ratio of the reimbursement price to the acquisition price) for hospitals eligible for 340B discounts was 3.08 (interquartile range, 1.87 to 6.38). After adjustment for drug, patient, and geographic factors, price markups at hospitals eligible for 340B discounts were 6.59 times (95% confidence interval [CI], 6.02 to 7.16) as high as those in independent physician practices, and price markups at noneligible hospitals were 4.34 times (95% CI, 3.77 to 4.90) as high as those in physician practices. Hospitals eligible for 340B discounts retained 64.3% of insurer drug expenditures, whereas hospitals not eligible for 340B discounts retained 44.8% and independent physician practices retained 19.1%. CONCLUSIONS: This study showed that hospitals imposed large price markups and retained a substantial share of total insurer spending on physician-administered drugs for patients with private insurance. The effects were especially large for hospitals eligible for discounts under the federal 340B Drug Pricing Program on acquisition costs paid to manufacturers. (Funded by Arnold Ventures and the National Institute for Health Care Management.).

Pharmacy Benefit Management: The Cost of Drug Price Rebates.

Pharmacy Benefit Managers (PBM) induce drug manufacturers to offer rebates to insurers and employers by denying coverage through formulary exclusions, impeding physician prescription through prior authorization, and reducing patient drug use through cost sharing. As they tighten these access obstacles, PBMs reduce the net prices received by the manufacturers.

Germany's Use Of Reference Pricing For Biologics: Lessons For The US.

A redesign of consumer cost sharing in the United States is important to accelerate the adoption of biosimilars and price reductions for biologics. This article analyzes therapeutic reference pricing for anti-inflammatory biosimilars in Germany and its implications for the United States. The German experience demonstrates that a redesign of consumer cost sharing can achieve savings for payers without creating onerous financial barriers for patients. In contrast, the dominant coinsurance structure of cost sharing in the US creates strong incentives for patients to abandon treatment, especially for serious illnesses treated by complex biologics, and only weak incentives to compare prices among therapeutically equivalent products. The Medicare Payment Advisory Commission (MedPAC) has advocated that the Centers for Medicare and Medicaid Services adopt a variant of reference prices for biologics, their related biosimilars, and therapeutically similar branded alternatives by assigning them the same billing code or by paying a similar rate for all the products. The German experience demonstrates that the proposed MedPAC approach is technically feasible and would generate savings for payers without imposing access obstacles on patients.

Price Differences To Insurers For Infused Cancer Drugs In Hospital Outpatient Departments And Physician Offices.

The prices paid in 2019 by Blue Cross Blue Shield health plans in hospital outpatient departments were double those paid in physician offices for biologics, chemotherapies, and other infused cancer drugs (99-104 percent higher) and for infused hormonal therapies (68 percent higher). Had these plans excluded hospital clinics from their networks, channeling all of the infusions to physician offices, they would have saved $1.28 billion per year, or 26 percent of what they actually paid. Had they relied on cost-sharing incentives to channel infusions to physician offices-with either uniform 20 percent coinsurance or reference pricing-they would have realized savings but increased the financial burden on patients who received care at the higher-price hospital clinics. Under 20 percent coinsurance, patients' payment obligations for care at hospital clinics would have exceeded those for care in physician offices by a median of 67 percent for biologics, 72 percent for chemotherapies, 87 percent for hormonal therapies, and 75 percent for other cancer drugs. Large savings are potentially available to commercial insurers from shifting cancer infusion care to nonhospital settings, but cost-sharing burdens could become very high for patients.

Competition From Biosimilars Drives Price Reductions For Biologics In The French Single-Payer Health System.

France has a single-payer health insurance system that has the authority to impose pharmaceutical price reductions but relies on decentralized market negotiations between hospitals and manufacturers to establish prices for injected and infused biologics. Hospitals rely on biosimilars-less expensive but therapeutically equivalent variants of biologic medications-to stimulate competition. Price reductions negotiated by hospitals subsequently are adopted by the health insurance system, driving hospitals to negotiate a new round of discounts. This article measures 2004-20 trends in prices, price reductions, utilization, and market shares for three prominent biologics-Remicade, Enbrel, and Humira-and their eleven competing biosimilars. Biosimilar launches are associated with a sequence of price reductions for the reference biologic, for other biologics that treat similar conditions, and for all related biosimilars. The French experience provides lessons for the US in its efforts to use competition from biosimilars to drive price reductions and savings from biologics.

Quantifying The Economic Burden Of Drug Utilization Management On Payers, Manufacturers, Physicians, And Patients.

The continuing launch of innovative but high-price drugs has intensified efforts by payers to manage use and spending and by pharmaceutical manufacturers to support patient access and sales. Payers are restricting drug formularies, requiring more stringent prior authorizations, and raising patient cost-sharing requirements. Manufacturers are investing in programs that help patients and physician practices navigate administrative controls and help patients meet cost-sharing obligations. Based on a compilation and analysis of the existing peer-reviewed and professional literature, this article estimates that payers, manufacturers, physicians, and patients together incur approximately $93.3 billion in costs annually on implementing, contesting, and navigating utilization management. Payers spend approximately $6.0 billion annually administering drug utilization management, and manufacturers spend approximately $24.8 billion supporting patient access in response. Physicians devote approximately $26.7 billion in time spent navigating utilization management, whereas patients spend approximately $35.8 billion annually in drug cost sharing, even after taking advantage of manufacturer and philanthropic sources of financial support. All stakeholders in the US pharmaceutical system would benefit from a deescalation of utilization management, combining lower drug prices with lower barriers to patient access.

Physician and Patient Adjustment to Reference Pricing for Drugs.

Importance: Reference pricing has been shown to reduce drug spending in Europe and has been adopted by some employers and labor unions in the United States. Its association with patient cost sharing depends on whether and how quickly physicians adjust their prescribing patterns to favor the least costly alternatives within each therapeutic class. Objective: To examine whether the implementation of reference pricing is associated with physicians and patients shifting to lower-cost drugs, thereby reducing consumer cost sharing and the prices paid by employers. Design, Setting, and Participants: This economic evaluation included employees of Catholic organizations who purchased health insurance through the Reta Trust and a random sample of employees of public sector organizations who purchased insurance through the California Public Employees' Retirement System (CalPERS) as a comparison group between July 1, 2010, and December 31, 2017. Data analysis was performed from January 1, 2019, to September 1, 2019. Exposures: The Reta Trust implemented reference pricing in July 2013; CalPERS did not adopt reference pricing during the study period. Main Outcomes and Measures: Probability that the drug prescribed was the least costly alternative within its therapeutic class, price paid per prescription, and patient cost sharing per prescription. Multivariable, difference-in-differences regression analysis of drug insurance claims was performed for patients before and after implementation of reference pricing, adjusted for patient characteristics, each drug's therapeutic class, and the month and year of the prescription. Results: During the study period, a total of 1.2 million prescriptions were submitted by 34 319 individuals covered by Reta Trust and 2.1 million prescriptions were submitted by 738 159 individuals covered by CalPERS. In the first 2.5 years after implementation of reference pricing, the percentage of prescriptions made for the low-priced drug within each therapeutic class increased by 5.1 percentage points (95% CI, 1.8 to 8.4 percentage points), patient cost sharing increased by 10.3% (95% CI, -1.6% to -23.6%; this difference was not statistically significant), and prices paid decreased by 19.1% (95% CI, -30.2% to -6.2%) for Reta Trust patients compared with CalPERS patients. During the subsequent 2-year postimplementation period, the percentage of prescriptions made for the low-priced drug increased an additional 6.2 percentage points (95% CI, 2.3 to 10.1 percentage points), patient cost sharing decreased by 21.3% (95% CI, -31.2% to -9.9%), and prices paid increased by 7.2% (95% CI, -12.6% to 31.4%; this difference was not statistically significant). Relative to the change experienced by the CalPERS population, during the study period, the share of prescriptions for lower-priced drugs increased by 6.3 percentage points (8.9% relative increase), the mean prescription drug price decreased by $9.5 (12.1% relative decrease), and the mean patient cost sharing decreased by $1.8 (4.3% relative decrease). Conclusions and Relevance: In this study, reference pricing was associated with a combination of lower prices paid by employers and lower cost sharing by employees but with a time lag in prescribing habits by physicians.

Increasing Divergence in Drug Prices Between the United States and Germany After Implementation of Comparative Effectiveness Analysis and Collective Price Negotiations.

BACKGROUND: Payers and purchasers in the United States seek to moderate drug prices and align them with the incremental clinical benefit offered by individual medications; some policymakers have proposed linking U.S. prices to an index of prices paid in other nations. The German health care system resembles that of the United States in featuring multiple private payers but differs in featuring a highly coordinated process of comparative clinical assessment and price negotiations for drugs. OBJECTIVES: To (a) measure trends in prices paid for physician-administered drugs in Germany before and after the mandate for comparative effectiveness assessment and price negotiations in 2011 and (b) compare them with price trends for the same drugs in the United States. METHODS: This study observed trends in the prices paid for 80 physician-administered drugs, which account for approximately half of Medicare Part B drug spending. Quarterly data covering 2004-2018 were obtained for Germany from the Lauer-Taxe database, which contains net prices paid by all German payers. U.S. data were obtained from the Centers for Medicare & Medicaid Services, which publishes net prices paid by private U.S. payers and the Medicare Part B program. These data contain the net prices actually paid after accounting for all discounts and rebates, not merely the manufacturer's list price. Statistical analyses were conducted with multivariable difference-in-differences regression methods. RESULTS: Before implementation in Germany of comparative effectiveness analysis and collective price negotiations, net U.S. prices for physician-administered drugs averaged 29.2% higher (95% CI = 26.6%-31.7) than those in Germany. After implementation of comparative effectiveness assessments and price negotiations in 2011, the divergence between U.S. and German prices increased another 28.9% (95% CI = 23.7%-34.3%). CONCLUSIONS: Commercial health insurers and Medicare pay significantly higher net prices for physician-administered drugs than do insurers in Germany, with the divergence growing after the mandate in Germany that new drugs be subject to comparative effectiveness assessment and collective price negotiations. The experience of Germany may be of special value for the current U.S. debate over pharmaceutical pricing reform, given the demographic, economic, and health system similarities between the 2 nations. DISCLOSURES: This study was supported by the Commonwealth Fund, New York. The sponsor had no role in the study design, conduct, interpretation, or writing up of results. Whaley reports a grant from the National Institute on Aging, unrelated to this work. The other authors have no potential conflicts of interest to report.

Reference Pricing in Germany: Implications for U.S. Pharmaceutical Purchasing.

Issue: The German health care system resembles that of the United States in important ways ­ it is financed by multiple private payers and relies principally on negotiation rather than regulation to establish prices. New drugs that offer minimal benefits compared with existing alternatives within a therapeutic class are subject to reference pricing; those with incremental benefits are subject to price negotiations. Together, the reference and negotiated pricing systems have held German prices substantially below U.S. equivalents. Goal: To describe the German reference-pricing system and compare it to tiered formularies and consumer cost-sharing in the United States. Methods: Document review and interviews with leaders in payer, policy, and pharmaceutical industry organizations in Germany. Key Findings and Conclusions: The German pharmaceutical pricing system uses modest levels of consumer cost-sharing to influence consumers' choices for drugs with therapeutically equivalent alternatives. Manufacturers are free to set the prices of their products, but insurers will not pay more for a new drug than for its comparators unless it offers an additional clinical benefit. For drugs covered by reference pricing, the insurers' payment maximum is set at a level that ensures sufficient choices of low-priced options. These models offer an alternative to the U.S. system of tiered formularies.

Association of Reference Pricing with Drug Selection and Spending.

Background In the United States, prices for therapeutically similar drugs vary widely, which has prompted efforts by public and private insurers to steer patients toward the lower-priced options. Under reference pricing, the insurer or employer establishes a maximum contribution it will make toward the price of a drug or procedure, and the patient pays the remainder. Methods We used difference-in-differences multivariable regression methods to analyze changes in prescriptions and pricing for 1302 drugs in 78 therapeutic classes in the United States, before and after implementation of reference pricing by an alliance of private employers. We assessed trends for the study group relative to those for an employee group that was not subject to reference pricing. The study included 1,122,741 prescriptions that were reimbursed during the period from 2010 through 2014. Results Implementation of reference pricing was associated with a higher percentage of prescriptions that were filled for the lowest-priced reference drug within its therapeutic class (difference in probability, 7.0 percentage points; 95% confidence interval [CI], 4.0 to 9.9), a lower average price paid per prescription (-13.9%; 95% CI, -23.8 to -2.7), and a higher rate of copayment by patients (5.2%; 95% CI, 0.2 to 10.4) than in the comparison group. During the first 18 months after implementation, spending for employers was $1.34 million lower and the amount of copayments for employees was $0.12 million higher than in the comparison group. Conclusions Implementation of reference pricing was associated with significant changes in drug selection and spending for a population of patients covered by employment-based insurance in the United States. (Funded by the Agency for Healthcare Research and Quality and the Genentech Foundation.).