Patient and Plan Spending after State Specialty-Drug Out-of-Pocket Spending Caps.

BACKGROUND: Specialty drugs are used to treat complex or life-threatening conditions, often at high financial costs to both patients and health plans. Three states - Delaware, Louisiana, and Maryland - passed legislation to cap out-of-pocket payments for specialty drugs at $150 per prescription. A concern is that these caps could shift costs to health plans, increasing insurance premiums. Estimates of the effect of the caps on patient and health-plan spending could inform future policies. METHODS: We analyzed a sample that included 27,161 persons under 65 years of age who had rheumatoid arthritis, multiple sclerosis, hepatitis C, psoriasis, psoriatic arthritis, Crohn's disease, or ulcerative colitis and who were in commercial health plans from 2011 through 2016 that were administered by three large nationwide insurers. The primary outcome was the change in out-of-pocket spending among specialty-drug users who were in the 95th percentile for spending on specialty drugs. Other outcomes were changes in mean out-of-pocket and health-plan spending for specialty drugs, nonspecialty drugs, and nondrug health care and utilization of specialty drugs. We compared outcomes in the three states that enacted caps with neighboring control states that did not, 3 years before and up to 3 years after enactment of the spending cap. RESULTS: Caps were associated with an adjusted change in out-of-pocket costs of -$351 (95% confidence interval, -554 to -148) per specialty-drug user per month, representing a 32% reduction in spending, among users in the 95th percentile of spending on specialty drugs. This finding was supported by multiple sensitivity analyses. Caps were not associated with changes in other outcomes. CONCLUSIONS: Caps for spending on specialty drugs were associated with substantial reductions in spending on specialty drugs among patients with the highest out-of-pocket costs, without detectable increases in health-plan spending, a proxy for future insurance premiums. (Funded by the Robert Wood Johnson Foundation Health Data for Action Program.).

The Pay-Twice Critique, Government Funding, and Reasonable Pricing Clauses.

The federal government subsidizes the research and development of prescription medications. Thus, a captivating critique of expensive medications is that prices are too high because of taxpayer co-financing. This critique is often framed in terms of "paying-twice"-first for the research and second through the above market pricing of resulting products. Reasonable pricing clauses-which place some kind of pricing limitation on the exercise of license or patent rights governing a federally funded medication-are one proposed policy tool for addressing the pay-twice critique. This article provides increased analytical clarity as well as historical context to present-day debates about the privatization of federally funded research and prescription drug pricing. It makes three arguments. First, despite its pervasiveness and intuitive plausibility, the pay-twice critique is subject to differing interpretations which has important implications for the appropriateness of proposed solutions. Second, despite their initial attractiveness, the costs, necessity, and effectiveness of reasonable pricing clauses render the wisdom of this policy tool uncertain. However, third, given continued interest in reasonable pricing clauses, the NIH's previous experience with such a policy offers some useful lessons.

Out-of-Pocket and Health Care Spending Changes for Patients Using Orally Administered Anticancer Therapy After Adoption of State Parity Laws.

Importance: Oral anticancer medications are increasingly important but costly treatment options for patients with cancer. By early 2017, 43 states and Washington, DC, had passed laws to ensure patients with private insurance enrolled in fully insured health plans pay no more for anticancer medications administered by mouth than anticancer medications administered by infusion. Federal legislation regarding this issue is currently pending. Despite their rapid acceptance, the changes associated with state adoption of oral chemotherapy parity laws have not been described. Objective: To estimate changes in oral anticancer medication use, out-of-pocket spending, and health plan spending associated with oral chemotherapy parity law adoption. Design, Setting, and Participants: Analysis of administrative health plan claims data from 2008-2012 for 3 large nationwide insurers aggregated by the Health Care Cost Institute. Data analysis was first completed in 2015 and updated in 2017. The study population included 63 780 adults living in 1 of 16 states that passed parity laws during the study period and who received anticancer drug treatment for which orally administered treatment options were available. Study analysis used a difference-in-differences approach. Exposures: Time period before and after adoption of state parity laws, controlling for whether the patient was enrolled in a plan subject to parity (fully insured) or not (self-funded, exempt via the Employee Retirement Income Security Act). Main Outcomes and Measures: Oral anticancer medication use, out-of-pocket spending, and total health care spending. Results: Of the 63 780 adults aged 18 through 64 years, 51.4% participated in fully insured plans and 48.6% in self-funded plans (57.2% were women; 76.8% were aged 45 to 64 years). The use of oral anticancer medication treatment as a proportion of all anticancer treatment increased from 18% to 22% (adjusted difference-in-differences risk ratio [aDDRR], 1.04; 95% CI, 0.96-1.13; P = .34) comparing months before vs after parity. In plans subject to parity laws, the proportion of prescription fills for orally administered therapy without copayment increased from 15.0% to 53.0%, more than double the increase (12.3%-18.0%) in plans not subject to parity (P < .001). The proportion of patients with out-of-pocket spending of more than $100 per month increased from 8.4% to 11.1% compared with a slight decline from 12.0% to 11.7% in plans not subject to parity (P = .004). In plans subject to parity laws, estimated monthly out-of-pocket spending decreased by $19.44 at the 25th percentile, by $32.13 at the 50th percentile, and by $10.83 at the 75th percentile but increased at the 90th ($37.19) and 95th ($143.25) percentiles after parity (all P < .001, controlling for changes in plans not subject to parity). Parity laws did not increase 6-month total spending for users of any anticancer therapy or for users of oral anticancer therapy alone. Conclusions and Relevance: While oral chemotherapy parity laws modestly improved financial protection for many patients without increasing total health care spending, these laws alone may be insufficient to ensure that patients are protected from high out-of-pocket medication costs.

The consumer welfare implications of governmental policies and firm strategy in markets for medicines.

This paper empirically examines the consumer welfare implications of changes in government policies related to patent protection and compulsory licensing in the Indian market for oral anti-diabetic (OAD) medicines. In contrast to previous studies on the impact of pharmaceutical patents in India, we observe, and estimate the welfare effects accruing from differential pricing and voluntary licensing strategies of patent-holding innovator firms. Three novel molecules belonging to the dipeptidyl peptidase-4 (DPP-4) inhibitor class of OADs have been launched in India by the patent holders, at lower prices than those prevailing in the developed countries. Using aggregate market transaction data, we structurally estimate demand and supply and use the parameter estimates in our model to simulate consumer welfare under various counterfactual scenarios. Our results suggest that the introduction of DPP-4 inhibitors generated a consumer surplus gain of around 7.6 cents per day for a typical DPP-4 inhibitor user under the existing differential pricing and voluntary licensing strategies. If the innovators decide to price at developed-country levels, this surplus is eliminated almost entirely. The issuance of compulsory licensing does not always improve consumer welfare because if innovators defer or delay the introduction of new drugs in response, the loss in consumer welfare could be substantial.