Panel
Walking the Drug-Pricing Tightrope: Fostering Innovation While Maintaining Affordability
Milken InstituteDan Diamond, Matthew Eyles, Dan Leonard, Mark McClellan, Seema Verma, Greg Walden, Matt Iles
- Approximately 50 additional high-cost treatments are expected to enter the market, with individual costs projected between $500,000 and $2,000,000, creating sustainability concerns for the healthcare system due to a trend of super high-cost drugs with no pricing limitations.
- The administration anticipates addressing drug pricing via bipartisan legislation or, if that fails, through independent proposals, with expected action occurring by the end of the year or shortly thereafter.
- The International Pricing Index (IPI) is currently under review at the Office of Management and Budget and remains pending the completion of bureaucratic processes.
- Government policies are projected to potentially negatively impact patient access to cures, the development of next-generation therapies, and overall innovation if not set appropriately, while reducing payments under the current system could also affect research.
- Current Part B payment structures, calculated as average sales price plus a percentage add-on, are expected to encourage manufacturers to set higher prices and physicians to prescribe costlier drugs, whereas future models are anticipated to shift toward value-based arrangements that may complicate implementation due to discrepancies between clinical trial and real-world performance.
- Value-based pricing strategies are expected to potentially result in higher initial launch prices as manufacturers may incorporate potential discounts into base costs, though CMS expects to facilitate easier private industry implementation of such arrangements.
- Reforms to the Part D catastrophic benefit are expected to significantly lower out-of-pocket expenses for seniors, while improved negotiation and competition in Part B are anticipated to better address physician-administered drugs.
- Antimicrobial reimbursement is expected to see increased payment rates for the first few years following FDA approval to support development, and future legislation like a "21st Century Cures 2.0" may introduce payment systems that align with long-term benefits.
- Innovative payment systems are expected to ensure that treatments providing decades of benefit are paid for over a patient's life cycle rather than in a single calendar year, moving away from fee-for-service models toward early diagnosis and one-time treatments like gene therapy administered outside hospitals.
- Private sector negotiators are expected to preserve patient choices, while a shift to government-negotiated prices is projected to result in a one-size-fits-all solution that could negatively impact patient access.
- The public is unlikely to be satisfied without legislative or administrative action to address drug costs, though there is optimism that thoughtful individuals across political sides will continue working toward bipartisan progress.