Industry admits lack of transparency spikes drug prices

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Increasing competition, reforming outdated laws, improving data infrastructure and letting market forces could lower drug costs and save up to $71 billion within a decade, according to an organization funded by various healthcare companies, trade associations and conservative business groups.

The Council for Affordable Health Coverage, whose members include CVS Health, Cigna, Sanofi and Express Scripts, said high drug costs impede effective and affordable care as providers transition from a fee-for-service to a value-based model.

Skyrocketing prescription prices have increased healthcare costs across the board. Providers have had to shift strategies and forgo recommended treatments, insurers have had to change coverage plans, and patients have had to pay more out of pocket as they’ve watched prices balloon year over year.

“The remarkable thing about this is the complexity of this entire system and the lack of transparency,” said Dr. Kevin Schulman, a professor of medicine at Duke University. “On the branded drugs side, this lack of transparency and increasing role of rebates as part of the pricing model begs question whether if anyone using a pharmacy benefits manager (such as Caremark which is part of CVS) is getting a good deal.”

Increasing transparency is one strategy to lower costs, the council argued. Informing consumers about retail drug costs, coverage and alternative options also would help, it said.

The council proposed reforming outdated laws that prevent rewards for better outcomes and lower costs, such as some anti-kickback provisions. It encouraged price competition by adjusting “best price” rules to exempt value-based arrangements.

Reducing red tape would also bring down costs, the council argues.

The council proposed a new priority review voucher for generic drugs with a 150-day deadline that would address shortages or price spikes. Expediting federal review of generics and biosimilars would expand choice, the group said.

“Competition works better than any government-designed program to lower costs for consumers,” Joel White, president of the Council for Affordable Health Coverage, said in a statement. “We’ve seen time and again that more products lead to lower costs, and incentives to pay for products based on their value help improve outcomes.”

The council recommended eliminating policies that undermine functioning markets, deter innovation, or threaten safety or access. Importation of drugs, price or benefit caps and interfering in price negotiations lead to anticompetitive markets, the council said.

“It is important to offer reforms firmly rooted in competitive markets and incentives that promote value, innovation, transparency and appropriate access to treatment,” White said.

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Industry admits lack of transparency spikes drug prices

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