| 来源类型 | Article |
| 规范类型 | 评论 |
| A market-oriented framework for reforming Medicare Part B drug payment | |
| Joseph Antos; James C. Capretta | |
| 发表日期 | 2019-07-09 |
| 出版年 | 2019 |
| 语种 | 英语 |
| 摘要 | The Trump administration has proposed to test reforms in the way Medicare pays for drugs and biologics covered under Part B. Those reforms would promote competition but also impose tighter price regulation using international reference pricing. This hybrid policy is not as unusual as it first appears. The proposal is motivated in part by the concern that other highly developed countries are taking advantage of American investments in pharmaceutical research by paying lower prices for products that are sold at much higher prices in the U.S. We explain below that the proposed International Pricing Index (IPI) methodology is effectively an across-the-board price cut for selected Part B drugs—which could be accomplished without incorporating international prices into the payment formula. A more market-oriented approach would rely on price negotiations by competing private vendors that make better use of clinical data to inform pricing decisions. Although Medicare Part B accounts for a relatively small share of overall spending on prescription drugs, changes to its payment methodology could set a precedent that the rest of the market might adopt. Therefore, Medicare payment reforms for these drugs should be evaluated both for their impact on Medicare and on the broader pharmaceutical market. Current Policy And The Administration’s Proposal Most Part B–covered drugs and biologics are purchased by physician offices or outpatient departments. Subsequently, the Medicare program compensates these providers for their acquisition costs. This is the so-called “buy and bill” system for financing physician-administered drugs. Medicare pays for most drugs covered under Part B using an average sales price (ASP) methodology. ASP is based on the weighted-average prices of drugs sold by manufacturers, which reflect discounts and rebates off list prices. Certain types of sales are excluded from the ASP calculation, including sales to Medicare Part D plans and to entities covered by the Section 340B drug purchase program. The Medicare Modernization Act of 2003 established the Medicare statutory payment rate at 106 percent of ASP for most Part B drugs. The 6 percent add-on helps cover extra costs associated with these treatments, some of which involve special storage and handling protocols. Physicians get a separate fee for administering drugs that must be injected or infused. The Budget Control Act of 2011 imposed automatic spending reductions on certain nonexempt programs if Congress failed to enact legislation that met deficit-reduction targets. Because such legislation was not enacted, Medicare is subject to a sequester that has been in effect since April 2013. Consequently, the Medicare payment rate for Part B–covered drugs is currently reduced to 104.3 percent of ASP. Absent legislation halting sequestration, that rate will remain in effect through 2027. The Trump administration published an Advance Notice of Proposed Rulemaking (ANPRM) on October 30, 2018, requesting comments on potential options for revamping the payment system for Part B–covered drugs. The objective is to test three primary policy changes. A Competitive Vendor Program The demonstration project would replace the “buy and bill” system for Part B drugs with a competitive vendor program. This is a modified version of the Competitive Acquisition Program (CAP), which was authorized in the 2003 Medicare Modernization Act and operated from 2006 through 2008. CMS discontinued CAP due to cost problems and insufficient participation. There are two major differences between the new competitive vendor program and CAP. First, the new program would be mandatory. Under CAP, physicians could opt out and continue to “buy and bill” under the ASP payment methodology. In the new program, physicians who practice in the markets covered by the demonstration would be required to obtain their Part B–covered drugs through participating private-sector vendors. Second, the new program would be open to a wide range of potential vendors, including wholesalers, drug manufacturers, current Part D plan sponsors, hospitals, and physician groups. Under CAP, vendor participation was limited to specialty pharmacies. At least three vendors would be selected to participate in the demonstration. Vendors would be required to have the capacity to deliver the required services nationwide. Vendors would not be allowed to secure rebates or use formularies, which would reduce their leverage in negotiations with manufacturers. Physician offices and outpatient departments would be required to select at least one vendor to supply Part B–covered drugs. They could use different vendors for different products. Vendors would compete with each other based on the quality of the services they provide to the physicians and outpatient departments that select them. While the vendors would pay for drugs based on the prices they negotiate with the manufacturers, Medicare would reimburse them based on a revised payment methodology that replaces ASP. This program could succeed only if the negotiated prices are sufficiently below Medicare’s payment to allow vendors to earn a profit. The International Pricing Index And Targeted Savings As an alternative to the ASP methodology, the demonstration project would use an IPI to allocate a targeted savings percentage across selected Part B drugs. The IPI would be based on prices for drugs sold in the US and other countries. The ANPRM lists 16 countries with developed economies that were included in an HHS study of international drug pricing. That study found that US prices for 27 Part B–covered drugs were 1.8 times higher than the prices paid for the same products in the comparison countries. For most of the 27 drugs in the survey, Medicare paid the highest price. The IPI is the ratio of Medicare spending on selected Part B–covered drugs using the ASP methodology to spending on those same drugs using international prices. This calculation holds the volume and mix of drugs constant. A target price for each drug would be calculated by multiplying its international price by the IPI adjusted so that Part B spending for drugs included in the index would be reduced by 30 percent. The reduction from the ASP price to the target price would be phased in over five years. For drugs having a target price greater than ASP, the payment amount would be set at ASP. In other words, Medicare’s price for Part B drugs with a current payment below the adjusted international price would remain unchanged. Medicare’s price for drugs with a current payment that exceeds the adjusted international price would be lowered. A Revised Add-On Payment The ANPRM proposes to test an alternative to the current percentage add-on used to compensate physicians and outpatient departments for the additional administrative costs associated with Part B drugs. The alternative payment would be a fixed fee that would not vary with the product’s price. The payment amount per administered drug might be tied to the class of drugs (rather than a separate amount for each drug in the class). That would provide an incentive to prescribe, when appropriate, lower-cost drugs in a class. Other alternatives include providing a fixed amount tied to the physician’s specialty or practice. The new payment system is intended to be budget neutral (in the aggregate) to add-on payments based on 6 percent of ASP, rather than the 4.3 percent add-on required under the sequester. Individual physician practices and outpatient departments may be paid more or less than under current law depending on the mix of products they prescribe for their patients. In general, practices using the highest-priced products today, with the highest ASPs, would stand to lose under the administration’s proposal, while those using lower-priced products would stand to gain. Evaluation Of The Proposal The administration’s draft proposal for payment reform would substantially disrupt the status quo, which is not working well to keep prices in check. However, the proposal is unlikely to work as intended because of how drug companies would respond to it. It is also open to legitimate criticism for imposing arbitrary price reductions. Drug Companies Would Take Action to Evade International Reference Pricing In The U.S. Market Many high-income countries use international reference pricing (IRP) schemes to benchmark prices in their own nationalized health systems or to influence pricing that regulated private insurers pay. Most countries use reference pricing in combination with other tools, including direct price negotiations with the drug companies. Reference pricing is now so common among developed nations that pricing decisions in certain key countries cause global ripple effects. For instance, the price lists for drugs in the UK now influence pricing in countries with approximately 25 percent of the worldwide drug market, even though the UK itself accounts for only 2.3 percent of global spending on prescription drugs. A reference pricing system in the US is unlikely to work as it does in other countries because of the size and importance of the US market to global drug sales and profits. In 2018, drug spending in Germany—the largest market in Europe—was only 11 percent of US drug spending. Given how much would be at stake, drug companies would seek ways to evade pricing reductions from an IRP scheme in the US. They could refuse to sell new products or delay product launches to minimize reductions in their international prices. Drug companies also could offer price concessions that are not captured in official IRP data. These concessions could be in the form of rebates and other financial payments that appear to be separate from list prices. Such discounts are considered private transactions and not visible internationally. The Administration’s IPI Proposal Is A Budget Cut With A Reference Pricing Label The administration’s planned demonstration program is described as a test of whether aligning Medicare payment rates for Part B drugs with international prices, moving away from “buy and bill,” and changing the add-on payment would improve quality of care and reduce Medicare spending. However, the IPI Model would be set to reduce program spending by an arbitrary 30 percent for selected drugs—regardless of their prices in other countries. Although the specific prices assigned to the individual drugs in the index are tied to international prices, total Part B spending for those drugs using this methodology does not depend on international prices.1 The IPI methodology is an elaborate way to allocate an overall payment reduction for Part B drugs by targeting drugs with Medicare payment rates above an average of international prices. The total program savings is unrelated to prices paid in other countries. The IPI methodology is likely to be less relevant to policy than the goal of cutting Medicare’s spending for Part B drugs by 30 percent. A Market-Oriented Framework For Improving the Part B Drug Payment System We recommend that Congress, not CMS, take the lead in reforming payments for Part B-covered drugs, by passing legislation to change current policy. That would ensure the legitimacy and political stability of the new payment system. The following framework is consistent with ensuring continued investment in improved therapies. Rely On Competitive Private-Sector Vendors to Deliver Lower Prices The administration’s proposal to replace today’s “buy and bill” system for Medicare Part B with competing private vendors is a good first step. As indicated in the ANPRM, competing private-sector vendors would negotiate prices of Part B–covered therapies with drug companies. Unlike the administration’s proposal, these domestic prices rather than international reference prices should form the basis for Medicare’s payment. The vendors would be paid no more than the ASP (without the add-on) for the cost of the drugs. Negotiated prices are expected to be lower since vendors would have formularies and other tools to reduce costs. The current 4.3 percent add-on payment would be converted to a fixed dollar amount per administered drug. To encourage aggressive negotiations, Medicare could adopt a shared savings plan. Some of the savings from prices (net of discounts and rebates) below ASP would be returned to the best-performing vendors, which could use the additional funds to provide incentives to attract more providers to contract with them. Vendors with larger shares of the provider market would have an advantage in negotiating drug prices with manufacturers. Conduct A Small-Scale Test of Market-Based International Reference Pricing The ASP methodology is reference-based pricing using domestic market data. Because the ASP reflects prices that drug companies have voluntarily agreed to, these prices account for a return on capital sufficient to encourage investment in developing new, innovative therapies. While there are problems with the administration’s IPI proposal, there could be benefits to expanding the scope of the market prices in the ASP methodology to include market-based prices in other developed countries. Germany and the Netherlands both allow manufacturers some discretion in setting their prices. A broader index that includes some non-US prices might help lower Medicare payments while maintaining incentives for research. Manufacturers launching a new product in Germany are free to set the first year’s price without government interference. During that year, the government evaluates the product’s clinical value, which informs price negotiations for year two and beyond. Drug companies probably moderate their first-year prices knowing that they will be engaged in these negotiations. Starting from a price well above what the government is likely to approve for year two makes it more likely that an agreement will not be reached, resulting in a loss of access to the German market. On average, price negotiations decrease the price of new therapies by 20 percent relative to the price in year one. The reference pricing system used in the Netherlands groups approved drugs into clusters of competing therapies. For products with prices above the referenced amounts, patients are responsible for the excess cost. Drug companies can set prices freely for drugs for which there are no direct competitors, but if the price is too high, the government can exclude the product from the national formulary. That risk discourages excessive pricing by the manufacturers. Congress should approve a time-limited test of supplementing the ASP price ceiling with market-sensitive international data. Particular attention should be paid to any changes in pricing behavior in the international markets selected as part of this test. Potential permanent adoption of the augmented ASP methodology should be through legislation and not through the administrative authority granted to CMMI. Begin the Systematic Collection of Global Clinical Data to Inform Pricing for Therapies with No Competition The UK and Germany are among a group of countries that have invested in the complex process of assessing the clinical value of prescription therapies. Although Congress created the Patient-Centered Outcomes Research Institute (PCORI) in 2010, the US does not explicitly incorporate clinical evaluations into its payment policies for Medicare. Clinical assessments of therapies can be controversial. They necessarily involve judgments and assumptions, as well as hard data, and it is difficult to assemble a process that all parties view as neutral and fair. Nonetheless, better and more broadly disseminated clinical assessments can add value to the pricing environment in the US, especially in situations that involve a clinically important therapy where no effective alternative is available to patients and purchasers. In those circumstances, the only way to assess value is by looking at the actual clinical benefits for patients. The US could move in this direction by incorporating the following four steps into the payment system for Part B-covered drugs. First, the secretary of HHS should be required to identify any new product that is about to be covered under Medicare Part B for which no comparable treatment course is currently available. For these drugs, there would be a clinical assessment of the product’s value to patient health that would help inform pricing negotiations between the Part B vendors and the drug manufacturers. Second, HHS should create an advisory panel composed of experts from academia, industry, and medicine. This panel would analyze available clinical information on the therapies that the secretary identifies as lacking effective competition. Sources for this assessment should include research organizations such as PCORI and the Institute for Clinical and Economic Review (ICER), other academic centers, governmental agencies, and relevant agencies in other countries (such as Britain’s National Institute for Health and Care Excellence (NICE) and the clinical evaluation bodies in Australia, France, and Germany). The manufacturers also would submit clinical evidence to the panel. The panel would determine the range of clinical value estimates globally and determine if there is a consensus on which to base an assessment of a product’s benefits for patient health. Third, the advisory panel should publish a report on its findings that vendors could use to negotiate pricing under Part B. Fourth, following the launch of a product, clinical data on patient outcomes should be collected to inform subsequent pricing negotiations. This approach would lead to more systematic use of clinical evaluation in the pricing of Part B drugs, but it is unlikely to satisfy either critics or defenders of existing policy. Critics would prefer government price setting based on clinical assessments rather than relying on a more market-oriented process. Defenders of the status quo would raise concerns about the objectivity of the clinical evaluation process. What is proposed here is intended to strike a balance. Explicitly accounting for clinical value can bring an objective basis to privately negotiated prices and avoid the risks to pharmaceutical development that arbitrary price cutting by the government would entail. Summing Up The Trump administration’s proposals to lower prices for prescription drugs have stimulated a policy debate over drug pricing in Medicare Part B, including in Congress. That is a welcome development. However, the administration’s proposals for reforming how Part B pays for drugs need revision to be more effective and viable. Tying US prices to those paid in other developed countries resonates with many Americans, but the administration’s approach to testing this idea in Medicare targets a budgetary result rather than genuine research. A better approach would supplement the existing reference payment system based on domestic prices with the modest addition of market-oriented international prices. The revised reference prices would serve as a backstop to private vendor negotiations. Sometimes a clinically important product is brought to market with no comparable product available to patients. In those cases, the US should facilitate clinical assessments of the value of these products to provide a more objective basis for private-sector pricing negotiations. These steps are unlikely to satisfy any side of the ongoing debate over the drug pricing environment because sound policy must necessarily strike a balance between encouraging ongoing development of new products and ensuring affordable access to beneficial therapies for patients. Both parties in Congress should take advantage of the opportunity created by the administration’s proposals to strike a better balance than exists under current law. 1.↩ Because the last term in Equation 3 is identical to the denominator of the IPI, total spending for Part B drugs after application of the IPI methodology is equal to current program spending for the drugs times the savings factor, about 0.7 (to achieve 30 percent savings). Note: A longer discussion of the topics and proposals covered in this post is available here. |
| 主题 | Health Care ; Health Policy |
| 标签 | Health care costs ; Medicare |
| URL | https://www.aei.org/articles/framework-reforming-medicare-part-b/ |
| 来源智库 | American Enterprise Institute (United States) |
| 资源类型 | 智库出版物 |
| 条目标识符 | http://119.78.100.153/handle/2XGU8XDN/266096 |
| 推荐引用方式 GB/T 7714 | Joseph Antos,James C. Capretta. A market-oriented framework for reforming Medicare Part B drug payment. 2019. |
| 条目包含的文件 | 条目无相关文件。 | |||||
除非特别说明，本系统中所有内容都受版权保护，并保留所有权利。
