“Today, we are announcing another significant step in this fight through a proposed overhaul of Medicaid regulations that have long inhibited payment innovation among prescription drugs across the entire system.”
“This is a challenge with significant urgency due to the rapid innovation occurring among drug manufacturers. Over the past three years, the Food and Drug Administration (FDA) has approved the first four gene therapies, with many more in the development pipeline. By repairing defects in a patient’s genetic code, these medicines fight disease in an entirely new way, opening up a new world of possible treatments and cures. These gene therapies provide hope for patients with certain forms of blood cancer, a type of inherited blindness, and a fatal muscle weakening disease. Going forward, gene therapies hold the potential to transform the practice of medicine for some of the most devastating diseases.”
“While the life-saving impact of these often curative therapies are profound, their costs are unprecedented. The list prices of gene therapies and other groundbreaking medicines can approach or even exceed a million dollars for a course of therapy, creating challenges for payers and patients. Health insurers are more accustomed to paying for prescription drugs that are taken over months or years than for one-time curative therapies that come with a massive cost all at once. Given the advent of these new medicines, the nation’s payment systems need to evolve to reward value…”
“Today, payment for much of health care including pharmaceuticals is based primarily on volume. Volume drives negotiations; the greater the quantity of a manufacturer’s product that a payer sells, the larger the rebate that the payer usually receives from the manufacturer. Value-based payment has the potential to change the paradigm. Negotiations could be based on the effectiveness of the drug instead of the volume of product sold. Under value-based payment, manufacturers have incentives to invest in developing therapies that have the greatest likelihood of improving patient outcomes, since those are the therapies for which manufacturers would be paid the most…” Read the full article here.
Source: CMS’s Proposed Rule On Value-Based Purchasing For Prescription Drugs: New Tools For Negotiating Prices For The Next Generation of Therapies – By Seema Verma, June 17, 2020. Health Affairs.
