IH Provides Federal Officials With Input

Independent Health Provides Federal Officials With Input on Future Policies to Address Growing Drug Prices

Buffalo, NY (September 7, 2018) – Independent Health has provided federal officials with input on future policies to address growing drug prices saying it believes a series of immediate and longer-term, bolder strategies are necessary. Independent Health summitted the recommendations in response to a Request for Information (RFI) from the U.S. Department of Health and Human Services (HHS) regarding the HHS Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs.

In submitting the proposal to The Honorable Alex Azar, Secretary of HHS, Michael W. Cropp, M.D., president and CEO of Independent Health said, “We fully support the Administration’s objective of lowering the price consumers pay for prescription drugs and believe that lower costs will provide greater access to medications that improve health outcomes. We look forward to working with HHS to achieve this objective.”

Dr. Cropp also cited the success its Pharmacy Benefit Dimensions™ affiliate has achieved in providing a unique, transparent pricing model that seeks to provide the best pharmaceuticals at the lowest cost possible – in essence the right drug at the right dose, at the right price.

“Pharmacy Benefit Dimensions controls drugs costs by managing its formulary – emphasizing the use of therapeutically equivalent generics or brand drugs that cost less, which is known as a clinically based formulary,” Dr. Cropp explained. “The company also manages its own contracts with drug manufacturers and pharmacies, which allows us to pass the savings directly to clients.”

A summary of Independent Health’s recommendations to HHS for consideration in the effort to lower costs include:

  • Increase transparency across the board.
  • Increase competition between manufacturers, including for generics.
  • Establish a drug price review board with authority over drug prices.
  • Prohibit direct to consumer advertising.
  • Allow midyear formulary changes and flexible benefit designs.
  • Eliminate rebates and manufacturer coupons.Create uniform industry standards and definitions.

Read a more detailed summary

Dr. Cropp said the RFI identifies four key strategies that should be considered in lowering drugs prices including improved competition, better negotiation, incentives for lower list prices and lowering of out-of-pocket costs. He said the HHS policy statement recognizes that the implementation of these strategies can be done in two phases: actions that the Administration can take immediately, and other bolder actions that may require legislative changes.

Dr. Cropp also said the government has an opportunity to parallel the success Pharmacy Benefit Dimensions has achieved and adopt some of the same practices.

“Our comments seek to support efforts HHS may take to establish and maintain a level playing field throughout the system that we believe is best achieved when market forces are allowed to prevail,” said Dr. Cropp. “The traditional economic feedback loop of consumer behavior, one of the strongest market forces, is mitigated in the current system. Drug manufacturers are insulated from consumer behavior through a convoluted delivery system where different levers, such as rebates, brokers, and patient assistant programs, mask the true price of drugs.

“With pharmaceutical companies continuing their practice of routine price increases, it is becoming increasingly apparent that the ability to lower prices within the system is reaching its limit. The need for administrative actions to empower market forces and increase transparency on the various levers within the system is critical, especially through policies that focus on list prices,” added Dr. Cropp.

Independent Health requested that any administrative actions taken by HHS recognize the potential of unintended consequences that lowering costs in one sector may have on another sector.

“Our concern is that actions taken to lower prices for government programs might not extend to nongovernment programs, which could ultimately lead to even higher costs for some consumers, and ultimately the larger economy. For example, making changes to ‘safe harbor’ provisions on rebates for Medicare and Medicaid could ultimately lead to higher costs for the consumer in the commercial and small group markets. Any actions taken should be applied universally to avoid costs being shifted, rather than lowered,” Dr. Cropp emphasized.