Focus on Drug Prices Likely in State of the Union, Experts Say

DATE: February 5, 2019

Published by Medpage Today

WASHINGTON — It’s time for one of Washington’s favorite parlor games: guessing what the president will say in his State of the Union speech.

For Tuesday’s speech, the White House has confirmed that healthcare will be one of the broad topics, and it probably comes as no surprise that healthcare experts think drug pricing will be one of the specific areas mentioned.

“Let’s think of it this way,” said Rodney Whitlock, PhD, vice president for health policy at ML Strategies, a consulting firm here. “The drug pricing space is one place the president has been in pretty consistently, so one would expect that [he would discuss it].”

In particular, the president is likely to discuss the proposed rule announced last week by Health and Human Services Secretary Alex Azar to encourage drug companies to give rebates directly to patients rather than to insurers and pharmacy benefit managers (PBMs), Whitlock said in a phone interview, adding that the discussion, if there is one, would be in the president’s down-to-earth style — so instead of talking about “safe harbors” and “PBMs,” “it will have to come out as ‘middlemen’ and what they do with drug prices.”

The drug pricing issue is popular on both sides of the aisle, which increases its value as a possible speech topic, Bill Hoagland, PhD, senior vice president at the Bipartisan Policy Center here, said Monday on a phone call with reporters. Despite some mixed reactions from some Democrats on this specific proposal, “I do think there’s wide support both in House and Senate and [among] Republicans and Democrats for focusing on drug pricing … so I think this is a good start. Of all things, it’s like Nixon going to China in my world for a president to be able to take on drug pricing. I think after they start to better understand the president’s proposal, there’s an opportunity there for dealing specifically with drug pricing.”

Marsha Simon, PhD, a healthcare consultant here with expertise in drug pricing, agreed that the president likely would “congratulate himself” on the proposed rule even though she said she was “appalled” by it. “It makes no sense to cut the rug out beneath the very industry that grew up to negotiate drug prices and equalize the market power of payers and drug companies. If all of the savings are provided to patients, what is the incentive to negotiate by the plans (or the PBMs on their behalf)?”

Hoagland also mentioned reports that the president is going to discuss eradicating HIV transmission — likely as part of a “moon shot” initiative similar to the Obama administration’s cancer moon shot. “We understand it’s not finally decided, but that he would focus on a 10-year strategy for ending HIV transmissions by the year 2030,” Hoagland said. “We know the CDC administrator is a prominent AIDS researcher and is focusing on that.”

HIV is in some ways “a very traditionally presidential thing to say,” since it has been mentioned before in addresses by previous presidents, Whitlock said.

There are also issues that healthcare experts don’t expect the president to discuss. For example, Harold Miller, president and CEO of the Center for Healthcare Quality and Payment Reform in Pittsburgh, said in an email that he is not expecting any talk of health insurers’ high profits as a cause of high insurance premiums. And Hoagland said he would be very surprised if the president discussed repealing and replacing the Affordable Care Act, “but he may emphasize the need to maintain preexisting condition [coverage].”

Finally, there are the things the experts wish the president would discuss. Reauthorizing funding for the Patient-Centered Outcomes Research Institute (PCORI) is one topic that Hoagland hopes President Trump will focus on. “I believe PCORI has value to be placed in this whole question about value-based pricing, so I hope PCORI will be indicated as something the administration would support,” he said. “And the last thing that comes to mind is a bipartisan proposal on [banning] ‘surprise billing’ … I think that’s another area I’d hope they’d focus on.”

Miller said he wished that “the Administration would enable individual teams of healthcare providers (physicians, hospitals, etc.) to implement innovative approaches to delivering services to Medicare beneficiaries that would improve quality and reduce spending. In every other sector of the economy, the federal government encourages entrepreneurship and innovation, but in healthcare, it favors large businesses (e.g., large integrated delivery systems, accountable care organizations, and health plans) and central planning (CMS-designed delivery and payment models).”

“Congress created a process to encourage physicians to develop innovative approaches to healthcare delivery, but the CMS [Centers for Medicare & Medicaid Services] Innovation Center has refused to implement even one of more than a dozen such innovations,” he wrote. “None of the current CMS value-based payment programs have achieved significant savings, and it’s time to support bottom-up innovation rather than more top-down planning. This can and should be done in the regular Medicare program, not just through Medicare Advantage plans.”

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