Talking Points: 25 November 2024

A quick roundup of the issues driving the healthcare reform conversation.

Week in Review

Rx PROFITS Drugmakers enjoy profit margins well above the rest of the drug supply chain.

Quick takeaway: Big Pharma’s price-gouging and patent abuse playbook fuels astronomical profits.

Digging deeper: A new report shows the pharmaceutical industry’s profit margins are ten times higher than other sectors of the prescription drug supply chain.

Stakeholders cite a number of reasons contributing to the industry’s ability to reap such enormous profits, including: 

• Gaming the patent system to block competition
• Hiking prices at rates significantly outpacing inflation
• Setting increasingly out-of-control launch prices for new products
• Falsely claiming that solutions to lower prices could impede innovation

What it means: By manipulating the market, Big Pharma protects its profit margins, all while blaming others for why drugs cost so much.

One drugmaker even went so far as to tout the success of its patent strategy to prevent competition and extend its monopoly on its portfolio of life-saving HIV drugs.

PBM VALUE Employers value their pharmacy benefit managers (PBMs).

Quick takeaway: Employers appreciate PBMs’ transparency and their ability to lower prescription drug costs.

Digging deeper: A new survey of 700 employers finds that employers are overwhelmingly satisfied with their PBMs:

• Contract Clarity: 90 percent believe their PBMs are transparent
• Cost-Effectiveness: 88 percent are satisfied with their PBMs’ ability to provide the lowest costs for their employees
• Risk Management: 87 percent appreciate how their PBMs help manage risk and better predict their drug costs
• Negotiations and Savings: 86 percent are happy with their PBMs’ ability to negotiate discounts from drugmakers and generate savings

Employers also value the flexibility provided by their PBMs in designing coverage options that prioritize employee costs and access.

What it means: Experts are calling for a more nuanced conversation about the critical role that PBMs play in connecting consumers to safe, affordable prescription drugs. 

A new piece in the Journal of Managed Care + Specialty Pharmacy argues that casting PBMs as solely responsible for high drug prices is unconstructive, reminding policymakers that PBMs emerged out of the need to facilitate patient access to medicines at an affordable cost.

HOSPITAL COMPLIANCE Hospital price transparency decreases.

Quick takeaway: The percentage of hospitals complying with federal price transparency rules has fallen this year.

Digging deeper: As featured last week, hospitals continue to ignore rules requiring them to make prices for common medical procedures available to consumers. New data shows that compliance is actually getting worse and that lax enforcement is partly to blame.

In February of this year, more than 34 percent of hospitals were found to be compliant with the transparency rules. That number has now dropped to just 21 percent.

What it means: The rules, which came into effect in 2021, were intended to give consumers an easy way to compare prices between hospitals.

Hospitals’ noncompliance in making their prices transparently available leaves patients unable to obtain meaningful data on how much treatments cost.

PATIENT SAFETY Value-based care provides a pathway to greater patient safety.

Quick takeaway: By building quality measures into reimbursement agreements, stakeholders can drive better health outcomes. 

Digging deeper: A growing focus on patient safety has led to several large-scale strategic initiatives in recent years, including:

• Building systems for standardized definitions
• Detecting and measuring hospital-acquired harms
• Changes in payment policies
• Implementation of best practices
• Pay-for-performance programs

However, despite efforts to improve quality, adverse events still occur – many of which are entirely preventable.

A recent article highlights the persistent challenges to building patient safety measures into value-based contracts, such as the quality of reporting and the inherent conflict of interest when provider-reported data is used as a basis for payment.

What it means: Better integrating improved patient safety measures into our evolving healthcare system requires sustained and productive collaboration between health plans and providers, underpinned by a larger commitment from all stakeholders.

*****

The Health Action Network includes everyday Americans—families, workers, businesses, patients, providers, neighbors, and friends. We are working together because we support market-based solutions that offer better healthcare choices and help build a stronger economy. The Health Action Network is an Elevance Health, Inc., initiative.