The U.S. Department of Health and Human Services (HHS) held a forum on Friday, November 20 entitled, “HHS Pharmaceutical Forum: Innovation, Access, Affordability and Better Health.” Susan Dentzer, Senior Policy Adviser to the Robert Wood Johnson Foundation, moderated the forum, made up of a number of panelists and speakers including:

  • Secretary Sylvia M. Burwell, US Department of Health and Human Services (HHS)
  • Douglas M. Long, Vice President, Industry Relations, IMS Health
  • Mark McClellan, MD, Ph.D., Senior Fellow and Director, Health Care Innovation and Value Initiatives, Brookings Institution
  • Heather Block, Consumer Advocate
  • Marc M. Boutin, JD, Chief Executive Officer, National Health Council
  • Bianca DiJulio, Associate Director for the Public Opinion and Survey Research Program at the Henry J. Kaiser Family Foundation
  • Lisa Gill, Editor, Consumer Reports Best Buy Drugs
  • Debra Whitman, Ph.D., Chief Public Policy Officer, AARP
  • Andy Slavitt, Acting Administrator for the Centers for Medicare & Medicaid Services (CMS), US Department of Health and Human Services
  • Chester “Chip” Davis, Jr., President and Chief Executive Officer, GPhA
  • Andrea Grande, R.Ph., Vice President, Eastern Region Pharmacy Lead, Aon Hewitt
  • Brian Lehman, MBA, MHA, R.Ph., Manager of Pharmacy Benefits and Policy, Ohio Public Employees Retirement System (OPERS)
  • Justin Senior, Deputy Secretary for Medicaid, Florida Agency for Health Care Administration
  • Christi Shaw, US Country Head, President of Novartis Corporation & President of Novartis Pharmaceuticals Corporation
  • Daniel Durham, Executive Vice President, Strategic Initiatives, AHIP
  • Kenneth C. Frazier, Chairman of the Board and Chief Executive Officer, Merck & Co.
  • Steve Miller, MD, Senior Vice President and Chief Medical Officer, Express Scripts
  • Alan P. Spielman, Assistant Director, Healthcare and Insurance, Federal Employee Insurance Operations, US Office of Personnel Management (OPM)
  • Bernard J. Tyson, Chairman and Chief Executive Officer, Kaiser Permanente
  • Meena Seshamani, MD, Director of the Office of Health Reform, US Department of Health and Human Services

The key takeaway from the forum is that the government, pharmaceutical innovators, health plans, and consumer advocates want to work together to improve access to pharmaceuticals by properly aligning incentives across the industry. HHS Secretary Sylvia Burwell kicked off the forum with a welcome message discussing the “complex conversation” of medical technology. Secretary Burwell stated that innovation, quality, access, and affordability were the fundamental issues facing medical technology today. HHS has a number of goals in the coming years, including improving and expediting pathways of approval for drugs. Although HHS wants to put the consumer at the center of the discussion, Secretary Burwell said the agency wants to “listen and learn” from the forum speakers and other stakeholders.

One speaker presented research on the changes in the pharmaceutical market, noting that the generic wave has been slowing over the last 15 years while biosimilar and specialty pharmaceutical sales have been growing exponentially. Specialty pharmaceutical spending is predicted to continue to rise through 2020, while the biosimilar market continues to grow and the pharmaceutical industry uses more exclusive contracts and price negotiations.

CMS Acting Administrator Andy Slavitt briefly addressed the forum to state that improved transparency about price and effectiveness is needed to give payers and the public confidence they are receiving value when they purchase drugs. Mr. Slavitt emphasized that CMS and the pharmaceutical industry have the shared goal of wanting Americans to have access to life changing and lifesaving treatment. Mr. Slavitt said drug costs can be obscured by the simultaneous use of list prices, wholesale prices, average wholesale prices, rebates, markups by physicians and hospitals, formulary tiers, co-pays, and other practices, ultimately affecting decisions and opinions about drug prices. A number of panelists shared this view, and urged the government to increase transparency and fund additional comparative effectiveness research to provide more data on pharmaceuticals to the industry.

Mr. Slavitt believes that the right ideas will make a bigger market for innovators and make a more stable market for investors. Mr. Slavitt did not propose any steps that CMS may take to constrain drug pricing but did ask the panelists for ideas on how CMS can implement value-based pricing, improve transparency, and overcome regulatory hurdles by properly aligning incentives.

In response to Mr. Slavitt’s request, representatives from pharmaceutical companies and health plans discussed their newest innovations in pharmaceutical pricing. For example, many plans are moving towards utilization management tools, indication-based prescribing, and paying for results via outcome-based contracts. Merck and Novartis have both implemented outcomes-based contracting: each company gives rebates if its drugs do not perform as well as they did in clinical trials. Express Scripts is experimenting with guaranteed patient adherence contracts, giving rebates when patients do not adhere to their drugs.

The panelists urged HHS to remove regulatory barriers that hinder these types of value-based arrangements.  In particular, the speakers asked the Food and Drug Administration (FDA) for reduced restrictions on pre-approval marketing of drugs and communication about off-label uses. The panelists noted a number of administrative hurdles that would consume the savings of value-based contracting, such as adjudication of individual patient claims. These challenges are still unresolved.

Despite their different perspectives, the speakers and panelists agreed: “Medical innovation is meaningless if no one can afford it.” The forum was a true meeting of the minds among regulators, innovators, health plans, and advocates—all of whom wish to work together to improve pharmaceutical innovation, access, and affordability.