Last month we got a glimpse at what’s inside the Trump administration’s draft executive order to control drug pricing, and overall it was a pretty big win for drug companies.
They would be in line to get more power to charge monopoly prices overseas and be allowed to give even fewer discounts to hospitals with poor patients.
Plus, the administration is promising to roll back regulations that pharma has complained about.
All of that sounds great for pharma, so reporters over at Pro Publica and the New York Times focused on the one provision that didn’t — the idea that drug companies should reimburse healthcare plans for drugs that don’t work on patients.
Again, it sounds good for consumers, but as Charles Ornstein at ProPublica and Katie Thomas at The New York Times pointed out, other countries (specifically Italy) have tried this before. It’s called “outcome based” contracting, and it’s a dud.
Italian researchers, in fact, called these reimbursements “trifling.”
Here’s why: Since drug companies already set the prices for drugs and also set what constitutes a good outcome, usually they’re prepared for potential reimbursements. Plus, by negotiating these contracts, more insurers are willing to ease restrictions on a company’s drug that were put in place due to cost, so these actually get expensive drugs to patients more than they would under our current system.
The arrangements, he said, carried “bells and whistles” that made them look good in theory. “But as long as you control all the contract terms, it can be a lot of optics but no substance,” he said.
Bach and others say the pharmaceutical industry is using this approach to justify seeking major changes to federal regulations that could benefit them even more — including rolling back a requirement that Medicaid programs for the poor get the lowest drug prices, and another that bars companies from giving kickbacks to health providers. The industry says the changes are needed to allow more flexibility in the type of deals they can offer.
In other words, this is kind of a head fake. Don’t take your eyes off the prize — just plain old lowering prices.