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Perspectives on Pharmaceutical Costs in the U.S. NCSL Legislative Summit August 9, 2016 Chuck Shih, PhD MHS The Pew Charitable Trusts

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Page 1: Perspectives on Pharmaceutical Costs in the U.S. on Pharmaceutical Costs in the U.S. NCSL Legislative Summit August 9, 2016 Chuck Shih, PhD MHS The Pew Charitable Trusts

Perspectives on Pharmaceutical Costs in the U.S.NCSL Legislative Summit

August 9, 2016

Chuck Shih, PhD MHSThe Pew Charitable Trusts

Page 2: Perspectives on Pharmaceutical Costs in the U.S. on Pharmaceutical Costs in the U.S. NCSL Legislative Summit August 9, 2016 Chuck Shih, PhD MHS The Pew Charitable Trusts

Macro Trends in US Healthcare

• Intensifying need to demonstrate value.

• Rapid evolution of healthcare payment & delivery.

• Shifting balance of medical decision-making.

• Use of Real-World Evidence matures & expands.

• Early impact of ACA being assessed.

• Preparing for MACRA implementation.

Page 3: Perspectives on Pharmaceutical Costs in the U.S. on Pharmaceutical Costs in the U.S. NCSL Legislative Summit August 9, 2016 Chuck Shih, PhD MHS The Pew Charitable Trusts

Why are pharmaceuticals an issue?

• Rising prescription drug costs– Up 8.4% in 2015 ($310B)

• New drugs are a significant driver of spending growth– Projected to account for $91B in spending growth

between 2016 & 2020.

• Increasing spending on specialty drugs– 1% of all prescriptions but 36% of drug spending.

– Est. 50% of prescription drug spending by 2020.

Sources: IMS (2016), ESI (2016)

Page 4: Perspectives on Pharmaceutical Costs in the U.S. on Pharmaceutical Costs in the U.S. NCSL Legislative Summit August 9, 2016 Chuck Shih, PhD MHS The Pew Charitable Trusts

Are we getting better value? (not always)

825

0

50

100

150

200

250

300

350

400

450

500

Pri

ce

per

yea

r o

f su

rviv

al b

en

efit

($

1,0

00

s)

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Approval date

Benefit measured from RCT using OS

Benefit measured from RCT using PFS

Benefit measured from modeling study

The best fit line is: Price per year of life gained = $101,077 + $7,396 × Approval year.For purposes of display, we re-coded one value from $825,000 to $500,000.RCT: randomized controlled trial. OS: Overall survival. PFS: Progresion-free survival

Figure 2: Price per year of life gained versus approval date

Source: Howard, Bach, Berndt, Conti (2015)

Page 5: Perspectives on Pharmaceutical Costs in the U.S. on Pharmaceutical Costs in the U.S. NCSL Legislative Summit August 9, 2016 Chuck Shih, PhD MHS The Pew Charitable Trusts

A properly functioning market?The Example of MS Drugs

Page 6: Perspectives on Pharmaceutical Costs in the U.S. on Pharmaceutical Costs in the U.S. NCSL Legislative Summit August 9, 2016 Chuck Shih, PhD MHS The Pew Charitable Trusts

US vs. Other Countries

Page 7: Perspectives on Pharmaceutical Costs in the U.S. on Pharmaceutical Costs in the U.S. NCSL Legislative Summit August 9, 2016 Chuck Shih, PhD MHS The Pew Charitable Trusts

Americans are concerned…

Page 8: Perspectives on Pharmaceutical Costs in the U.S. on Pharmaceutical Costs in the U.S. NCSL Legislative Summit August 9, 2016 Chuck Shih, PhD MHS The Pew Charitable Trusts

Policy Ideas

• Allow HHS to negotiate drug prices

• Medicare Part B Drug Payment Model

– Value-based pricing

• Increasing Generic/Biosimilar Competition

– CREATES Act

• More Transparency

• Price Benchmarking

Page 9: Perspectives on Pharmaceutical Costs in the U.S. on Pharmaceutical Costs in the U.S. NCSL Legislative Summit August 9, 2016 Chuck Shih, PhD MHS The Pew Charitable Trusts

Questions?

Chuck Shih, PhD, MHSSenior OfficerThe Pew Charitable Trusts901 E St, NWWashington, DC 20004Phone: 202-540-6300Email: [email protected]

mailto:[email protected]
Page 10: Perspectives on Pharmaceutical Costs in the U.S. on Pharmaceutical Costs in the U.S. NCSL Legislative Summit August 9, 2016 Chuck Shih, PhD MHS The Pew Charitable Trusts

(Extra Slides for Reference)

Page 11: Perspectives on Pharmaceutical Costs in the U.S. on Pharmaceutical Costs in the U.S. NCSL Legislative Summit August 9, 2016 Chuck Shih, PhD MHS The Pew Charitable Trusts

Trends in Pharmaceutical Costs

Page 12: Perspectives on Pharmaceutical Costs in the U.S. on Pharmaceutical Costs in the U.S. NCSL Legislative Summit August 9, 2016 Chuck Shih, PhD MHS The Pew Charitable Trusts

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