Public Policy

International Reference Pricing: Cross-country comparison

The price of pharmaceuticals are much higher in the U.S. than in other countries. Some policymakers have claimed that international reference pricing could be used to lower the cost of drugs in the U.S. For instance, the Lower Drug Costs Now Act (HR 3) proposed setting the maximum negotiated price Medicare would pay at 120% …

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What will be the impact of adopting reference pricing in the US?

That is the question that a recent JAMA study–Mulcahy et al. (2021)–aim to answer. The authors use IQVIA MIDAS data to estimate sales price and volume in the US. These can can be used to estimate drug wholesale acquisition cost (WAC), but they ignore rebates. To account for rebates in the US they use SSR …

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Distributional Cost Effectiveness Analysis: A simple example

I have written previously about the need for distributional cost-effectiveness analysis (DCEA) which would increase the value of treatments who improve the health for individuals who currently have the worst expected quality-adjusted life expectancy (QALE). I’ve written about this in AJMC and Health Affairs among other places. One key question many individuals may have is …

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CBO: Impact of price control legislation on new drug development

It stands to reason that policies that aim to reduce drug prices or squeeze life science companies profits are likely to decrease incentives to finance the research and development needed to bring a drug to market. Previous estimates claim that bringing a new drug to market may cost over $2 billion, and life science companies …

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Biden brings plan for prescription drug pricing reform to Congress

That is the title of an article published in Pharmaceutical Technology today. I am quoted extensively. For instance, President Biden proposes to cap drug prices at genera rates of inflation. The article highlights some limits this would pose to value-based pricing that could evolve over time: Shafrin also says while Biden’s plan to penalise companies …

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Public-Private partnership in biologic drug development

A paper from Nayak et al. (2021) in JAMA Internal Medicine describes how public-private partnerships have helped bring new biologic drugs to market. Using data on new biologic drugs approved by the FDA’s Center for Drug Evaluation and Reseach (CDER) and US patent office data, the authors find that: Twenty-nine drugs (42%) showed evidence of …

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Total Cost of Schizophrenia in the US was nearly $300 billion in 2020

That is the finding from a white paper from the Schizophrenia and Psychosis Action Alliance titled “Societal Costs of Schizophrenia & Related Disorders“. I am a co-author on the paper. Below is a summary of the findings: …the societal costs of schizophrenia were estimated to be $281.6 billion in 2020…Direct costs for individuals living with …

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Biden’s Executive Order on Promoting Competition in the American Economy: What does it say about health care?

Last Friday, President Biden released an executive order titled “Promoting Competition in the American Economy” While the order talk about transportation, internet companies, and farming, there were a number of provisions related to health care. I summarize each of these below. Specifically I review OTC hearing aids. Currently, many patients need to visit a doctor …

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How easy is it for patients to access cell and gene therapies in Europe?

Cell and gene therapies have the potential to produce dramatic improvements in quality of life and survival for severe and often rare diseases. Currently, however, the cost of these treatments is high and access is sometimes limited. To identify some of these challenges in Europe EURODIS conducted an evaluation of country-specific challenges with respect to …

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Intellectual Property Rights and Innovation

That is the title of a 2016 NBER chapter by Heidi Williams and the subtitle is “Evidence from Health Care Markets“. Economic theory back to Nordhaus (1969) predicts that intellectual property rights increase the incentive for firms to invest in research and development and likely this would lead to more innovation. Proving these empirically, however, …

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Healthcare Economist named top Health Policy blog

Healthcare Economist was named one of the top 30 health policy blogs on the web by Feedspot. In fact we came in at #4! The top 5 are: Bill of Health USC-Brookings Schaeffer Initiative for Health Policy The Health Care Blog (Health Policy) Healthcare Economist Health Populi. You can review the full list here.

Did the individual mandate work?

A paper by Lurie et al. (2021) provides the answer. They reach four conclusions from their analysis: First, the actual penalty paid per uninsured month is less than half the statutory amount. Second, nonetheless, we find visually clear and statistically significant responses to both extensive margin exposure to the mandate and to marginal increases in …

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What is the FTC’s stance on pharmaceutical mergers?

The answer to this question likely will be shaped in part by a new multilateral working group that will include not only representatives from the U.S. (U.S. Department of Justice Antitrust Division, and Offices of State Attorneys General), but also Canada (Canadian Competition Bureau), Europe (the European Commission Directorate General for Competition) and the United …

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How much does the U.S. federal government pay for pharmaceuticals?

A number of different federal agencies buy prescription drugs. However, the price at which these pharmaceuticals are purchased varies dramatically. To quantify this variation, a 2021 report from the Congressional Budget Office examines the following prices: Medicare Part D: the prescription drug program for Medicare beneficiaries. Prices are set when private insurers (or pharmacy benefit …

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Democrats vs. Republicans: Health Policy Battle Royale

Conventional wisdom holds that the U.S. has become more and more partisan and the views of both Democrats and Republicans have become less moderate over time. Is that the case with respect to views on health policy? A paper in JAMA last week by Blendon et al. (2021) conducted probability-based national surveys on four topics …

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Law Will Allow Calif. to Produce, Distribute Biosimilars, Generics

That is the title of an article by Angela Maas in Radar on Specialty pharmacy (reprinted here). A few excerpts: “Although state governments frequently pay for health care through programs such as Medicaid, in the past, state governments have not manufactured drugs,” says Jason Shafrin, vice president of health economics at PRECISIONheor. “Thus, this is a …

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The perils of health systems

Last week I reviewed an article on some of the potential positives and negatives of large, integrated health systems. A recent 60 Minutes episode talks about some of the perils by examining how Sutter health system has become a near monopoly provider in Northern California. Consider the following interaction between Leslie Stahl of 60 minutes …

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On the promise and peril of health systems

Integrated delivery networks. IDNs. Accountable Care Organizations. ACOs. Systems of care. Health systems. Whatever you call them, many health policy experts claim that they are the best way for the U.S. health care system to deliver high quality care in a cost-effective manner. But is that really the case? A commentary by UCSD professor and …

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Orphan Drug Policies Around the World

How do you incentivize pharmaceutical companies and researchers to develop new drugs for rare diseases? Drug development is expensive and–by definition–rare diseases have a small market. One solution to this problem is that governments have used orphan drug policies to provide monetary incentives for innovators to research drugs for rare diseases. But which countries have …

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What is the impact of FDA review time on pharmaceutical R&D investments?

This is the question that a recent paper by Chorniy et al. (2020) attempt to answer. This issue is clearly very relevant as the UK recently has approved the Pfizer/BioNTech vaccine for COVID-19 before the US. Unlike most studies that attempt to examine the relationship between FDA review time and R&D investment dollars, the authors …

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Drug importation from Canada won’t work

I’ve mentioned this in a number of previous posts, but large scale importation from Canada won’t work to bring down US drugs prices. The US market is too large and Canada does not have the supply to meet US demand. Further, policies proposing drug importation from Canada assume that Canadians will be passive actors in …

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FDA sets guidelines for drug importation from Canada

Last month, the US Food and Drug Administration published a final rule providing guidance for allowing drug importation from Canada. The drugs have to be approved by the Government of Canada’s Health Canada’s Health Products and Food Branch (HPFB) and can be imported by States or Indian Tribes, or in certain circumstances by pharmacists or …

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CBO: COVID-19’s impact on the federal budget

Earlier this month, the Congressional Budget Office (CBO) gave an update to its federal budget projections between 2020 and 2030. As expected, things look grim for 2020. CBO projects a federal budget deficit of $3.3 trillion in 2020, more than triple the shortfall recorded in 2019. That increase is mostly the result of the economic …

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Using HEOR Methods to Reduce Health Inequalities

Join me tomorrow, 9/26, 12:00 PM EDT, as PRECISIONheor’s Jason Shafrin and Meena Venkatachalam discuss their recent blog commentary in the health policy journal Health Affairs on how novel methods of Cost-Effectiveness Analysis can be used to expand traditional value frameworks improve health outcomes for underserved communities. Moderated by Precision’s Kelly Wilder, there will be a live Q&A following the webinar. …

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Do we spend too much on health care?

According to my post yesterday, it may seem like the answer is ‘yes’. The US spends by far the most money per person and the largest share of its economy on health care. While cross-country comparisons often grab the headlines, a New England Journal of Medicine Perspective by Katharine Baicker and Amitabh Chandra argues that …

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What is the “reputational value” of developing a COVID vaccine?

COVID-19 is a global pandemic and finding a vaccine for COVID-19 would be a boon to societal. The value would be enormous. One study found that the value would be more than 1.1% of GDP. Since global GDP is $87.7 trillion, the value of a vaccine would be nearly $1 trillion. In a recent colloquium …

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Trump executive orders on drug prices: Much ado about nothing?

President Trump signed 4 executive orders on drug pricing on July 24, 2020. How are they likely to affect drugs prices? Passing along rebates to patients The one of the executive orders mandates that rebates go to reduce patient cost sharing: These middlemen — health plan sponsors and pharmacy benefit managers (PBMs) — negotiate significant …

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We are failing at treating mental health

That is the key takeaway from a recent JAMA Viewpoint by Carlo, Barnett and Frank (2020). While there has been some progress, there are still tremendous gaps that need to be addressed. For patients with schizophrenia, bipolar disorder, or other more serious mental health conditions, less than two-thirds received care for their illness, according to …

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