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HDA UK Media And Political Bulletin – 30 March 2017

Media Summary

If Trump wants to bring down US drug prices, he’ll borrow this tactic from the UK
Quartz, Oliver Staley, 29 March 2017

As attempts at repealing Obamacare currently appear to be thwarted, US president Donald Trump can still tackle the soaring costs of healthcare by addressing one of its biggest problems — the high cost of prescription drugs. Oliver Staley in Quartz suggests that, if Trump does indeed want to tackle rising drug prices, he could look at the UK’s cost-benefit analysis conducted by the National Institute of Cost Effectiveness (NICE). Things may be starting to change as US insurance companies are beginning to discuss value-based pricing for drugs. However, until Medicare and Medicaid start demanding that drugs be priced according to their effectiveness, US drug prices are likely to continue rising.

Pharmacy margins under the spotlight in court: PSNC’s challenge to funding cuts turns to profitability
Dispensing Doctor, Ailsa Colquhoun, 30 March 2017

Pharmacy operating margins have come under scrutiny during pharmacy’s legal challenge to funding cuts; the two cases brought by PSNC and the NPA were heard between March 21 to March 23. David Locke QC representing the NPA said the secretary of state had failed to have a proper understanding of the inequality of health outcomes. A judgment is not expected before mid-April.

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If Trump wants to bring down US drug prices, he’ll borrow this tactic from the UK
Quartz, Oliver Staley, 29 March 2017

While attempts at repealing Obamacare appear dead (at least for the foreseeable future), US president Donald Trump still has an opportunity to tackle the soaring costs of American-style healthcare by addressing one of its biggest problems—the high cost of prescription drugs.

The US spent $3.2 trillion on healthcare in 2015—almost a fifth of its total GDP—and 10% was on prescription drugs. That comes to more than $1,000 per person, per year. Drug prices have climbed at about 10% annually, and will continue to climb as more sophisticated treatments for cancer and heart disease are introduced. One cutting-edge treatments for melanoma, for example, now costs $256,000 a year (paywall).

Trump has loudly and often proclaimed his outrage over this. He convened the CEOs of the largest pharmaceutical companies in January, and more recently, said he wants the Medicare, the federal insurance program for seniors, to negotiate the cost of drugs, which is now forbidden by law. Drug stocks quake when he raises the subject, but they recover because no plan has been proposed.

If Trump truly wants to bend the arc of rising drug prices, he might want to look at how it’s done in the UK.

In England, the National Health Service, the government agency which provides mostly free healthcare to 65 million people, spends about $391 per person (pdf)—around two-fifths of per-capita US spending. Prescription drugs there cost three times less than in the US. Putting aside the issue of whether it’s cheaper for the US to simply adopt universal healthcare, one way the NHS does this is by negotiating down the cost of of some drugs, and simply refusing to buy others.

Once drugs are deemed safe and effective, they’re subject to a cost-benefit analysis by the UK’s National Institute of Cost Effectiveness (NICE). NICE determines whether the drugs are actually worth the money, and whether they should be bought by the NHS. Since the government buys the overwhelming majority of drugs in the UK, NICE’s recommendations—and the fear of a rejection—are hugely influential.
It’s not an empty threat: The agency turns down about a fifth of the drugs and treatments it evaluates.

When analyzing drugs, the agency considers the cost of extending a patient’s life for a year, adjusted for the quality of that additional year, and compares it to the next best alternative. Generally, NICE won’t approve drugs that cost more than £20-30,000 ($25-38,000) per quality-adjusted “life year” than the next best alternative. The US has a far higher appetite for cost: according to one analysis, the average difference for renal dialysis, for example, and the next best option to treat kidney failure is $129,000.

A NICE rejection can also serve to open negotiations.

For example, in 2015, the agency said the almost $5,000 per month cost of Lynparza, a new drug for certain types of ovarian cancer, would cost as much as £66,500 for the benefit it provided compared to existing treatments. After discussions, Lynparza’s manufacturer, AstraZeneca,agreed to both lower the price by an undisclosed amount, and pay for the cost of the drug if a patient remains on it after 15 months.

In the US, the Food and Drug Administration has the mandate of ensuring drugs are first safe, then effective, but is silent about whether the drugs it approves are worth the money. Medicare and Medicaid, the biggest buyers of drugs in the US, can’t ask, either. Pharmacy-benefit managers, like Express Scripts and CVS, which administer prescription plans for private insurers, can refuse to add drugs to their lists of approved medications, but are subject to the pressures of both pharma companies and customers.

Things may be starting to change, though. US insurance companies are beginning to discuss value-based pricing for drugs, and an association of cancer doctors now recommends oncologists weigh a drug’s cost when prescribing. But until Medicare and Medicaid start demanding that drugs be priced according to their effectiveness, US drug prices are likely to continue climbing.

Pharmacy margins under the spotlight in court: PSNC’s challenge to funding cuts turns to profitability
Dispensing Doctor, Ailsa Colquhoun, 30 March 2017

Pharmacy operating margins have come under scrutiny during pharmacy’s legal challenge of the funding cuts announced during the DDA 2016 annual conference and imposed from December.

Representing England’s pharmacy contract negotiator PSNC, Alison Foster QC revealed that the Department of Health had based its decision on pharmacy funding on a working operating margin figure of between 10 and 15 per cent.

The court heard that the 10 per cent estimate came  from one person described as an ‘Industry Insider’ whose information had been destroyed after the meeting with DH officials; and the 15 per cent from an analysis of Companies House data, 2015. This figure has since been discredited by accountancy firm PwC, which has suggested a 6 per cent operating margin.

The hearing of the Judicial Review cases relating to the changes imposed on community pharmacy on October 20 2016 has now concluded.

The two cases brought by PSNC and the NPA were heard between March 21 to March 23.

PSNC was granted permission for the Judicial Review from the High Court in December last year. PSNC’s case alleged that the Secretary of State failed to carry out a lawful consultation on the proposals for community pharmacy.

The NPA’s case was focused on arguments that the Secretary of State failed to properly discharge his Public Sector Equality Duties and failed to appreciate community pharmacy’s wider healthcare role.

In her submissions, PSNC’s QC Alison Foster made the following points about the Department of Health’s approach to negotiations with pharmacy:

Failure to use the cost of service inquiry 2011 and increasing costs for community pharmacies in its discussions

The narrow and technical function of the Drug Tariff to ensure fair and reasonable remuneration, rather than to enable a re-shaping of the community pharmacy market.

Failings in the process which make the consultation unlawful

Impact on private individuals’ livelihoods, family businesses and mortgages on homes

Unfair impact from and unprecedented nature of the cuts

Comprehensive reshaping of the markets

Going through the information disclosed by DH, Alison Foster indicated that there were references to incentivised use of internet pharmacies and amazon style deliveries.

David Locke QC representing the NPA said the secretary of state had failed to have a proper understanding of the inequality of health outcomes – which was more than simply access to pharmacies; the imposed decision would increase health inequality in urban areas: the funding cuts would hit urban pharmacies the hardest which had the least protection from the Pharmacy Access Scheme.

James Eadie QC representing the Secretary of State, put forward the its arguments that sufficient evidence had been provided to PSNC to enable it to respond to the consultation and that there had been sufficient time for PSNC to respond.

A judgment is not expected before mid-April.

HDA UK Media And Political Bulletin – 30 March 2017

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