Driving Down Rx Costs: 4 Ideas to Consider ? Ed Kaplan, The Segal Company
NEW YORK--(BUSINESS WIRE)--Jan 10, 2013 - “To lower the cost of prescription drug coverage in a meaningful way, public policy makers should consider more aggressive solutions that produce savings for patients and health care payers, while preserving the incentives for drug manufacturers to continue to innovate,” says Edward A. Kaplan, SVP and National Health Practice Leader for The Segal Company.
Mr. Kaplan suggests that in addition to promoting the use of lower cost generics, new ideas to consider include:
| 1. | Introduce an
advertising tax on all drug makers. Introduce a sales tax for
amounts spent on marketing and sales that exceed the amounts spent
on R&D. If manufacturers continue to advertise, this will be
revenue generating for the federal government. If instead
manufacturers choose to reduce marketing spending, they may
increase spending on R&D.
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| 2. | Create a bid process
or reference-based pricing method for non-life threatening drug
therapies. The Centers for Medicare & Medicaid Services
(CMS) could run an annual bid process for Medicare Part D
beneficiaries through which it selects and covers the cost of the
top two or three best-value drugs within a therapy class based on
price and efficacy. This process would encourage manufacturers to
focus on the direct pricing of competing products rather than on
rebates, coupons and other complex schemes that inflate costs.
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| 3. | Vary the length of
patent protection by therapy classes. New patents for the
treatment of a selected list of lifesaving therapy classes should
have longer patent lives than drugs that are mainly lifestyle
treatments. For example, a breakthrough drug that reduces the risk
of dying from cancer would get a longer patent life than a drug
that treats hair loss or seasonal allergies. This would force the
industry to focus more on critical illnesses.
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| 4. | Develop a reinsurance
purchasing program for high-cost specialty medications that can be
used by both insurers and self-funded health plan sponsors. CMS
should negotiate pricing on specialty medications and allow private
sector payers to purchase specialty drug stop loss insurance
coverage secured by the federal government. This would stabilize
problematic claim liability for many plan sponsors.
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The Segal Company (www.segalco.com) is an independent, US-based firm of benefit, compensation and human resources consultants. Clients include joint boards of trustees administering pension and health and welfare plans under the Taft-Hartley Act, corporations, non-profit organizations, professional service firms and state and local governments.
Contact: The Segal Company
Mary L. Feldman, 212-251-5029
Senior Vice President, Public Affairs
mfeldman@segalco.com
Posted: January 2013
