With the release of President Trump’s “American Patients First” strategy blueprint to tackle US drug pricing and health care costs, clinical pathway developers and professionals will need to take this proposed plan into consideration. This blueprint, if enacted, would require clinical pathways to articulate value to both patients and payers. Clinical pathways will need to become more specific; current broad clinical pathways would be replaced by much more detailed pathways that provide greater direction not only to providers but to patients and insurers as well, which would add much more value.
The announcement of the Trump Administration’s blueprint to lower drug prices and reduce out-of-pocket costs, titled “American Patient First,” starts with a telling quote from President Trump:
“One of my greatest priorities is to reduce the price of prescription drugs. In many other countries, these drugs cost far less than what we pay in the United States. That is why I have directed my Administration to make fixing the injustice of high drug prices one of our top priorities. Prices will come down.”1
This, along with the blueprint title, describes the program’s primary aim to have foreign countries that have negotiated lower prices to pay more, so that US prices can be lowered. This blueprint would require clinical pathways to articulate value to both patients—given their increased out-of-pocket costs—and payers—given the increasing long-term benefit from treatments such as gene therapy. It would also mean that clinical pathways will need more specificity given more narrow formularies and possible indication-based pricing. Current general board clinical pathways may be replaced by much more detailed pathways that provide greater direction not only to providers but also to patients and payers as well, which would add much more value.
Blueprint Overview
In the blueprint, the US Department of Health & Human Services (HHS) identifies 4 main challenges in the American drug market:
- High list prices for drugs
- Seniors and government programs overpaying for drugs due to lack of the latest negotiation tools
- High and rising out-of-pocket costs for consumers
- Foreign governments free-riding off of American investment in innovation
HHS also proposes a comprehensive outline for addressing these challenges, identifying 4 key strategies to achieve reform, including improved competition, better negotiation, incentives for lower list prices, and lowering out-of-pocket costs. There are 2 phases of action under each of the 4 reform strategies: phase one includes actions that the President may direct HHS to take immediately; the second phase includes actions HHS is actively considering and on which feedback is being solicited. The initiatives focus on lowering drug prices, increasing payers ability to negotiate, and removing provider margins (Table 1).
Out-of-Pocket Expenses
Some of the proposed interventions will happen outside US clinical pathways, such as forcing increasing payments from foreign countries and Medicaid. The assumption here is that this will translate to lower US drug prices, although there is nothing to prevent pharmaceutical manufacturers from maintaining their current US price levels and simply pocketing the increased revenue. But if these initiatives do reduce US prices, it may also potentially improve clinical outcomes through higher adherence rates. For example, one study called out in the blueprint found that consumers asked to pay $50 or more at the pharmacy counter are 4 times more likely to abandon the prescription than a consumer charged $10.
Increasing Access
While some interventions focus on lowering patient out-of-pocket expenses, others target increased access, such as indication-based pricing and long-term financing. This is needed today, given increasingly sophisticated therapies, such as gene therapy with high upfront costs but long range benefits, and other therapies with very narrow indications initially but expanded indications later, which leads to much higher utilization. Indication-based pricing is being pushed because of situations wherein a drug first comes to market with extremely limited use but later gains an indication for a much larger pool of patients; because of the higher volume it can then be offered at a lower price point. This is possible through indication-based pricing and could increase access that would be reflected in clinical pathways.
The ability for long-term financing of therapies given in a single dose with long-term benefits could also increase access to new treatments, which will need appropriate placement in clinical pathways. In addition, payers will look to clinical pathways to help articulate the long-term benefit so that these innovative financial arrangements can best be modeled.
Total Treatment Costs
While most of the blueprint focuses directly on drug pricing, one measure looks specifically at the total cost of treatment through movement to site neutrality in payment, which would remove the increased payment afforded to hospital-based settings. This could lead to greater opportunities for settings outside of hospital-owned sites for care, which could be reflected in clinical pathways.
Along the same theme of decreasing payments based on where care is rendered, the blueprint strategies shift away from providing a financial incentive for physicians for over utilizing expensive therapies through reimbursement under the Medicare Part B buy & bill model. There has been increasing pressure to take steps to leverage the authority created by the Competitive Acquisition Program for Part B Drugs & Biologicals to replace the buy-and-bill system with direct reimbursement of medications, which would remove providers’ incentives in using these therapies.
Where Else Could Clinical Pathways Come Into Play?
One intervention that could be attained through clinical pathways is related to the shift from requiring Medicare Part D plan formularies having a minimum of 2 drugs per category or class to just one. Clinical pathways could follow suit with much narrower and specific treatment recommendations. This limited access would give payers greater ability to negotiate as the single treatment selected would enjoy much greater volume with a lower the price, maintaining the same total revenue. Greater negotiating ability could be strengthened even further with the allowance of powerful group purchasing organizations under Medicaid where up to 5 states could come together to test drug coverage and financing reforms that build on private sector best practices.
Also in the blueprint is an initiative wherein Medicare Part B drugs would be shifted to Part D. Currently under Part B, Medicare does not negotiate prices or control utilization, as opposed to Part D, which is managed by private companies that both negotiate prices and control utilization. This move would result in a significant decrease in pharmaceutical reimbursement through lower prices and lower utilization. The specific areas that would be impacted due to this shift is described in detail in Table 2.
Perhaps the most notable item in the blueprint for clinical pathways is the Administration’s push to use value-based purchasing arrangements for drugs in federal programs and to experiment in other areas like indication-based pricing and long-term financing. While value-based contracting could be a real solution, its success would be dependent on effective use of data and measurement as well as policy changes. This is an area that clinical pathways can play a significant role in describing the targeted outcomes and appropriate data for tracking.
Conclusion
The proposals outlined in the blueprint could result in clinical pathways that are much more prescriptive and thus used by payers to negotiate more strongly for therapies to gain increased utilization. This increased utilization would come at a price that would benefit patients in the form of lower out-of-pocket expenses. One thing is certain: developers of clinical pathways need to take into account an increasingly complex pricing and utilization landscape.
Reference
1. Department of Health & Human Services (HHS). American Patients First. HHS website. https://www.hhs.gov/sites/default/files/AmericanPatientsFirst.pdf. Published May 2018. Accessed June 6, 3018.
