8:10 PM
Nov 02, 2018
 |  BioCentury  |  Politics, Policy & Law

Backing into value with Part B

How HHS’s Part B proposal is a backdoor to value-based pricing

The Trump Administration’s proposed revamp of Medicare Part B would cede value determinations to other countries by importing their cost-effectiveness standards on drug pricing. It could also lead to more experiments with alternative models for drug pricing and reimbursement.

The Oct. 25 proposal from HHS would create an International Pricing Index (IPI) and link it to Medicare reimbursement for infused drugs administered in a physician’s office or outpatient hospital setting. It would also upend the existing buy-and-bill model by inserting third parties into the system to negotiate potentially lower prices, and by taking physicians out of the business of purchasing the drugs. Instead of receiving an add-on payment tied to the average sales price (ASP), physicians would be reimbursed a flat rate.

BIO, PhRMA and some physician groups see the move as detrimental, saying it imposes price controls and could put patients at risk (see “Trump’s Divide and Conquer Part B Plan”).

On first blush, introducing a cap to Medicare reimbursements appears to run counter to the administration’s proposals to move towards “value-based” pricing and payment models (see “CMS’s Verma Outlines New Drug Payment Options”).

Stakeholders from physician, insurance and market access sectors see the issue as more gray than black or white.

Four of five KOLs who spoke to BioCentury disagree that it goes against the trend toward value-based pricing because nearly all of the countries included in the market basket rely on health technology assessments (HTAs) to define cost-effectiveness. The dissenting voice believes that the HTA processes in these countries don’t take into consideration enough factors, such as quality of care and real-world patient outcomes, to be considered value assessment.

Three of the KOLs said the proposal could spur more novel drug payment models among commercial payers because it would introduce a value-based starting point, rather than an opaque manufacturer-determined price.

However, Peter Bach, director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center, thinks more changes are necessary to implement true value-based payment models for pharmaceuticals. Bach also serves as chair...

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