Pharmaceutical Pricing Practices, Utilization and Costs - Meeting Summary. 4. Lightning Round: Public Policy Researchers' Perspectives


Following the discussion of strategies for controlling costs and increasing value, five health policy researchers were asked to give their perspectives on everything they had heard at the conference.

Stanley Wallack, Ph.D., Brandeis University

Dr. Wallack said that if he were sitting as a key policymaker, he would expect the utilization and expenditures of prescription drugs to go up. He would be interested in the following topics:

  • How efficient is the U.S. pharmaceutical market and can we make it more efficient?
  • What is the "value" of pharmaceuticals from a societal perspective? Developing information to answer this question will require substantial funding from the public sector.
  • Is the drug industry making monopoly profits? Conference participants gave very little attention to this question. In a monopolistic market, more value goes to the manufacturer than to other parties.
  • What potential is there for increasing the utilization of generic drugs? Perhaps in the new drug approval process, brand-name drug manufacturers should be required to say how their new product will compare to generics in terms of price.
  • Do we want to use information to change the U.S. pharmaceutical market generally or do we want to use targeted incentives (e.g., incentives for R&D)?
  • Can disease management techniques be used for high users of prescription drugs? High users account for an increasing proportion of individuals who use prescription drugs and are at the greatest risk for drug interactions.

Robert Helms, Ph.D., American Enterprise Institute

Dr. Helms said that when talking about economic systems, the bottom line for economists is how well an economic system provides value to consumers--i.e., satisfies consumer wants and adapts technology to consumer wants in an efficient way. This is something we should keep in mind in the debate about prescription drugs--what we are after is providing what consumers want.

It is very probable that prescription drugs will be added somehow to Medicare, and when this is done, the basic debate will be whether to use a market approach or a regulatory approach. Economics offers a lot of literature about what happens under both systems, and Dr. Helms quite frankly is on the market side. He is fairly optimistic that the prescription drug market will work out. The market provides incentives for innovation. And the higher prescription drug costs go, the more incentives there are to make the pharmaceutical market work more effectively

Beth Fuchs, Ph.D., Health Policy Alternatives

Dr. Fuchs said that she came to the conference hoping that she would get more information that would help her analyze Medicare prescription drug proposals, but she is now more confused than ever because of the complexity of things. Dr. Fuchs said she believes it would be helpful to have more information about whether PBMs could help get Medicare beneficiaries access to prescription drugs in an affordable manner. What would happen if PBMs were given a free rein in a public-private approach? Could a PBM-like entity produce significant savings that would help Medicare's 40 million beneficiaries get access to prescription drugs in an affordable manner? Finally, Dr. Fuchs noted that much of the information that policymakers need to make policy regarding prescription drug benefits has been proprietary or lost in the academic literature. She encouraged drug manufacturers and policy analysts to make this information available in a form that policymakers and researchers can use.

William Scanlon, Ph.D., U.S. General Accounting Office (GAO)

Dr. Scanlon said that he felt as though lots of different boxes had been opened and everything poured out of them at this conference. He said he believes that policymakers need two types of information:

  • Information related to market failure in the U.S. prescription drug market. Conference participants identified several aspects of market failure in the prescription drug market. Many of the problems are tied to a lack of information--information on the underutilization and overutilization of drugs, what prices are being paid, what utilization we should want, clinical information, etc. A key question that arises is: How do we generate more information about what pharmaceuticals can do and how they should be used? It is important to bear in mind that if a Medicare prescription drug benefit is enacted, all of the relationships and prices that exist in the U.S. prescription drug market at present will change.
  • Information related to the design and management of a Medicare prescription drug benefit. In designing and managing a prescription drug benefit, policymakers will not necessarily chose between a market approach or a regulatory approach. Instead, they will probably combine the two approaches. In any event, information will be critical. It is impossible to run a market economy unless there is good information flowing freely and people are able to act on it, and it is impossible to regulate an economy without huge amounts of good information. Getting information down to the level of Medicare beneficiaries is going to be particularly important if consumers are going to play a role in health care cost containment or quality enhancement.

Judith Feder, Ph.D., Georgetown University

Dr. Feder said that it is not surprising that there are so many questions at the end of the 2-day conference. She noted, however, that policymakers do not have the luxury of certainty. They never have all the information they could use and have to make decisions with the best information available. Dr. Feder believes the discussion at this conference has two two kinds of policy implications:

  • Managing prescription drug benefits for the insured. The bulk of the discussion at the conference has focused on the use and costs and prices of prescription benefits for the insured population. The consensus at this conference seems to be that the role of government--apart from examining the policies it has in place--is to facilitate the market. There was advocacy of a role for government in (1) getting more information about pricing and other behaviors; (2) creating an entity that is a source of independent information on prices and on values; and (3) promoting guidelines that give some indication of the range of ways to think about the value of prescription drug products. There was support expressed for techniques and ways to help physicians--as well as pharmacists--in the prescribing process. Given the survey data that people trust their physicians, Dr. Feder believes that enabling doctors to work with their patients to make what are inevitably difficult choices about prescription drugs is a good idea.
  • Providing prescription drug benefits for the uninsured. Right now many of the people who are most in need of prescription drug coverage--elderly Medicare beneficiaries--are among the people least likely to have it. Dr. Feder concluded by saying that she absolutely believes that Medicare beneficiaries ought to have prescription drug coverage and that it ought to be an entitlement. The country does have the resources, she said--it is just a question of making a choice about how those resources are used. Having Medicare rely on best practices for managing drug utilization and costs in the private sector will lead those practices to improve over time.