Efforts to rachet down drug prices aren't enough to get the most value from the Medicare drug benefit. Two health policy experts are saying other steps are necessary to save money and improve overall results.
Debate on the improving the program also need to focus on the evidence of drug efficacy and therapeutic value, said Ruth Lopert and Marilyn Moon in their report, "Toward a Rational, Value-Based Drug Benefit for Medicare."
Lopert and Moon suggest an alternative approach to the current system by introducing a form of reference pricing. Under that approach, the prices for all drugs in a group would be set at the same level, except when evidence supports a clinically important difference in patient outcomes.
"This is not only simply a technique for cost containment but would also establish a conceptual framework in which Medicare coverage supports the purchase of health 'outcomes' rather than the drugs," the authors write.
Much attention surrounding Medicare Part D involves drug prices, and some lawmakers are pushing to eliminate the current ban on government intervention in price negotiations with drug manufacturers. Those calls have been rising as a result of increasing profits among pharmaceutical companies.
Lopert and Moon suggest that the Centers for Medicare and Medicaid Services establish and administer a "no-frills stand-alone plan to compete with private plans" by integrating drug benefits with comprehensive health coverage.
"A CMS plan would require a comprehensive but closed formulary, built on transparent, evidence-based assessments of comparative effectiveness and value for money," the researchers say.
Such an approach may result in limiting the number of generic or brand versions of a drug, or the number of choices within a therapeutic class, as well as limiting the medical indications for which a drug is reimbursed, said the authors in their report, published in the November-December issue of Health Affairs.
They also reiterate a proposal that Medicare policymakers should seek to meld Medicare Parts A, B and D into an integrated benefit. Moon and three other authors first suggested the development of such a plan, which they dubbed "Medicare Extra," in a Commonwealth Fund report published two years ago.
"An integrated benefit with treatment options based on assessments of effectiveness and cost-effectiveness would ensure that early and judicious use of preventive drug therapies is encouraged by an understanding of downstream outcomes and cost offsets," the authors conclude.