CMS BLOG
Remarks
of CMS Acting Administrator Andy Slavitt at the HHS Pharmaceutical Forum:
Innovation, Access, Affordability and Better Health
***
Thank you all for being here today.
We have leaders from patient groups, health plans, providers and
manufacturers, and remarkably, everyone is here to come together around
the same opportunity: to ensure Americans have and maintain access to
life-changing and life-saving treatments. Through innovations in life
sciences and genomics, we have unprecedented opportunity to cure and manage
disease like never before. I thank you for your commitment to the discovery and
development of these vital treatments, and also your growing cognizance of public
concerns regarding the accessibility of these medicines. Let me do
my best to frame both the challenge and the opportunity and where I
believe we most need your input into the challenges we are discussing
today.
At CMS, we start this
discussion the same place we start everything-- with the 140 million
beneficiaries and consumers we serve. Millions of our
consumers – whether Medicare, Medicaid, CHIP or Marketplace -- rely
on prescription medications to manage chronic illnesses and treat
acute conditions. The science and innovation engine that are creating the
medicines of the future will be an instrumental component of the quality of
life of today's and tomorrow's beneficiaries. But surveys also tell us
that as costs go up, so does everyone's anxiety about their continued access to
their prescription medicine. And because we all plan to use
the Medicare program one day, it's not just today's beneficiaries,
but all of us who have a stake in the long term
accessibility of new therapies.
Today's discussion is designed
to begin a dialogue that allows everyone in this room and beyond to chart a
path that continues to encourage scientific discovery and ensures those
discoveries are accessible to those that need it. As we encourage the
development of new generations of highly targeted, personalized therapies, we
need strategies for ensuring access to these innovations. It is in all of our
interest to find ways to improve affordability and access for patients,
support and increase innovation in the industry, and – most importantly – make
people healthier.
***
In 2014, CMS spent $140
billion on prescription drugs for seniors, the working poor, children, and
the disabled in the Medicare and Medicaid programs. This doesn't include
prescription drug spending for the Children's Health Insurance Program and the
Marketplaces, where monthly premiums are highly influenced by
prescription drug costs. Spending on medicines increased 13 percent in
2014, compared to 5 percent for health care spending growth overall, the
highest rate of drug spending growth since 2001.
Drug costs are not
just the states and federal government's fastest
growing cost, but through Part B and D premiums, co-insurance
and deductibles, our beneficiaries pay 16 percent of the
bill, making this a real kitchen table issue for working families and
retirees. Per capita Part D costs increased by 11 percent in
2014, driven by increased spending on high cost drugs in the catastrophic phase
of the benefit.
Given these costs, consumers'
access is already under threat. Surveys suggest that as many as 1 in 4
Americans cannot afford and, therefore, do not fill the prescriptions on
which their health depends. State Medicaid agencies in some
cases are in the difficult position of withholding vital
therapies for people in need. The reality is cures and improvements
in the quality of life are not available to everyone. Access isn't a
problem of the future - it's a problem of today and evidence suggests that
this trend of diminishing access will continue if we do not work together to
find viable solutions.
One element of the challenge is
specialty drugs, which are a small fraction of prescriptions but nearly a
third of all costs, and growing very rapidly. These therapies are expensive to
develop, and for every great cure, there are many failed investments; but we
need discussions and solutions that allow us to bear the cost of development
fairly and reasonably and not have it threaten access to the very people the
drugs are developed for. Hepatitis C and the new drugs available to treat the
disease shine a light on this issue. We have the potential to cure the disease
however, tight state Medicaid budgets struggle to provide broad access to this
cure.
Generic medications have been one
element of this affordability strategy. Each year, the use of FDA-approved
generics save the country $200 billion. However, in some instances, the prices
of generics available for years have increased substantially without any
additional health benefits for patients. This is a concern across the country,
but particularly for consumers on fixed incomes. We need better insights
and visibility as generic medication prices begin to grow.
So how do we make sure our
beneficiaries have access to the best quality medications so we can keep them
healthier? And how can we do this not only today but into the
future - when more people are gaining coverage by aging into
Medicare or under expanded Medicaid - and the pipeline of high cost
specialty drugs continues to grow?
I have had a number of conversations
recently with innovative manufacturers, health plans, patients, and other
stakeholders in this room and out of it, and I can report, as you're hearing
today, a great interest in finding a strategy which gives broader
access to the innovations being created today and in the future. The right
ideas will in turn create bigger markets for innovators and should serve to
create a more predictable climate for investors to support the innovation we
need. We shouldn't have to choose between innovation and access. As a country
we can work together to find strategies to achieve both.
***
Understanding how to approach this
challenge begins with an open dialogue, a shared set of facts and a
search for the best ideas. Different interests may have different views
but we believe there are a common set of objectives we are working
towards.
We believe patients,
manufacturers, providers, insurers and government all share a common goal
to foster a health care system that leads in innovation, delivers affordable,
high quality medicines, and results in healthier people with access to the care
they need.
As we continue to engage with many
of you, my hope is that we continue to hear
real, practical ideas to maintaining innovation while
finding ways to improve access. We are particularly interested in
continuing to hear your ideas across a few important domains.
***
The first is the domain
of value and value-based payments. Our scorecard for customers and
taxpayers can be summed up by the word value. As a purchaser, a logical
question to start with is are we getting good value for the consumers and
taxpayers dollar? Over the last year, we at CMS have moved strategically towards
rewarding physicians, hospitals and other care providers who deliver better
health care, spend our money more wisely and most importantly, keep people
healthier. We have committed that within the next two years, paying
through these alternative payment models will be the dominant way we reimburse
for care. We've done this in close partnership with care providers,
experimenting with new models, taking feedback, improving the models and
publishing the results transparently.
And just as we pay for quality in
care delivery, how should we create incentives which take the entire health and
outcomes for an individual into account? How do we create rewards
for therapies that reduce disease, keep people in their homes and out
of hospitals or other institutions and control chronic diseases
while improving outcomes? What's the best way to pay for targeted
therapies when they work for some patients, but not others? How do we
think in terms of episodes of effective treatment, rather than just the cost of
a pill? This dialogue on value we are having today presents an important
opportunity to understand how to invest in innovation and improve
access. We need to learn more.
***
The second domain is
in information transparency and availability. We don't have a common understanding
of the data and know that drug costs are often unclear. There are list
prices, wholesale prices, average wholesale prices, rebates, supplemental
rebates, markups from hospitals, markups for physicians, different costs when a
drug is administered outpatient than inpatient, formulary tiers, mail order
prices, biosimilars prices and of course patent expirations, compounds,
samples, and many other ways that end up obscuring the reality of the
price paid, who pays it, and how all of it influences treatment decisions. And
most of that information is not available or well-understood by the public,
making it hard to have confidence that we have a truly functional and
transparent market that delivers good value for patients.
The truth is we don't have enough
public information on the effectiveness of new drugs in the real world or about
prices and rebate structures. As a result, anecdotes-- whether about pervasive
generic price increases or other things-- draw significant attention. And
in order to avoid reacting to misinformation, we must increase the transparency
of the information available about drug pricing and value.
How do we make public the
information that will allow us to understand prices and value? How do we
educate the public on the cost of these medicines, the value chain, the
measures of effectiveness? How do we create visibility into price
increase? How do we help the public have an informed debate over the size of
Federal and State expenditures or the unit costs or patient value created? We
want ideas on the best way to take steps to improve transparency.
***
The third
domain is incentives and hurdles. We have to understand what has
gotten us here in order to make progress. Are there rules and regulations
across government getting in the way of affordability and access? What should
we look at across CMS, other parts of HHS, or other areas that will allow us to
improve affordability? What other hurdles are there? Also what incentives are
inadvertently driving up costs? What could be changed about how incentives are
created for physicians, hospitals, and pharmacies?
In each of these domains--
value-based purchasing, transparency and barriers and incentives-- and
others, we are committed to taking in all ideas and working collaboratively. We
know everyone won't always agree on every step, but we plan to take these
issues on transparently and with public input so we can move forward,
learn and improve. In an effort to work towards solutions that will address the
challenges spoken about today and uphold our obligations, we ask everyone in
the room to use this forum as a way to better understand the positive role we
can all play in this process and consider how we all can contribute to
constructive solutions over the coming years.
***
I hope that today's public dialogue
kicks off a commitment to listening and working together to advance ideas that
improve access, affordability and innovation so all Americans have access to
the breakthroughs ahead. There are no easy answers to these multifaceted
challenges, but there is a significant benefit - to all of us – of working
together to find a solution. We want to work together to explore the best
ideas, and we are committed to making progress as the public is
relying on our ability to find solutions.
We look forward to working with you
in the weeks and months ahead. Thank you.
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