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AMA: Fundamentals of drug pricing must be altered

To address and improve the current prescription drug pricing issue in the U.S. market, drugs should be priced based on value, thereby reducing costs without compromising patient outcomes and access, according to a new policy adopted by the AMA.

“The new AMA policy acknowledges the carte blanche approach to drug pricing needs to change to align with the health system’s drive for high-quality care based on value,” Andrew W. Gurman, MD, president of the AMA, said in a press release. “This transformation should support drug prices based on overall benefit to patients compared to alternatives for treating the same condition. We need to have the full picture to assess a drug’s true value to patients and the health care system.”

The new policy aims to lessen the burden of increasing pharmaceutical spending rates by altering drug prices to reflect an optimal balance of benefits and costs. Since 2011, there has been a 98.2% rise in brand name drug prices within the U.S. According to Express Scripts, in 2015 alone, the average price of brand-name drugs increased by 16.2%. The AMA notes that higher health insurance premiums, as well as increases in cost-sharing requirements, have often been used to justify the prices of prescription drugs. IMS Institute for Healthcare Informatics reported a 25% increase in out-of-pocket expenses for brand-name drugs for patients with commercial health insurance since 2010. Furthermore, high prescription drug prices are a main health care concern for many people living in the U.S., according to a Kaiser Health Tracking Poll. 

AMA outlines essential principles for value-based pharmaceutical prices. These prices:

• should be determined by objective, independent entities;
• should be evidence-based;
• should consider valid and reliable data from clinical trials, clinical data registries and comparative effectiveness research;
• should consider vigorous short- and long-term clinical outcome measures; and
• should allow for patient variation and physician discretion.

In addition, AMA outlines principles regarding processes to regulate value-based pharmaceuticals prices. These processes:

• must be transparent and easily accessible to physicians and patients;
• must allow practicing physicians and researchers to be a central and significant role;
• should restrict administrative burdens on physicians and patients;
• should ensure patient affordability by considering affordability criteria; and
• should limit system-wide budgetary impact.

“The AMA principles emphasize that efforts to price prescription drugs based on value should ultimately benefit patients and the health care system without stifling innovation in the pharmaceutical industry,” Gurman said in the release. “These initiatives should aim to ensure patient access to necessary prescription drugs and allow for patient variation and physician discretion. In addition, such initiatives should limit administrative burdens on physician practices and patients, and be evidence-based, transparent, objective and involve the input of practicing physicians and researchers.”

The new policy stresses that a drug’s public health value should be considered by pharmaceutical pricing mechanisms. In addition, the AMA promotes direct purchasing arrangements of drugs for diseases, such as hepatitis C, that uniquely threaten public health to guarantee a larger market with lower drug prices.

Disclosure: Healio.com/InternalMedicine was unable to confirm any relevant financial disclosures at the time of publication.

For more information:

https://www.ama-assn.org/ama-supports-changing-fundamentals-drug-pricing