 We're now going to transition to our final panel of the day and I'll encourage you guys to come on up Looking forward a value-based approach to drug pricing moderated by Kaiser Permanente's Polly Webster I'll introduce Polly and let her introduce the panelists Polly is a senior policy adviser in the government relations department at Kaiser Permanente She provides counsel and legislative support on federal and state policy issues focusing on drug pricing food and drug administration Pharmacy benefits and reimbursement Prior to joining KP she was the health policy director for Congresswoman Diana to get where she played an instrumental role in drafting and passing the 21st century's cure act and other laws She's also held health policy positions on the Senate committee on finance and in the office of former senator Jay Rock of Heller So Polly. Oh, do we need a sorry? You're confusing me Okay, pending get two more chairs up there I wasn't counting Yes, why don't you do that? Okay? We're really really happy to see such a great turnout and also such a broad range of perspectives Represented, you know, I think if one thing is clear from our technical panels today These are daunting challenges linking payments and prices to value In the pharmaceutical space is definitely among the more vexing health policy challenges that I think that we face today And so bringing these perspectives together is really important. So we really appreciate that you're here So our panel is tasked with looking forward and starting to try to unpack some of the solutions and things that Policymakers should consider as they're trying to address these challenges Which is no small task in itself And I'll steal from what Maisha said earlier and that I have the good fortune of being the moderator of this panel instead of The one who needs to come up with these solutions So I'm very happy to have four experts with us today Who are going to take on that challenge? But before they come up? I think I'll just note That we're entering an era where million dollar plus drugs could become more commonplace I think drugs that cost hundreds of thousands of dollars particularly in the specialty area are already becoming quite common So while it would be just given how challenging this topic is Easier for everybody to kind of throw up their hands and say, you know, this is too big. We can't take it on I think we're really in a place where you know, the issue is being forced by what's going on in the external environment So again, we're looking forward to partnering with all of you moving forward and we're hoping to kick off that conversation today By hearing from our expert panel who I'll introduce once I get on the stage Great. Thanks for bearing with us with the logistics All right, so today we are very privileged to have with us on our expert panel Hami Tourson who is the director of the National Governors Association Center for best practices health division We also have Lee Purvis who's the director of health services research at AARP's Public Policy Institute We have Barg Tolenti who is the executive vice president of advocacy for the National Multiple Sclerosis Society And then Sean Dixon who is the director of health policy at West Health Policy Center So with that I will turn it over to Hami for her presentation Good afternoon everybody. Well, this is the last panel of the day. I hope you stay engaged We are going to try to continue to provide you with some interesting information. First of all I just want to say thank you for having me here today. I have been here since the morning And I think it's been an incredibly important discussion I wanted to just know I direct health at the National Governors Association But I work for governors who think about everything And so of all the things they have to work on health care itself is very complicated and pharmaceuticals is a subset Within a complicated world that is even more complicated So when we think about you know, what are the states doing both at the executive branch and also the legislative branch They're doing a lot, but the leaders are continuing to face a lot of challenges Just even understanding the system and where to go next One of the things I want to just let you know For those of you who are not familiar with our organization There are two parts to the National Governors Association We are completely bipartisan our current chair is Governor Hogan from Maryland and our vice chair is governor Cuomo from New York And we really believe in bipartisanship and bringing folks together Which I think in sort of the world that we live today is somewhat unique and I think really important to finding solutions There are two parts to NGA NGA advocacy is the part of the organization that is the lobbying arm that represents the governor's interest to Congress and the Administration and the center for best practices is where I sit where we really work with Governors and their senior leaders to identify best practices learn Learn from one another at the state level and bring those ideas to the advocacy side where they can then be shared with Congress so I wanted to just explain that because there are a couple things I'm going to talk about today where I think that's important So a couple of things on pharmaceuticals One thing I've been at NGA for five years and I've been working on Medicaid for about 20 One of the things that I have observed over the past number of years at the state level is Governors have historically been focused on Medicaid budgets budgets for state employees We heard about earlier today states have limited budgets. They can only do so much Every year because they actually have to work on balancing their budgets every year And one of the things that has been a concern is health care costs more generally in Medicaid and state employees Not just pharmaceuticals other costs as well. One thing that has been a trend I would say in the pen and more recently is thinking about those costs even outside Medicaid and state employees Governors are hearing from their constituents about the affordability of health care more broadly The challenges for actually getting the care that they need and it has become a topic of great interest and because of that Both in the Center for Best Practices, we've invested I would say the past two years a lot of time thinking about Health care costs more broadly and pharmaceuticals specifically and on our advocacy side the governors have decided to come together to Issue a set of prior principles to Congress and the administration I just wanted to share those with you because I think it's telling That that was able to be done with when you do when they issue principles They have to agree to do that and so governors collectively have to agree and the topic as hard as this It's it's quite an accomplishment that that was able to be done. So just a couple things to Highlight for what's in those principles One thing there's their buckets. There's a lot of details underneath if you're interested They're on the nj website But one of the buckets was Congress and the administration should foster greater transparency around pricing Congress should enhance market competition through accelerated market entry entry of safe and effective generics and by similars Congress and the administration should support state flexibility and invest in strengthening state purchasing power to address pharmaceutical costs across programs And the last one is the administration should take steps to ensure best practices and lessons learned from innovative purchasing strategies at the federal and state level are Shared now those are the top level and underneath each of those there's a lot more detail in those recommendations But what I wanted to highlight for you because it's really relevant to the discussion Was that the fed the states asked that the federal government provides some insight on definition of value? Because at the state level there are questions around. How do we think about this? Where do we go? What are the opportunities that we should really be pursuing so that is definitely I think one thing that is I think very relevant to this conversation Okay One of the things I wanted to also talk about is what are states doing we heard? I think some really good information about Louisiana the subscription model as well as Oklahoma, which was a great presentation Just you know Kaiser Health News just reported 33 states have enacted 51 laws That's a lot of state activity And there it's and it's a priority area and that's why you're seeing so much of that activity and it's across the number And it's not just the laws there's other action that are that's related to this that's at the executive level as well But there is across all of these different topics I'm not going to talk about all of them in great detail, but I wanted to highlight a few for you one is definitely around transparency and Really that I think transparency has been a very active space both on you know the manufacturers as well as the pharmaceutical benefit managers In states like Vermont, California and Oregon They have initiatives that focused on manufacturers price and bringing light to high-launch prices and price increases and requiring justification and Then in regards to pharmacy benefit managers a number of states I'm not even going to mention them all have taken steps to drive greater transparency for PBMs either by passing laws or implementing through their contracts I think Ohio is an example where it's been in the news a lot After a port was released highlighting the amount of money their PBM earned through spread pricing 225 million in one year and they've since actively moved to eliminate spread pricing and bring bring full Transparency to their contracts and I mentioned that because I think there was an earlier comment about the supply chain So so that's all to say a lot is happening along that road But I do think there's an acknowledgement that this is a starting point as opposed to an end goal and it can form the basis Of what can come next? I want to go back. Sorry. I didn't mean to do that Next I wanted to highlight the Medicaid spending cap. So we didn't really talk much about that so far today It's just one piece of the strategy But in 2017 New York is the example where they established a cap within their global Medicaid cap specifically for pharmaceutical pricing and They established a series of steps and policies that are required to spending exceeds the cap Drug products that contribute to spending in excess of the cap are identified and then manufacturers are invited to the table to negotiate down Their price and if they're unwilling to negotiate the drug is then subject to additional utilization management strategies Transparency requirements and referral to the state's UR board which can then recommend supplemental rebate Now a number of states have asked to learn about New York But a number of states are not really interested in doing the NERC model necessarily It takes a lot of resources a lot of effort and it's a pretty sophisticated model But I just provide you as an example of one state trying what it thinks can work in its state And that's how state work is it has to work for what's happening in the state What's happening in the market and what's happening and really in the res that appeals to the residents in that state? Massachusetts is one state that's implementing a similar model, but it doesn't actually set a cap another topic I want to talk about which we already have is Value-based or outcomes-based purchasing contracts and just a couple of comments that I wanted to make in addition to what we already heard From about Louisiana and Oklahoma I think from our perspective, you know, Michigan and Colorado are coming behind Oklahoma They haven't implemented yet, but they've gotten approval from CMS And I think there are a number of states interested in learning more But some are wary and they're wary because they look at the complications and the administrative costs of doing something like this And they're wondering is it going to be worth it? So I think some of them want to see what's going to happen in those states Which could take a couple years to really actually fully realize and they're sitting back and Doing other things in the meantime. So I just say that to provide that perspective That I think Is across the states Okay, and the last one I wanted to mention is affordability boards That's another strategy that's opening the door to looking at value in states These boards have been passed in law in Maryland and Maine and others. There's a few other states that are looking at the same option So I wanted to conclude because I'm just at the end of my time here and I'm glad to answer more in the q&a that I mean working with the governors and their senior leaders one thing has been clear across all the states no matter what they're doing There really is a belief that all the stakeholders have to come to the table The states are trying a lot of things. They cannot do this alone They need partnership with their manufacturers with the plans with the consumers in their states and also with the federal government So as I mentioned in the beginning, this is a very complex problem with a lot of layers I like to call it an onion. You keep peeling and you you keep going. Um, and then maybe you cry, um, but But they really I think governors are looking for new solutions and looking for partnerships to get there So we'll end they aren't happy to talk more during q&a. Thank you Hi everyone and thank you for having me here today. Um, again, my name is lea pervis I'm with AARP for those of you who aren't familiar with us We are the nation's largest organization representing the needs of americans age 50 plus and their loved ones And also if you haven't heard prescription drugs is kind of a hot topic for us right now So I want to preface everything I say next by saying AARP strongly supports moving towards value in the prescription drug space Um, the reason I'm I'm kind of putting that down is because everything that I say after this may call that into question We definitely think this is a great approach, but we think there are a lot of challenges ahead of us in terms of actually implementing it The first of which we've already heard alerted to you several times In on the panels earlier today, which is how do you define value? I get asked this question a lot and my response is always another question How do you define value and I think if we went from table to table? We would not have any a real agreement and that's just us in the room who are actually very engaged on this issue Think about going out to the broader population think about going to providers going to Health plans going to the government going to the state governments There is a possibility that we could never actually reach a consensus on defining value So that is going to be a huge obstacle Um, also, I think we need to be mindful that within this room value is a great buzzword But actually translating it to consumers is hard because what sounds good on paper when we are first talking about it What sounds good to an academic? It becomes a lot more complicated when it's personal It's very easy to say, you know what? We should not have access to this because of this reason when you are not the person trying to access That particular thing and that is something else. It's going to put up some barriers on this Approach I think the other thing to be mindful of and I'm sure some of you've heard me say this before The whole point of this is to get away from status quo and a lot of the work that we've seen on value In particular perhaps some Stakeholders it would like to see status quo continue. Do a very good job of putting up kind of Challenges in front of the people who are doing this work, sarah That make it very hard to make progress and we want to be sure That whatever it is that we do with value actually represents a meaningful change from what we have now In terms of what we AARP would like to see I think it's pretty obvious The u.s. Healthcare system is pretty unique in this in the way that we deliver goods and services And the idea that we're just going to say hey this has value This doesn't without really having a conversation with a variety of different stakeholders It's simply not going to work Americans do not like hearing no when it comes to their healthcare and the idea we would be using value Which again can be very hard to explain to tell people i'm sorry You're not going to have access to that service or that drug is going to be complicated So you want to have that broad conversation and make sure everyone has their chance to weigh in I think the other thing to keep in mind is that this is not just about cost We want evidence to be a part of this conversation value is not simply saying this cost way too much We're not even going to consider it. We do need to consider it. That is the whole point of looking at value And then of course when you are looking at this kind of going back to my previous comments there will be A lot of concerns about access and finding a way to be able to speak to those concerns is going to be incredibly important I think everyone is aware of what happens in this country when a health plan says i'm sorry You are not going to get this drug the patient goes on twitter and they get the drug That is how our healthcare system works right now So you need to be able to alleviate those types of concerns and say, you know The reason you can't have this drug is because it doesn't work like those are the types of conversations We need to be ready to have So it's sitting on our way. I kind of walked through all of that earlier But I think also something that's been alluded to repeatedly is data Yes, we have claims data. Do we have the patient data that we need? Do we have What we need to make a meaningful link between a drug price and a value and I would say right now that is a challenge We can't even get comparative effectiveness in this country Not at a meaningful level at least we have post marketing studies that aren't being completed Those are the types of research the preliminary basic research that we need to move towards value and right now We are not getting it so the idea of moving wholesale to this without fixing that very basic problem would be a challenge I think the other part of this is resources right now. We have some organizations who are working on this idea We have some people who are working very hard on trying to develop definitions and finding ways to develop an outcomes based contract but There's a lot of drugs in this country that people are using and the idea That we're going to have the resources to do all of the research that we need to get to value We need to figure out how we're going to pay for it because right now we have kind of one off which is great It's wonderful. We're moving in the right direction, but on a whole scale meaningful change. We're going to need to figure out how to pay for it So in terms of what else is needed kind of see the previous slide. We do need more research I think there's also it's also very important to take a step back We seem to be running towards this idea of moving towards value with drug pricing And the reality is if you listen to the conversation that took place in this room today I think anyone else would step back and say why on earth are you doing this? There are so many obstacles in front of you So look at the lessons that we can learn from countries that have moved forward before us Think about whether this is something we want to put so much of our resources toward Knowing that it may not be possible to assess value for all prescription drugs Are we going to maybe we should be limiting it to a subset of those very expensive drugs? But thinking about the resources that we're putting towards this And going back to the what I just said is this the best path the idea that this Is the only path forward is something that I think a lot of stakeholders who have a lot of money at stake Think is a great way to kind of push things down the line The reality is getting to value-based pricing for drugs or purchasing for drugs Is a fair distance in the future and the people that I represent need change now So yes, this is a great thing to be pursuing, but let's not pursue it to the exclusion of all else And kind of building on that I think it's also important to keep in mind that a drug can be valuable and still not affordable So again thinking through other solutions that is incredibly important in this market. There are a lot of different places This is not something that's going to be won on the basis of value And then finally again been mentioned a lot Pricing itself Needs to be addressed. We can't just build on what is obviously a very broken system So going back to the other solutions, we need to make sure that whatever we're doing Ensures that those prices are justified. Thank you Hi everyone. I'm Barry Tlinti and I'm with the national multiple sclerosis society. So MS has already come up a few times today So I wanted to ground everyone and sort of why does it keep entering the conversation And what is multiple sclerosis? So it's a chronic often disabling disease And I think it's important to note that people with MS are typically diagnosed between the ages of 20 and 50 So why is this important? Right now while we're fortunate to have a number of different medications for the relapsing forms of MS Almost all of these drugs mean that someone takes them every year for the rest of their life And when you see the prices of those you'll start to understand why MS is so often highlighted in these conversations about value price and access So most people are diagnosed with the relapsing forms of MS and we have more than 15 treatments that are available for them And what we know and we're always learning Is that early and ongoing treatment is the best way to slow the progression of the disease and prevent the accumulation of disability So that means if we want to have the value conversation about what does value mean from medications? And what does value mean for someone with a lifelong illness? We have to do everything we can to prevent that accumulation of disability Not only from the individual perspective But from the cost that it's bringing to the health system and to that individual and society overall So what are the prices of the MS medications? And so What you're looking at was the first version of this was done in 2015 in The neurology journal by researchers from Oregon health sciences university And we work with them to update it every year, but to ground you The x-axis is the number of years starting in 1993 when the first ms disease modifying treatment came to market And then the y-axis is the price So it's a little hard to see though You can certainly see the trajectory that we have no matter whether you can see the numbers But the first medication came in 1993. It was priced at $11,500 That same medication today if you follow that light green line all the way up is more than $98,000 So Did that medication bring value at $11,500? Maybe maybe it was underpriced Is it value at $98,000 probably not like we heard from other medications It's the exact same medication that came to market in 1993 Still used today and it's gone from 11,000 to 98 And at every step along the way We heard earlier about shadow pricing, but we certainly see that in ms So we have the original treatments the next generation which brought higher efficacy But then the lower efficacy treatments raised their prices also to keep up And we still have ms treatments that are being approved all of the time In fact, T were approved earlier this year at the end of February and March And there's many others that are in the pipeline And so we're not expecting this trajectory to change much anytime soon unless we all take action around that So when we talk about value, what is it that we should be considering and assessing? So there's the price But it has to be about more than just cost like we heard about already And we have to think about the society value and the system value And you know, we've talked about this already today, but We're all here because we want people who need the medications to get them and stay as healthy as possible That also means that we need to think about what is it that people want from a medication? And what is it that people need from a medication that's going to make them stay adherent to that treatment regimen? And that needs to be part of the value conversation also when we're having these value assessments and looking at it We have to make sure that we're thinking about the end user of the product Which often gets lost in our system with we focus so much on the supply chain Sometimes we lose sight of the actual patient So we have to make sure that we're incorporating patient-centered factors into assessing value What's important to that patient? What are they looking for from a treatment? And sometimes I hear well, that's too hard to do because it's so individual But there's really much more similarities than differences when you take the time to ask people What it is that they're looking for? and we did that along with icer in the ms class review in 2017 sarah And so the ms coalition worked with icer to do The first time that icer engaged in a large-scale patient survey and that data was incorporated into The ms class review And so the first two items that you see that people rated at 94 percent when asked What's important to you in choosing a disease modifying treatment? So delaying disability and preventing relapse. That's what studied in a clinical trial, right? So that's what people are told to look for that's what people are told is important But when you actually get to what is it that they're thinking about on their own? 90 want to continue working and continue their normal activities. It's not rocket science But we have to pay attention to what it is that people want and what they need to take their medications And many of the things that are listed underneath can get wrapped up into that So dosing frequency root of administration side effects All of those things are actually part of someone being able to continue working And continuing their normal activities if they take their medication and then they wind up in bed for the next two days They're not continuing their normal activities if they can't take a job that requires travel Because they wouldn't be able to keep to their medication schedule Then they're not able to keep working and keep within their normal activities And many many people with ms prematurely leave the workforce because of side effects of the disease Because it's too hard to continue to navigate the health care system and live with a lifelong chronic illness like ms And that's bringing other societal costs when people prematurely leave the workforce. They're going on disability And so there's a societal cost to that There's a health care system cost when people enter medicare before the age of 65 because they're on disability So these are all the things that need to somehow get incorporated Into the value assessments that we're doing and when we're thinking about value So additional considerations for us to think about You know, we do have we're fortunate in ms to have so many medications on the market And we're starting now to enter a period of time where we're going to have Multiple medications within a single mechanism of action So how do we determine value on that? Maybe there's differences in the side effect in the safety profile Maybe that brings higher level of value But then we have to ask the question about whether the research and development investment is the same when we're looking at something That's a single mechanism of action. What's the r&d that was required to get us there? And that brings us to that larger question of what's innovation Are we satisfied with innovation? That's incremental and multiple products that do the same or very similar things Or are we going for the curative model of innovation? And what does that look like? We've had a lot of conversation today also about Alternative payment models and so we need to think about what that looks like we've talked about gene therapy And how that's a one-time A one-time medication That's curative But we also have other Different dosing schedules that need to be considered as we're looking at alternative payment models and thinking about value So within just ms people take a medication just twice a year That means twice a year. They're getting hit with Really large health care bills and health care costs There's some medications that are only for one week or a month for the entire year again. That means 60,000 to 90 thousand dollars worth of medication costs hits you in one week And that goes back to that. Maybe there's value, but it's not affordable for people All right. Good afternoon. My name is Sean Dixon. I'm director of health policy at the west health policy center The west health family of institutions is an independent non-partisan non-profit Organization focused on lowering health care costs to enable successful aging And our drug spending portfolio though is focused on lowering drug costs for all americans with the recognition that they Have an outsized effect on those who are aging So today I want to start by thinking about the comment that len made this morning about why are we paying The fullest amount of value when there's a price that that we could pay that's lower and I think we need to think about how The work that we've done around value-based care has somehow transitioned into value-based pricing for pharmaceuticals Value-based care is about finding the highest quality Intervention at the lowest possible cost reducing spending while increasing the quality of care And we talk about value-based pricing We take about paying all of that value forward rather than trying to save money and achieve that same level of value And I want to think about what are the alternatives To value that we can use to set prices initially and then default back to that value or have those prices rebutted by value If we so determine So to do that I want to talk a little about the theory of value Talk a little bit value in context look at a specific example and think into this idea of using value as a backstop As value rebuts a lower price rather than value as a way to save money from a much higher price So one question is why would pricing drugs at their value save us money, right? We won't think that in a market we should be paying more than something is worth And so that means two things it means either that the prices we're paying are at some other measure of value, right? Something above a clinical set of values that we've put forward Or that our insurance system requires payers to pay more than value Yet they're still willing to participate in this market because it remains profitable And so it's because of this that I get a little skeptical that we're going to see significant savings just from using Value-based pricing strategies alone because we wouldn't expect value to be significantly different than what we're paying Because otherwise why would we be paying for it? If we could say no, why would we do that? And if it is the case that we're paying for something instead of saying no Then maybe it's not a pricing intervention, but it is a utilization management intervention that helps us get to that point So apologies to all the economists out there simple and otherwise, but I'm going to take a very simple economic approach here So here's our standard A chart of how we get monopoly pricing and what prices are available So we have our demand curve our marginal revenue curve and our marginal cost curve And so monopoly situation we set prices where marginal revenue intersects marginal cost But the manufacturer should be willing to accept a price all the way down to the intersection of marginal cost and the demand curve And that difference is all the value that is retained by the monopolist, right? And this is when we say we give all of the value that's something people have raised today when we pay at the utmost value It's all being retained by the manufacturer But we have this area where the manufacturer should be willing to accept a price in that they might not want that price It would be lower profits But it would still be possible for them to engage and continue in this market And so what I want to do is how can we think about ways to have prices at the lower part of that revenue And allow a manufacturer to demonstrate why we should go all the way up to that highest point and think about the situations in which we'd want that So one example of this is the hepatitis C market, right? When the curative treatments came out, ICER helped establish that, yes, these were incredibly valuable treatments And the pricing was consistent with the value that they were delivering But in a very short amount of time, those prices tumbled precipitously We're down to about $20,000, perhaps, after a very short amount of time About $20,000 perhaps after some of these discounts And the question here is, what would happen if we were in a world where we paid the full value of these drugs? If we had locked ourselves into a five-year or ten-year contract saying, we will use value as a cap And we will pay you that amount the entire time when the manufacturer is actually willing to accept a much lower price once there was competition in the market So as we're thinking about ways to maximize savings to be able to do all the other things we want to do, all the budget tradeoffs that Peter talked about this morning We want to think about ways to set prices that are at the lower bound of what the manufacturer will accept And then think about cases in which a higher value-based price is justified So to do that, we need to think about where all of these prices land Our current model in thinking about value-based pricing, reducing the amount we're spending It presumes that the prices are being set at some higher profit-maximizing price And we want to negotiate down to the value of the drug But there could be prices that are between the marginal cost of that drug taking into account failures and innovation, the average total cost of producing a drug That are still below value, that would still yield a manufacturer profit And so what we're thinking about is ways that we can establish a lower price And that helps with what Chris was talking about earlier Because it requires the manufacturer to have enough evidence to demonstrate value and rebut that starting point We want to negotiate up from a reference point rather than down from that profit-maximizing price So what are some ways to do that? So we could start with a cost-plus model, that was something that I think Mark talked a little bit about this morning Other ways that we could think about setting prices We could use an international reference price that's been tossed around a lot lately We could think about creating domestic reference prices where we look at other prices for drugs in the therapeutic area Or drugs of similar mechanisms of action And give some sort of presumed premium for what we think a new drug in that area would do And when we do that, once we set that price to start with Then we say manufacturers incumbent upon you to provide the data to show why a higher price is justified And this could encourage manufacturers to have higher quality data at the time a drug is approved and released To facilitate those studies going forward This is a bit in contrast to the German model that Amit talked about earlier Where you have a year of sort of monopoly pricing and then we determine a lower price you should have In this model, we would start with a lower price and then say manufacturer as soon as you can justify a higher price And if we really think it is justified, then we can move back up to it This is similar to what Massachusetts has been talking about in its Medicaid program for drugs with limited evidence at the time of launch Why should we be covering those at the manufacturer's monopolist price at launch when there isn't even enough data to justify it By switching this and starting with a lower price, we can get the manufacturer to use value to justify the higher price So in conclusion for this, what I want us to recognize is that we should always be thinking about value as the maximum payment We wouldn't ever want to pay more than something is worth And in part of that is why do we think we are paying more than something is worth right now Is it because we don't have the tools? Is it because it's too expensive to figure out what it's worth? Is it because there's other types of value, value of a patient's hope or the cost of having to get them to switch to something else That makes it worthwhile to pay more than that And see if there are areas where we can intervene to ensure that we're not paying more than value We shouldn't be forced to pay more above it and what in our payment systems allows that to happen The second is we want to instead of having payers use value to lower costs We want manufacturers to use value to justify higher costs Let's start with a negotiation or a pricing framework at a lower price point and move up to value Rather than allowing a higher price point to exist that we try and rebut with value Let's use value as a justificatory higher price rather than a discount strategy And then finally the hepatitis C example shows us that when we're creating policies Because any value-based policy that's done on a national level for Medicare and Medicaid Is going to involve some trade-offs and some of those might be We'll lock ourselves into the value-based price for a certain amount of time Just like we do with FDA exclusivity We don't want to lock ourselves into paying the highest possible price for a drug That cap that should be value when commercial pressures would have brought it down during that period So we need to recognize that there are prices below value that are still profitable for manufacturers And make sure we're taking all the steps possible to bring prices down there Rather than go straight to the highest possible price Thank you Great, thank you so much to all of our panelists for helping us navigate the waters On these really difficult questions today I don't know about the rest of you but I'm really overwhelmed with how much I've learned today And how to kind of translate this into actionable policy ideas over the near term and the long term So I think I'll start off with a couple of broader framing questions And then I encourage folks in the audience to proceed to the microphones If any of you have questions that you'd like to ask our panelists But as we all know, the drug pricing debate has evolved very significantly over the past couple of years And we're seeing all different types of policy ideas being thrown out right now Some dealing with coverage and reimbursement, a few dealing with patents A number dealing with price increases and things of that nature But it still feels like we're only just now scratching the surface On policy ideas that raise questions about whether prices themselves are rational Or reflect various definitions of value And so my first question for all of you is are policy makers at the state and federal level Really ready to take on this conversations And what are you hearing when you go and you talk to staffers and folks on Capitol Hill And in state governments about their level of interest in this topic As well as some of the concerns they might have about trying to address it Sure, yeah So I'm happy to talk from the state level, and I mentioned this a little bit in my comment So I just came back from a three day, and Marie was there A three day meeting with 36 states and four territories Mostly represented by their cabinet secretaries or their senior governor's advisor on health And in talking to all of those folks Clearly an interest in continuing to think about and do something on this topic And I think that's a reflection of number one, what they're hearing from the people in their state Their concern about their state budgets I will tell you, I think the thing that's coming up the most now is the first in class drug with no competition And Medicaid's inability, and you know, I think everyone appreciates the innovation They understand these could be incredibly impactful treatments for people I think the challenge is how do we afford that for everybody when we have a limited budget So both, you know, on the Medicaid side and the state employees So I think that's also a driving force in the conversation And I think that's apparent by the 33 states with 51 laws on their books of what they're trying to do I think what's interesting at the state level is the variability across where states are And what they want to do and what they're trying I also think, and that's reflected in our principles, that there's an interest in Congress to take a role as well Because they have the bigger levers So I also think I'll just be very frank, speaking for myself and not for NGA I think there's some uncertainty around whether Congress will actually be able to get anything done And states are the laboratories of democracy And they will continue to try to do things regardless of whether there's federal action or not I would say there's definitely interest in kind of getting to the underlying price Both at the state and the federal level, and I think that's borne out by the transparency legislation And what I call the transparency on steroids, which is the affordability review boards There really does seem to be a recognition that there isn't a whole lot to justify the prices That these states and the federal government are being asked to pay And they are starting to ask kind of those very basic questions of how did you reach this price Can you justify it? It may not be as nuanced as looking at value But I think there's definitely a willingness to try to start to get an idea of how these products have been priced I think there's a lot of interest, I think, as we all know, these are really hard, complicated issues And I think that's where we've seen some of the sticking points You know, we've had a lot of movement in the states And in part that's because there's the pressure from state budgets But there's also this willingness at the state level to take one concept And move it forward and see what happens and adjust from there You know, in Congress we try and say, we try and do everything at once Where it has to be the biggest bill you can think of And we tie ourselves in knots making it so complicated And making everyone have a piece of it that everyone's chiming in and it never moves forward So I think that's why we're seeing some interesting things happen at this state level You know, certainly we see that we have to start asking questions about price And we've certainly had a lot of conversations with members of Congress that are very interested in understanding the price increases And how that's part of the value conversation and how things are priced You know, I think we all have to sort of dig in and say we have to keep at it And keep at it for a long time and try and do a few pieces at once I think a lot of the attention to value from policymakers is an attempt to get leverage in their conversations with pharmaceutical manufacturers The way it works, either from a payer, a commercial insurer, or from a Medicaid program or the Medicare program If they're ever trying to negotiate a price, they're always starting from something that the manufacturer gives them And trying to find ways to justify why that price shouldn't be so high And so value is a tool to arm them with something going into the negotiation But I don't want value to be our only tool, right? We've seen how other countries have set prices that are related to other drugs in the market, the German deference to a reference price We've seen the growth of an interest in international reference pricing as another mechanism Where policymakers are trying to find something to go into that negotiation with And so value needs to be in our toolkit, but we need to have a broad set of negotiation tools and techniques That payers can come forward with two manufacturers and say, no, you negotiate with us This is the price that we think is fair. We're not going to just negotiate down from what you propose And so value is one of those, but I don't want value to be the starting point every time Because that means we're transferring all of that benefit to the manufacturer in terms of price Great. I think another question that's kind of tying in different themes throughout today Is that it really, when you're looking at this issue on kind of a macro level It feels so huge and in so many ways so aspirational Which raises the question about, well, what can we start chipping away at now Or in the relative near term to start working towards some of the more aspirational goals That we all have in terms of linking pricing and payment to value Or rational justifications and things of that nature So Lee mentioned pricing transparency and price justifications as one step I think a number of folks mentioned today some challenges And generating sufficient evidence through the FDA approval process Particularly expedited reviews, reimbursement barriers such as best price And average sales price were raised What lessons can we learn from other countries I'm wondering if any of you will have thoughts about potential starting points That policymakers should consider that would be meaningful to advancing the dialogue in this space Well, I think the National MS Society released recommendations three years ago now That really looked across the entire prescription drug supply chain And we said that medications have to be affordable And the process for getting them has to be simple and transparent And I think we need to have that transparency across every aspect of the supply chain And I think part of why we struggle with what the answers are Is because it's so siloed and so opaque across the different areas And so it's been too easy for different stakeholders across the supply chain To sort of protect what they have and just point the fingers at someone else If we can shine transparency across all of it Then we can have better, more informed conversations to move towards meaningful solutions I think we've heard enough about the data limitations that are kind of challenging Moving forward on this, so I will leave that alone But one aspect of research that I think is kind of lacking Is when you do try to go out there and look at the values purchasing agreements That are out there and figure out whether they're working, whether they're reducing spending Whether they're improving quality, there's not a whole lot there And I think finding a way to get that sort of information Will inform our moving forward Kind of going back to my, is this the best approach You know, if we're looking at value on the back end Maybe this is something that she may move to the front end Before the drug gets on the market and make sure that the proper incentives are in place To make sure the drugs are valuable before we have to worry about telling consumers That they cannot have access to them So I think that should be part of the conversation as well I think, you know, we can't talk about this just in terms of pricing and reimbursement We have to think about how we get more competition in the market And so part of that is going to have to involve reforms to the amount of exclusivity we have Either through changes to the length of patents in this area The ability to continue patenting But we need to have more tools for commercial processes that we have shown To bring down drug prices in some case to be more effective overall I would just end, again I'd refer you back to the NJ website To really understand all the recommendations that we have But I would agree, one of the recommendations we have Is about how do we bring more competition to the market Because that is something beyond what states can regulate The other piece about transparency Each state is doing its own set of transparency rules And I think probably burdensome for some of the manufacturers and plans out there But if there was sort of a federal initiative on that It would have a more uniform basis, so that's another thing we recommended We also asked for more innovation within Medicaid And yes, Medicaid has best price, which has been vital to the program It also has drug rebates, which has been vital to the program as well But it continues to have to cover all the drugs And so there was a request, for example, for those fast-track drugs For a select number of those, if there was an ability for states to have Either an additional rebate or to be able to exclude from their formulary That would be an example of where states could get more time Until there was more evidence to understand all the indications For which something could be applicable So that's definitely a thing in there as well Great, and I'll note that we have a little bit under eight minutes left for questioning So if audience members want to proceed to the microphones Now we're happy to take audience questions I'm not meaning to dominate this But in the interim, we've also heard a lot of conversations today About what types of data and what types of metrics are needed In order to do this effectively Whether it's implementing some sort of value-based contract Or just even assessing the value of drugs And some of the techniques that ICER has used there But clearly there's been a lot of controversy around things like qualities There are a lot of questions about what types of gaps in information there are Particularly if products are coming to market on an expedited basis And are not completing post-market reviews We hear at Kaiser Permanente on a pretty regular basis From our subject matter experts that that leaves us in a difficult situation A lot of the time because we aren't sure how drugs are going to perform In our patients So I'm wondering if any of you all have thoughts about What metrics we should consider and where the gaps are And I think Barry, I might start with you Since you mentioned the importance of ensuring that the patient voice And matters that are important to patients are included in these assessments Yeah, I think we talked about some of those things before But I think when we're looking at data too We have to have conversations about how willing are we And how do we accept new data as it becomes available And so we have this over reliance in my opinion On randomized controlled clinical trial data Which is a snapshot in time and it gets us started But we learn so much more once a product is on the market And how do we make sure that that's getting accounted for That as we're able to follow people over time In a lifelong illness like MS or some others That we're accounting for things that we're learning about that And I think it's very circular And we have to go back to the FDA and open up the data that's considered there And we have to make sure that manufacturers have a willingness To look at other information in clinical trials That's beyond just the end points that the FDA is focused on for approval But I think right now we're in this place where we say Well we can't do the value assessment on that over here Because it's not kind of elected over there And then the manufacturers say Well we can't spend even more money over there Because we get criticized on praise and we know the FDA is not going to look at it So we all have to sort of draw the line in the sand somewhere And say everyone needs to start moving on this I could jump in really quickly on that too I think this is my own personal soapbox so I can miss the opportunity I think the one thing that hopefully everyone can agree on Is including comparative effectiveness research I think knowing whether a drug is better than existing drugs Really should be just a very low marker in terms of looking at value So having that information available to us I think is really important And I also wanted to kind of put my flag out there again In terms of collecting the data and the types of data That ultimately becomes included in these types of valuations It's very easy for these things to collapse under their own weight If you just keep saying what about this, what about this, what about this And we need to be careful to kind of hold a line In terms of not trying to make perfect any of good Hi my name is Sarah Chedakwitz with Kaiser Permanente One question that I was thinking about as we were kind of having this dialogue Many of you on stage have constituents Whether it's the community of individuals who identify as having MS Or who are members of ARP Or who are parts, you know, state leaders Or, you know, West Health working with many of the other Kind of philanthropic groups that it works with That I'm sure you're holding in mind during the conversation today And if there's one thing that you would want to be able to share With your constituents about the conversation today One thing that you really think that they should know Or that you learned that you would want to convey to them What would it be? And actually as a follow-up question why specifically for that community So I'm actually going to flip that And not answer your question because I'm up here so I get to do that And I want to share with all of you the story of Diane Who Diane is a woman living with MS She was diagnosed before the first treatments were available She, many of you probably don't know But when that first MS treatment became available There were concerns about production And there was actually a lottery that people had to enter To be able to get the medication So we've come a long way, we have other problems today We've come a long way from there Diane was on that medication for more than 20 years Probably closer to 25 or 30 And she had good insurance, she was a teacher She was able to afford copays And then that started going up over time And then Diane transitioned to Medicare And was sort of hit with life as a Medicare beneficiary Without a cap on out-of-pocket costs And Diane made the really difficult decision To stop taking her disease modifying treatment Because she could not bear the financial burden That she was bringing to her and her husband's retirement And to her family And so she stopped taking her medication And that is the reality of what life is like For people out there Living with these conditions Trying to navigate and manage through it While we sort of have the luxury Of having this academic conversation about value I would go back to several steps Prior to frankly this conversation And the very basics with our members And the sense of helping them understand That this is an issue that affects them Regardless of whether they're a patient And that's something we've actually been working very hard on In the context of our campaign On this issue that's ongoing Helping people understand that these prices And the steps that are needed to try to help bring them down Are necessary because you personally are affected by this Regardless of whether you are taking a drug yourself And I would say to the governors and their senior leaders That there are a lot of thinkers in this space That are creative, coming up with different ideas And so to continue to try to incorporate Some of those, that thinking Across all the different stakeholders In what they're trying to do in their state And not lose momentum The nice part about being a part of an independent organization Is we don't necessarily have a defined constitution You can say what you want But I think when we focus on lowering healthcare costs For all Americans we really are trying to ensure That we're not doing that in problematic ways And so one of the things that I think Is really important to stress for everybody in this space Is the difference between the cost of a drug And the cost sharing for the drug And why we even have cost sharing in the first place And we've talked several times today About the problem with the skin in the game metaphor That it presumes that people can choose whether or not They need a treatment rather than having been guided By medical decision making And so what we need to do is get away from Solutions to reduce drug spending That rely on the cost sharing system altogether And really focus on giving more power To reduce cost at the upstream level Rather than having people opt out on their own Because they can't afford it Alright, well we are right at time Exactly, so please join me in thanking the panel Thank you