Public Health

Physicians back steps toward value-based drug pricing

Troy Parks , News Writer

Value-based pricing has the potential to reduce prescription drug spending in the U.S. And with recent spikes in drug prices directly affecting patients, the AMA House of Delegates Monday looked to address increases by adopting new guiding principles to support value-based prescription drug pricing.

Prescription drug spending was $457 billion in 2015, accounting for 16.7 percent of spending on personal health care services, according to the Department of Health and Human Services (HHS). Of that, 71.9 percent was for retail drugs at outlets that serve patients directly and 28.1 percent was for non-retail drugs.

In HHS’ March 2016 brief, “Observations on Trends in Prescription Drug Spending,”, it is projected that prescription drug spending will increase by an average of 7.3 percent per year from 2013 to 2018. The average price of brand-name drugs rose 16.2 percent in 2015, according to Express Scripts.

Based on the results of a report of the AMA Council on Medical Service, delegates reaffirmed several existing AMA policies. Some support the use of value-based insurance design that could determine patient cost-sharing requirements based on the clinical value of treatment. Others establish guidelines to help maximize opportunities for clinical data registries to enhance the quality of care provided to patients.

Delegates also adopted new policy outlining principles to guide the support of value-based pricing programs, initiatives and mechanisms for pharmaceuticals:

  • Value-based prices of pharmaceuticals should be determined by objective, independent entities. They also should be evidence-based and the result of valid and reliable inputs and data that incorporate rigorous scientific methods including clinical trials, clinical data registries, comparative effectiveness research and robust outcome measures that capture short- and long-term clinical outcomes.
  • Processes to determine value-based prices of pharmaceuticals must be transparent, easily accessible to physicians and patients, and provide practicing physicians and researchers a central and significant role. They should also limit administrative burdens on physicians and patients.
  • Those same processes should incorporate affordability criteria to help assure patient affordability and limit system-wide budgetary impact.
  • Value-based pricing of pharmaceuticals should allow for patient variation and physician discretion.

In addition to the guiding principles, delegates directed the AMA to support direct purchasing of pharmaceuticals used to treat or cure diseases that pose unique public health threats, including hepatitis C. They also directed the Association to support the inclusion of the cost of alternatives and cost-effectiveness analysis in comparative effectiveness research.

“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,” AMA President Andrew W. Gurman, MD, , said in a statement. “This transformation should support drug prices based on their clinical outcomes, and reductions in morbidity and mortality. We need to have the full picture to assess a drug’s true value to patients and the health care system.”

The AMA last month launched a grassroots campaign,, to provide a space for patients to share their stories of how drug pricing has affected their lives.

Addressing restricted distribution systems

Delegates adopted separate policy to address the exploitation of restricted distribution systems by pharmaceutical manufacturers, which blocks generics’ entry into the market.

The new policy directs the AMA to:

  • Advocate for legislative or regulatory measures that require prescription drug manufacturers to seek Food and Drug Administration and Federal Trade Commission approval before establishing a restricted distribution system
  • Advocate for legislative or regulatory measures that expedite the FDA approval process for generic drugs, including but not limited to application review deadlines and generic priority review voucher programs

The policy also calls for the AMA to support requiring pharmaceutical companies to allow for reasonable access to and purchase of appropriate quantities of approved, out-of-patent drugs upon request to generic manufacturers seeking to perform bioequivalence assays.