Maryland’s Prescription Drug Affordability Board is working through regulations aimed at limiting the prices of some prescription drugs. Photo by Getty Images.
Maryland’s Prescription Drug Affordability Board, which has the authority to negotiate prescription drug prices, was created five years ago and has to date spent more than $3 million in taxpayer funds. Yet patients have yet to save a cent.
Just last month, the PDAB approved a plan to limit the price of some high-cost prescription drugs. But this plan — if implemented — could backfire.
Maryland lawmakers undoubtedly had good intentions when they established the PDAB. But PDABs are problematic since they focus exclusively on drug prices at the expense of a far more meaningful metric: drug value. This price-centered approach fails to account for the fact that the clinical value of medicines — or any health care service — is unique to each individual.
When deciding which medicine to prescribe, clinicians have to consider a complex interplay of factors unique to each patient, including medical history, genetic predispositions, lifestyle and personal preferences. They use their expert judgment to determine what’s best for each individual.
We know that this personalized approach improves patients’ long-term health, which in turn makes the entire health care system more efficient.
It’s true that innovative medicines — such as those used to treat sickle cell anemia, hepatitis C, and once-fatal cancers — can be expensive. But these drugs typically offer tremendous value in the long run by preventing or reducing complications of the diseases they treat. This upfront investment in treatment and prevention can reduce spending on high-cost services such as emergency room visits and hospitalizations.
Consider a patient with Type 2 diabetes. When price is the sole consideration, a better, more expensive medication might seem like a poor choice compared to lower-cost but less-effective alternatives. But if the higher-priced medication does a better job at helping that patient control blood sugar and avoid complications, potentially keeping the patient out of the hospital, then it may be worth the higher initial cost.
By giving an advantage to medicines with negotiated prices and potentially providing a disadvantage for those that are not, PDABs and drug formularies risk overlooking these crucial nuances. As a result, the setting of upper payment limits for negotiation drugs could end up decreasing access to alternative, higher-value medical inventions, ultimately leading to poorer health outcomes, wider disparities and increased spending in certain circumstances.
While the PDAB allows the board to monitor accessibility issues that may arise from an upper payment limit and suspend the limit if needed, prior experience demonstrates that this arduous undertaking does not always protect clinical choice.
Moreover, lowering the price of one drug in a therapeutic class could incentivize insurers to steer patients toward that drug, even if it is not the medicine a patient’s doctor recommends.
Instead of fixating on drug prices — and potentially further intruding on the doctor-patient relationship — state policymakers should craft policies aimed to decrease the use of low-value care and make it easier — not harder — for patients to access essential, high-value care.
We define low-value health care services — such as unnecessary tests or ineffective treatments — as those that provide little or no benefit to patients, and can even harm them. Despite being identified by professional clinical societies, billions of dollars are spent on these services annually. In addition to improving outcomes, doing so would make the health care system more efficient overall.
Low-value care doesn’t just lead to poorer outcomes — it wastes our health care system’s finite resources. One study estimated that the United States spends over $345 billion on low-value care annually. If even a small portion of these resources were redirected to high-value interventions, the savings to our health care system would likely dwarf any short-term savings from drug price negotiations.
By myopically focusing on drug prices while spending on low-value care runs rampant, policymakers are missing an opportunity to lower healthcare spending while enhancing equity and improving healthcare quality.
I have often said that I did not go to medical school to learn how to save people money. I also am the first to say that it is not fiscally sustainable to provide all medical services to all people regardless of price and benefit on health. We need to shift our focus from mere cost-cutting (i.e., how much we spend) to a clinically driven approach that encourages patients and clinicians to use more high-value services (i.e., how well we spend).
The PDAB’s narrow focus on drug prices will only make this much-needed paradigm shift harder to achieve.