Physician Resources

MedPAC to look at physician prescribing tools as a way to control drug spending




WASHINGTON – The Medicare Payment Advisory Commission is going to look at physician prescribing tools as part of a broader examination of how to rein in Medicare drug spending.

Members acknowledged during the Sept. 11, 2015, meeting that when it comes to the prices of drugs in the Medicare programs, the tools are limited to keep the prices low. Between statutory requirements for coverage of drugs in protected classes and a prohibition against the secretary of Health and Human Services negotiating prices for the Part D prescription drug benefit and other statutory requirements, even for intermediaries such as plan providers and hospital groups, leverage in price negotiations is very limited.


However, commission member Dr. Craig Samitt, former partner at Oliver Wyman of Paradise Valley, Ariz., suggested that the focus should be more on what leverage providers might have when it comes to utilization.

“So if we feel that neither CMS nor the intermediaries have sufficient leverage, well then who has significant leverage? The prescribing clinician,” Dr. Samitt said. “How well have we aligned interests around utilization in particular, not so much price, with the clinicians?”

Dr. Samitt noted that on the commercial side, there is a focus on utilization as a more effective driver of price, rather than simply targeting price first in the negotiation process, and suggested there might be room in Medicare for that kind of focus.

He also suggested that perhaps including drug utilization within the context of accountable care organizations could result in “additional focus on more effective prescribing patterns.”

The conversation occurred against a backdrop of examination of drug spending in general. MedPAC staff noted that Medicare is becoming a more prominent payer for drugs in the wake of Part D’s launch.

MedPAC staff estimates that in 2013, retail drugs made up 13% of Medicare spending, versus 9% of national health expenditures. Additionally, of the $574 billion spent by Medicare in that year, 19% was drugs and pharmacy, with the majority of drug spending (57%) coming from Part D.

The discussion was just the first on the subject as the group will look at other aspects of drug pricing and spending in future meetings. A specific timetable for offering policy recommendations was not discussed.

Dr. William Hall, professor at the University of Rochester (N.Y.) School of Medicine, added that it is not the price of the drug per se, but its value that needs to be focused on. He noted that the prices of the latest hepatitis C drugs might be high, but the value they have to the health care system is much greater and needs to be taken into consideration.

“One of the big differences from 2004 is we know a great deal more about the efficacy of drugs,” Dr. Hall said, suggesting that more needs to be done to educate clinicians on the proper use of medications as part of finding the right way to use physician prescribing patterns as leverage in price negotiations.

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