Escalating costs of medicines are leading to financial hardship for many U.S. patients and taxpayers, but the Trump administration's idea of having Medicare pay for expensive therapies based on international prices would not solve those problems, a panel of drug industry representatives and oncologists said.

"To jump to a proposal that would put so much patient access and innovation at risk with international price referencing is borderline unethical," said Jacqueline Zummo, senior director of global oncology corporate affairs at Eli Lilly and Co.

"International price referencing is as low as it gets," Zummo said during a Nov. 14 panel discussion at the 2018 Biopharma Congress, a drug industry conference in Washington.

The Trump administration is seeking to let Medicare slowly phase in payments for injectable medicines for cancer and other complex diseases based on an international pricing index model and it wants to test the idea in a five-year experiment.

It also wants to change the way providers are reimbursed for those products by Medicare Part B — the U.S. government's program that covers injectable medicines for seniors and the disabled.

Health and Human Services has estimated that using the model could generate savings of up to 30% for beneficiaries and taxpayers, or about $17.2 billion over five years, though the administration has yet to disclose how it came up with those figures.

Centers for Medicare and Medicaid Services Administrator Seema Verma said the administration wants to make the model mandatory for half of the country's providers.

The model would be a "significant change," Verma said during an address at the Nov. 14 conference. "It is an overhaul of Medicare Part B drug pricing," she said.

Right now, however, the administration has only issued an advance notice of proposed rulemaking — a bureaucratic mechanism used to gauge public opinion ahead of making a formal proposal.

The process is also used when an administration is uncertain it wants to move forward with an idea and can easily pull it back, blaming it on the public opposition.

CMS is accepting public comments until late December.

"The input we receive will inform the development of a proposed rule early next year," Verma said.

Any formal proposal would need to go through another round of public comments before the administration can launch its experiment — meaning, it likely can not get off the ground until at least 2020.

It's complicated

Joe Grogan, associate director of health programs at the White House Office of Management and Budget, said HHS Secretary Alex Azar was "pretty adamant that he's driving this thing to the conclusion."

But the decision to move forward is contingent on the comments the administration receives, he added.

"It's complicated," he said at the Biopharma Congress. In implementing the model, the administration must first figure out how to quantify things like the timing of approval of medicines by the U.S. Food and Drug Administration, as well as delays in products entering the market, and other factors, like disease burden and economic elements, such as gross domestic product, Grogan said.

The international pricing index concept would stop European nations from "free-riding" off of American taxpayers, who are subsidizing most of the world's drug development and are paying much higher prices for their medicines, he said.

But the Pharmaceutical Research and Manufacturers of America, a drug lobbying group, pushed back on the idea, calling it an attempt to impose "foreign price controls from countries with socialist healthcare systems that deny their citizens access and discourage innovation."

Americans will no longer have to worry about how they will pay for expensive drugs like gene therapies "when you've killed the incentives for discovering them," Randy Burkholder, PhRMA's vice president of policy and research, said at the conference.

Many uncertainties

Lilly's Zummo said the administration was misleading Americans by trying to sell its international pricing idea as a pay-for-value system.

While the goal of reducing costs by one-third was "laudable," it is unclear how those savings would be achieved and if they would reach individual patients, said Jeff Allen, president and CEO of the nonprofit advocacy group Friends of Cancer Research.

Allen said he was also concerned that forcing a shift in the market could result in drugmakers deciding to launch their products overseas first rather than in the U.S., delaying Americans' access to new medicines for cancer and other diseases.

The current way Medicare Part B pays for medicines — reimbursing at 100% of the drug's average sales price, or ASP, plus a 6% add-on — incentivizes U.S. doctors to prescribe higher-priced products and manufacturers to set higher prices, Verma said.

The ASP is based on a drugmaker's sales to all purchasers, with certain exceptions, net of the manufacturer rebates, discounts and price concessions.

But Burkholder argued the ASP system was "grounded in negotiation, it is grounded in competition and that competition and negotiation in fact do happen."

CMS' own recently released fiscal fourth-quarter report showed that, on average, payment amounts for the top 50 Part B drugs decreased by 0.8%, he noted.

Access

While the administration has taken some positive steps to move market competition toward value-based care — like making it easier for drugmakers to discuss more freely scientific and economic information about unapproved uses of medical products with payers and providers — "government price-setting inarguably is moving in the opposite direction," Burkholder said.

Debra Patt, executive vice president of policy and strategic initiatives at Texas Oncology, said she was concerned Trump's Medicare Part B proposal would increase doctors' administrative burdens, resulting in seniors and the disabled being shifted to hospitals for their cancer care.

"If the hospital delivery system is required to absorb that volume of Medicare patients, we will have an access problem," added oncologist Mike Kolodziej, chief innovation officer at ADVI, a consultancy company.

Patt said she was also concerned that Trump's experiment would result in seniors and the disabled being blocked from receiving the "newest, latest and greatest treatments."

"I think there are a lot of questions about access to care for Medicare beneficiaries," she said.