October 16, 2019

A seat at the table: Driving the conversation on drug value

As drug prices rise, Kaiser Permanente is part of a growing movement that asks how to create a fairer system to assess and pay for drugs according to their value.

Tony Barrueta, SVP of government relations for Kaiser Permanente, at the Kaiser Permanente Institute for Health Policy Forum, Unpacking Drug Value: A Path to Fair Pricing.

Over the past decade, U.S. drug prices have risen to unsustainable levels, threatening to cripple our health care system. Potential solutions have largely focused on how to finance and cover these high prices. But there’s another conversation emerging — one that challenges the high prices altogether and instead asks: How do we create a fairer system that assesses and pays for drugs according to their value?

Tony Barrueta, senior vice president of government relations for Kaiser Permanente, has worked on the issue of drug pricing for more than 25 years and shares his perspective on what’s driving this new conversation and where it’s headed.

Q: You recently had a front-row seat to the evolving conversation on drug pricing, at the Kaiser Permanente Institute for Health Policy Forum and the Financial Times’ Pharma Pricing and Value Summit. What did you take away from those experiences?

When a sense of unfairness persists, change is on the horizon. I believe that’s happening now in the context of drug pricing.

There’s a swell of enthusiasm and urgency to identify more equitable ways to price and pay for drugs in this country. Kaiser Permanente’s unique experience as an integrated care delivery system — comprised of a health plan, physician group, and hospital system — is recognized by many stakeholders in this conversation as valuable, and it’s gratifying that our experience is informing this discussion.

"We must keep our patients at the center of this effort; after all, if patients can’t afford their medications, it’s hard to make a case that they’re truly providing value."

Q: How has Kaiser Permanente been affected?

This is a problem Kaiser Permanente has felt acutely. When managing drug therapy for our members and patients, our physicians and pharmacists work together to advance our shared goal of providing evidence-based treatment with a focus on quality and safety.

When new drugs come to market with less evidence, our physicians are put in the difficult position of prescribing medicines when they are not sure how well they will work for their patients, or even which patients stand to benefit from the therapy.

Yet, we are being asked to pay for these drugs — some with price tags over $1 million — as if the certainty and durability of their effects have already been proven. These high prices have had ripple effects throughout the health care system, forcing insurers and patients to make tough decisions about how to cover and pay for them.

Q: How do you see this issue evolving?

Connecting drug pricing to value will be a challenging — though worthy — endeavor.

It will require giving more thought to how drug value should be determined, and who should benefit from the value a drug creates. The basic assumption many analysts make is that a drug’s price can be justified based on the savings that come from avoiding other health care costs, or the economic value of the increased healthy years that may come from taking a drug.

It’s important to recognize how radically different this is from how most other things are valued. For example, when a surgeon performs a life-saving heart surgery, she is not compensated for the value of the remaining years of that patient’s life. But in effect, that’s what pharmaceutical companies are asking for when they set astronomically high prices for their drug therapies.

It will also require us to reexamine the evidence we have available and identify the evidence we’re not currently collecting that we need to make value-based assessments.

Q: What is Kaiser Permanente’s goal?

Ultimately, our goal is to move toward a system where patients can get the medications they need at a price they can afford. At the same time, we want to be sure we incentivize the full range of drug therapy innovation — not merely the products that have the potential to deliver blockbuster profits for drug companies. For example, we’d like to encourage drug companies to develop newer antibiotics and other drugs critical for population health.

We must keep our patients at the center of this effort; after all, if patients can’t afford their medications, it’s hard to make a case that they’re truly providing value. We will continue to champion this issue because our patients’ health depends on it.

Hear more of the conversation from the Institute for Health Policy Forum, Unpacking Drug Value: A Path to Fair Pricing.