Pharmaceuticals are expected to undergo a 4.92% price increase from 2018 to 2019, according to the recently released July-August 2018 Drug Price Forecast from Vizient. That’s actually a slowing from the 7.61% increase for 2018, AIS Health reported.

The company conducted its analysis using price and volume data from hospital and non-acute facilities participating in its Vizient Pharmacy Program. Among Vizient members, therapeutic classes with the highest spend include many with specialty drugs.

Disease-modifying antirheumatic agents lead the way with an estimated 8.57% increase, followed by the immunomodulatory agents for multiple sclerosis, at 7.33%. According to the report, “Based on the total amount of spend across care environments, the types of molecular entities approved by the FDA, and the investigational products in the development pipeline, it is certain that specialty pharmaceuticals will continue to play an increasingly important role in pharmacy budgeting.”

However, a handful of events have occurred that are helping slow drug price increases, including CMS giving biosimilars a unique reimbursement code and pass-through status, as well as the administration’s initiative to bring down drug prices.

Challenges within the system include the fragility of the pharmaceutical supply chain, which is leading to multiple drug shortages, and novel new medications that launch at very high prices.

The Trump administration continues to take steps aimed at bringing down drug prices. CMS Administrator Seema Verma said in an Aug. 29 memo to Medicare Part D plan sponsors that they can begin using indication-based formularies in contract year 2020, AIS Health reported.

Starting in 2020, "Part D sponsors may utilize step therapy-like requirements within their [prior authorization] to promote cost-effective drug therapy by requiring the use of one formulary drug for a certain indication prior to authorizing coverage of a second drug for that indication," explains the memo.

Experts say there are multiple benefits to using indication-based formularies. According to Andrew Cournoyer, R.Ph., vice president at Precision for Value, plan sponsors will have the "ability to negotiate steeper discounts in the specialty space — not tied into a single rate for utilization of a product across multiple indications."

Plans also will be able "to assign a combination of higher payment and/or lower cost share for a treatment used for a particular indication, where evidence shows that this treatment for that indication is likely to yield a better outcome compared to alternative treatments," says Elan Rubinstein, Pharm.D., principal at EB Rubinstein Associates. In addition, for uses of a drug in which evidence offers worse outcomes compared with alternatives, plans can "assign a lower payment and/or a higher cost share," he adds.

The policy, however, has multiple potential downsides and risks. Cournoyer points out that it won't impact the broader population. And Rubinstein questions "what constitutes sufficient evidence to support preference for one product over another as a matter of policy and benefit design, if there are patient-specific variables such as severity, age, mobility, comorbidities or other matters that should be taken into consideration?"

Rubinstein also suggests that another challenge will be how payers can "verify the correctness of a drug written for a preferred indication."

While many stakeholders have praised CMS’s move to allow Medicare Advantage (MA) plans to apply step therapy to drugs covered under Part B, others have cautioned that it could result in delays or restrictions in patients accessing much-needed medications, AIS Health reported.

On Aug. 7, CMS issued new guidance allowing MA plans to use step therapy for Part B drugs as of Jan. 1, 2019. The letter also states that those MA plans that also offer prescription drug coverage may use step therapy to have a beneficiary use a drug under Part D before stepping to one under Part B.

Matt Eyles, president and CEO of America’s Health Insurance Plans, praised the administration’s move. He said, “patients and families deserve the prescription drugs they need at a price they can afford. The new CMS policy helps deliver on that promise while also helping to ensure patients continue to have access to safe, effective, and evidence-based care.”

Meanwhile, some groups expressed their concerns. In a letter to HHS Secretary Alex Azar, the American Medical Association said, “The AMA is concerned about the utilization management tools frequently used by PBMs and health plans to control costs, as they often have little clinical basis and can simply be a means of shifting costs in the system. For example, prior authorization and step therapy protocols can create significant barriers for patients by delaying the start or continuation of necessary medical treatment, which can negatively affect patient health outcomes.”

In an Aug. 8 research note, Leerink analysts noted that “pharmaceutical companies could be enticed to offer rebates back to payers and plans in order to gain preferred status at the front of a step-edit or risk losing volume as a second-line or later agent. In turn, these rebates will lower drug costs for Part B MA plans and patients, but also lower pharmaceutical revenues.”