Below are the comments of CMS Acting Administrator Andy Slavitt on November 3, 2016 before the Biopharma Congress in Washington, D.C.
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Thank you for having me here this evening. It’s a pleasure to join you again to reflect on the progress we’ve made since I spoke to you last year, as well as the goals I believe we should be working on together. I know you probably hoped I would come talk about a little demo we have been working on to address ways of testing the value of drug payments, and I’ll get to that in a few minutes. But, I’d like to start by stepping back and discussing what we’re trying to accomplish in the innovation space.
The Beneficiary
Ultimately, our goal is to bring highest quality, cutting edge health care and medicine to our beneficiaries as affordably, as quickly and as safely as possible. Because it’s patients that drive everything we do at CMS, the care and well-being of 140 million Americans, most on fixed or modest incomes in the Medicare, Medicaid, Children’s Health Insurance and Marketplace programs, and the millions more who will need these programs someday.
They are daughters and sons who watch their parents lose their independence from debilitating conditions like Alzheimer’s and cancer. But, they are also Medicare patients who leave the hospital with five prescriptions to fill and no idea how to pay for them.
Obviously you, as the developers of these innovative treatments, have such a central part to play in their futures: from advance diagnostics and laboratory-developed tests to precision medicines that aim at our disease, but spare our minds and bodies based on our unique make-up. So let me begin by highlighting some of the exciting ways that CMS and innovators are beginning to collaborate on developing new products, getting them onto the market, and making them available to for patients as quickly as possible.
- Investing in Research —
First of all, we’re looking for more ways to invest in research. I’ve been a proud member of Vice President Biden’s Cancer Moonshot Task Force, which worked to break down barriers between the research community, the federal government, community oncologists, and other innovators on processes to address the full range of issues impacting breakthrough medical discoveries.
While we all look forward to the discoveries ahead, we don’t have to wait for them to make a meaningful difference in the lives of patients. On the Task Force, we developed new ways of working to create common data, leverage existing clinical research, and decide where to step on the gas so we can simplify the path to market for new discoveries in the areas of prevention, diagnosis, and treatment. Our recommendations are outlined in the Cancer Moonshot Report that Vice President Biden presented to the President on October 17th.
- Supporting Clinical Trials —
We are also actively engaged in supporting the investigation of new products by covering the costs of care for Medicare beneficiaries in certain categories of clinical trials and studies.
For example, in trans-aortic valve replacement, we partnered with a device company, providers, and FDA to cover the device within weeks of FDA approval for all FDA indications and included a registry for coverage with evidence development so we at the agency, the manufacturer, and providers could show improvements in long term outcomes and develop more evidence on additional indications where the device might be beneficial.
- Shortening the Wait for Innovative Products —
Francis Collins, Rob Califf, and I have established tri-Lateral leadership discussions among our agencies. We’re a sleeper group, but hope to establish critical ties that can eventually create a single front door to research safety, efficacy, coverage, and pricing – with appropriate firewalls and safeguards. Together we’re making it a priority to figure out how to coordinate in ways that advance product development. You may have seen that we just extended indefinitely our parallel review program. This is a CMS-FDA partnership that makes it possible for CMS to consider new devices for coverage even before their approval by the FDA. We believe that eliminating risk for you will improve lives and reduce costs as it significantly accelerates the speed at which your innovations become available to our beneficiaries.
In the case of Cologuard – a rapid screening test for colon cancer that has the potential to increase screening and early detection – we were able to initiate a National Coverage Analysis and proposed decision on the very day that the FDA approved the product, and we issued a final positive National Coverage Determination less than two month later, seven months ahead of our statutory deadline. We’re currently using parallel review to track the progress of FoundationOne® a first-of-its-kind comprehensive genomic profiling assay that incorporates multiple companion diagnostics to support precision medicine in oncology.
- Maintaining Affordability While Pushing for Innovation –-
We’re also trying new approaches to ensure patients continue to have access to the most innovative therapies. We have introduced a new way to pay for cancer care called the Oncology Care Model, which allows physicians to earn extra bonuses under MACRA. The model includes a novel therapy adjustment, which incorporates the cost of new therapies, once approved by the FDA, into our pricing model to ensure that physicians can focus on optimal patient care and outcomes, using the best treatments available.
- Data –-
CMS is also committed to releasing data whenever possible, across all our topics and sectors. We’ve released information on Medicare spending and utilization that provide unprecedented detail on how providers practice medicine and prescribe drugs in Medicare. Collectively, these data releases cover more than 85 percent of Medicare payments and include information not just on individual clinicians but also hospitals, skilled nursing facilities, home health agencies, and hospice providers. In addition, Medicare claims data shows us that we provided coverage for more than 145,000 beneficiaries in over 7,500 clinical studies in 2015.
We recognize the potential contribution this knowledge can add to studies in which large numbers of our beneficiaries enroll. We are interested in collaborating with you to consider how we can leverage the size of the Medicare program and the quantity of data we collect to help you develop real-world evidence to show improved health outcomes from use of your products.
Cost
Of course, as great as all these efforts have been, we still have a lot more to do. But before we get to that, let me turn to a different “reality” – how do we make sure that all Americans have access to not only the great care around the corner, but also the drugs they depend on today.
So let’s have a candid talk about drug costs. Not the politics, not the value argument, not even the patient perspective. Let’s start with the math:
- At the top line, total prescription drug spending in 2015 was about $457 billion or 16.7 percent of health care spending.
- Based on recent trends we’re currently projecting average annual increases of 6.7 percent through 2025.
- Part B drug spending doubled from 2007 to 2015, and Part D costs increased 8.4 percent between 2013 and 2015
- Specialty drugs are a big part of the equation. In 2014, they accounted for 31.8 percent or spending despite representing only 1 percent of prescriptions.
- However, of the 20 drugs with the highest per-unit cost increases in Medicaid, seven were generic drugs. Those products had increases in price ranging from 140 percent to nearly 500 percent between 2014 and 2015.
Cost increases are pervasive. Despite all the attention it has generated this year, Mylan’s Epipen is not even on our top 20 list for either high price increases or spending overall in 2015. Many of these have been ongoing for a while with real patient impact and some are big stories waiting to happen.
You know, last year when I spoke here, the price increases at Turing were making news, and I told you I didn’t want this industry to be defined by its worst actors. I defended the industry then, but the more data that’s revealed, the more bad actors you find, and I’m telling you now: it’s too many.
These numbers don’t give us the full picture, but they do help to draw attention to a problem that is an increasing source of worry for families across the country. Drug costs have become the health policy issue Americans are most anxious to see us act on, and we have a responsibility to them to explore all the options available us to make their medications more affordable.
I hear occasionally from some that life sciences needs to tell its “value story” better. Perhaps. But it also needs to do the math. If something is growing by 11 percent, unless it’s causing something else to decrease by 12 percent, it’s not going to last forever. The reality is that in the next few years these costs will put unsustainable pressure on the Medicare program, and action is going to be necessary to address them. For my successor, this will likely be a big priority as well.
In every state I visit now, governors pull me aside to tell me that they can’t sustain the rising cost of drugs in their Medicaid programs. I was in Oregon just last week with Governor Brown, where they told me that pharmacy spending rose from 16 percent of costs in 2012 to 19 percent in 2015. They anticipate those numbers to rise for 2016. They cannot plan for it and now worry about being able to adequately fund their mental health system. As their federal partner, I am too.
Accessibility is as critical as affordability
Simply reducing the cost of medicine is not our focus. This is the richest country on earth and I’m quite confident there are solutions so that every American can have access to high-value innovative medicines that improve their lives. But because costs get passed on to consumers and taxpayers through higher premiums, coinsurance, and payroll taxes, and rapidly increasing costs affect the ability of everyone to access the medicines they need to maintain their health and add to the length and quality of their lives.
What you choose to do as an industry will help define the next several years. So the question is: can we have both innovation and the affordability necessary to make it accessible? I think the answer is yes.
These two goals shouldn’t be in opposition. In every-forward looking industry outside of health care, we see that competition actually fuels innovation, and affordability improves alongside the development of new technologies. There are plenty of policy options and certainly a number of ways innovators like you can choose to respond – from disputing the math and fighting it, to looking for win-wins.
CMS wants to be a partner in innovation. For those of you who look at data, find solutions, and pay for value, we want to partner with you.
I have seen some very encouraging signs of collaboration this year. Just last week, Johnson & Johnson became the first manufacturer to join our Health Care Payment Learning and Action Network – a group dedicated to transitioning the health care system to reward the value of care, rather than the volume. We are grateful for their commitment to this shared goal, and look forward to the perspective they will bring to the table.
In closing, last year I made commitments to four priorities in working with you: better data to collaborate on, exploring value-based models, ensuring the needs of the lowest-income, and improving innovation processes. We are just getting started here.
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