The Federal Government Considers Updating Data Collection and Analysis of Drug Prices

prescription bottle

The Trump Administration announced a series of initiatives earlier this month to reduce prescription drug prices and patient drug costs. Its American Patients First provides an outline of ideas for future action and reprises initiatives the Administration recently began. The Administration is now seeking public input on many of these proposed policies.

The Administration’s Request for Information (RFI) — entitled HHS Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs — seeks responses to questions about a great variety of policy ideas described in the Patients First document.

While there are many ideas on the table, the National Academy for State Health Policy (NASHP) is examining proposals to expand US Department of Health and Human Services (HHS) data collection and transparency. If expanded and made current, this data could bolster drug price transparency initiatives, which are of great interest to states and have been recently approved by several state legislatures.

As part of its initiative, the Administration took a significant step last week by rolling out its revised Medicare and Medicaid drug spending dashboards. To date, the dashboards provided information about past program spending, but now they include specific drug prices with annual price changes dating back to 2012. This is a great new transparency tool for states and researchers. In its RFI, the Administration asks how this drug price-tracking effort can be improved.

How to Improve Drug Cost Data
The current dashboards use insurance claims information. While offering a great tool for price transparency tracking, years-old information will not help states that are trying to develop strategies to lower drug prices in real time, as new state transparency efforts do. HHS should take additional steps to provide more current list prices and price changes on its website, which would create efficiencies for states. If that information was readily available, states would not have to recreate systems to track price increases and could instead focus their resources on collecting manufacturer price increase justifications as new state transparency laws now require.

The RFI also asks for input on improving other HHS data about prescription drug costs. For example, the RFI asks if it would more informative to publish information on national gross (before rebates) and net (after rebates) spending. Providing gross and net prescription drug spending would certainly assist the industry in demonstrating that their net prices are lower than the public understands. However, it will be even more helpful for the public to understand how prescription drug costs impact health care coverage and spending. Currently, the Centers for Medicare & Medicaid Services’ Office of the Actuary presents prescription drug spending as a portion of total national health expenditures (NHE).

NHE includes spending on health and medical research, long-term services and supports, and other important health expenditure categories. In the context of all national health spending, spending on drugs may not appear as significant as it does when examined in the context of personal medical service spending or health care coverage.

A separate, annual analysis of prescription drug spending as a percentage of federal, federal/state, and commercial health coverage spending would give policymakers an informative representation of the significance of prescription drug spending and spending increases where it counts most.

NASHP’s Pharmacy Costs Working Group will be responding to the HHS RFI about these and other ideas, and will feature the responses on its Center for State Rx Drug Pricing website.