Setting the Bar for New Drugs
Drugs are another big-ticket item, and the U.S. pays almost twice as much per capita as the OECD average. To keep their prices lower, Schoen says, many European countries have information systems that track the relative clinical effectiveness of pharmaceuticals. “And they’re using it to inform the way they cover drugs: not to exclude them from the list of what’s covered, but to do something in Europe that’s called reference pricing,” she adds.
Let’s say a new drug costs 50% more than an older one with roughly equivalent efficacy. Under reference pricing, a doctor can still prescribe the new drug, but the patient must pay all or most of the difference. Such benchmarking has fueled an interesting dynamic. “The brand names that are coming in and want to get some market share will price themselves lower, because if they’re priced really high compared to the reference price, the chances are they just won’t ever get a market share,” Schoen says. As a result, drug prices stay lower.
The concept, although discussed in the U.S., has yet to be widely implemented here. A new study in the April issue of the Journal of Managed Care Pharmacy, however, could cause some cash-strapped governments to take a closer look.1 In the study, the Arkansas State Employee Health Plan used reference pricing for proton-pump inhibitors, using the cost of generic omeprazole as its reference point. Over the 43-month reference-pricing period, net plan costs for the drugs dropped by 49.5% per member per month.
A third lesson is that constructive feedback on quality can improve performance, even if no money is attached to outcomes. Like the U.S., Germany is placing a high priority on metrics that evaluate hospital quality. Schoen says the German performance improvement initiative is identifying outliers and providing them with feedback and technical support, but it is not built into the payment system. “They’ve had pretty rapid improvement out of that,” she says, “and I would say we’re learning the same thing in the U.S.”
Initially, Medicare data posted on its Hospital Compare website (www.hospitalcompare.hhs.gov) showed a wide hospital-to-hospital variation in mortality rates for pneumonia, heart attacks, and congestive heart failure. But since then, Schoen says, most outliers on the low end have improved dramatically, even though the only payment incentive was to encourage reporting. In fact, CMS is dropping some core measures from its hospital value-based purchasing program.
Public reporting of quality measures, especially mortality rates, is certainly not without controversy. But Schoen says that if handled properly, disseminating information that suggests a facility’s performance is subpar can tap into the professionalism of its staff and create a strong incentive among them to do better. “That’s something true both internationally and in the U.S.,” she says.
In the U.S., Schoen says, the basic questions asked of patients in the HCAHPS (Hospital Consumer Assessment of Healthcare Providers and Systems) portion of Medicare’s new VBP system represent a good start. But the experiences of other countries, she says, suggest that patient reporting should be directed more at outcomes, similar to a proposal left out of last year’s healthcare reform bill that would have created a feedback system for patients receiving implantable medical devices.
Even so, hospitals like Dartmouth-Hitchcock Medical Center in Lebanon, N.H., are instituting patient feedback systems on their own, and a National Institutes of Health (NIH) initiative called PROMIS (Patient Reported Outcomes Measurement Information System) is gaining traction. “It’s less blaming, and it’s more informing,” Schoen says. TH
Bryn Nelson is a freelance medical writer based in Seattle.