A cure for high pharma costs? Import drugs, export patients

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KANSAS CITY, Missouri — As drug costs continue to rise faster than medical, now consuming as much as 50% of total spend, what can brokers and clients do to help put them on a different trajectory? The first step is importing the right drugs in the right way, and then when that is not an option, exporting the patient.

During the National Association of Health Underwriters annual convention, members listened to experts explain how to build safe, ethical and legal ways for clients to purchase specialty drugs across borders.

In 2016, per capita retail prescription drug spending grew at a slow rate of 0.6%, particularly in comparison to the previous two years when new specialty drugs came on the market, according a Kaiser Family Foundation analysis of national health expenditure historical and projected data from the Centers for Medicare and Medicaid Services.

In 2015, pharmaceutical spending grew 8.1% on a per capita basis and in 2014 those costs had grown 11.5%. Looking ahead, projections suggest growth per capita drug spending will be moderate through 2026.

Retail prescription drugs had represented a shrinking share of total health spending through 2013, but increased in 2014 and 2015 with the introduction of some high cost specialty drugs. In 2016, drug spending did not grow as much as spending on other services; however projections show that drug spending will continue to represent large portions of overall health spending over time.

Mark Davenport, senior vice president at health insurance technology firm PriceMDs, says there are three causes for why specialty drugs are so expensive in the United States. The first cause is the government.

“Anyone from a pharma standpoint who is a lobbyist or is in a position to make laws around prescription drugs will say what they are doing is good for us as consumers,” Davenport says.

The second cause is the insurance companies. These companies take rebates from the drug manufacturers based on the spending for particular drugs.

Third are the pharmacy benefit managers — third-party administrators of prescription drug programs for commercial health plans, self-insured employers, Medicare Part D plans, the Federal Employee Health Benefits Program and state government employee plans.

Because PBM companies are some of the biggest in the world such as Express Scripts, CVS Health and UnitedHealth Group Davenport says he does not use them. They are also against the personal importation of drugs from other countries.

“Personal importation law allows members to get treatment outside of the country and bring back a 90-day supply of drugs,” Davenport says. “There are some drugs where you can acquire up to 180 days.”

The FDA’s guidance for coverage of personal importations of unapproved drugs identifies several factors that are considered by FDA personnel when determining whether to exercise enforcement discretion and refrain from taking action against importation of unapproved drugs.

The general guidance section states that the FDA should consider not taking enforcement actions against such importation if:

· The intended use of the drug is unapproved and for serious condition for which effective treatment may not be available domestically either through commercial or clinical means.
· There is no known commercialization or promotion to persons residing in the U.S. by those involved in the distribution of the product at issue.
· The product is considered not to represent an unreasonable risk.
· The individual seeking to import the product affirms in writing that it is for the patient’s own use and provides the name and address of the doctor licensed in the U.S. responsible for his or her treatment with the product or provides evidence that the product is for the continuation of a treatment begun in a foreign country.

Brokers are turning this to their advantage by encouraging employers to allow their employees to travel to places such as Mexico or the Cayman Islands to purchase drugs, some that are already legal in the U.S., that are priced anywhere between 50% to 70% less than domestically.

To motivate employees to take these trips — even though the trip could save upwards of $1.6 million in claims cost depending on what specialty drugs they need — brokers are advising their employer clients to ensure that the travel cost and lodging is also included into the purchase of the specialty drug. That way the employee is not only taking a trip to retrieve their medication, but it can also be a short vacation.

“Employers need to make sure they are writing one check for one bill for lodging, flight, the drug, medical management inclusion and anything the employee will need to go from point A to point B,” Davenport says. “At any point in time, if the employer or employee have any problems making the trip, we will pay for the broker to go alongside the employee for the first trip.”

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