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What We’re Watching: March 12, 2019

EVERYONE’S TALKING ABOUT IT

Drug pricing hearings continue to command attention from the Congressional healthcare committees. Both houses of Congress are moving methodically on separate bipartisan reform packages. The Senate Special Committee on Aging and the House Ways and Means Committee held hearings focused on solutions. On Wednesday the House Energy and Commerce Health Subcommittee takes up the drug pricing topic, examining seven FDA related bills. The subcommittee will also hear from HHS Secretary Azar on his budget priorities, and he will undoubtedly discuss drug prices.

What we’re saying: Premier submitted statements for the hearings, calling for actions to speed access to generics and biosimilars, streamline the drug approval process, and accelerate the movement to value-based care. All of this action and momentum underscores that there is a strong likelihood we will see the most significant drug industry reforms ever this year. Premier aggregates and works with healthcare providers to drive maximum market competition. By aggregating the buying power of U.S. hospitals, Premier’s drug portfolio prices have grown less than half the rate of the industry average. For FY 2020, Premier projects a net decrease of 0.2 percent for on-contract purchases, compared to a 3.8 percent overall increase in total pharmaceutical costs.

THE NEW HEALTHCARE DYNAMIC

The House Judiciary Subcommittee on Antitrust held a hearing on consolidation and anticompetitive conduct in healthcare markets last week that largely focused on the effect of pharmaceutical industry consolidation on cost and quality. While the anticompetitive behavior of the pharmaceutical industry dominated the hearing, lawmakers also raised concerns about hospital consolidation, particularly in rural areas. Research shows hospitals acquired by merger achieve cost savings that average between 4-7% and revenue per patient admission drops nearly 4% in the years following the acquisition.

What we’re saying: Premier has found that mergers and acquisitions in the hospital space have yielded better clinical integration in addition to cost savings. The benefits of clinical integration facilitates the creation of longitudinal care plans, which increase efficiency. Obviously those cost savings can be reinvested into enhancing patient care.

THANK YOU, SCOTT

It was announced last week that FDA Commissioner Scott Gottlieb would be stepping down from his post, which he has held since May 2017.

What we’re saying: Premier issued a statement thanking Dr. Gottlieb for his work and commending him on the path he chartered in his time with the FDA, particularly around generating greater competition for drugs to drive costs down.

IN CASE YOU MISSED IT

What We’re Watching is a weekly blog focused on the current events Premier is following and their relevance to the work of Premier and its members.

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