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New Policy to Support Value-Based Drug Pricing

And other American Medical Association news
VBCR - December 2016, Vol 5, No 6 - AMA News
Rebecca Bailey

Value-based pricing is a practical cost-saving method for challenging the current basis used to determine how much patients pay for prescription medications in the US market, according to a new policy adopted by physicians at the American Medical Association (AMA)’s 2016 Interim Meeting held in Orlando, FL.

“The new AMA policy acknowledges the carte blanche approach to drug pricing needs to change to align with the health system’s drive for high-quality care based on value. This transformation should support drug prices based on overall benefit to patients compared to alternatives for treating the same condition,” said Andrew W. Gurman, MD, President, AMA, Chicago, IL, in a press release by the association.

Dr Gurman also stated that it is important to have the full picture to assess the true value of a medication with regard to patients and the healthcare system.

Prescription drug spending was approximately $457 billion in 2015, accounting for 16.7% of spending on personal healthcare services, according to the US Department of Health & Human Services. Of that amount, 71.9% was spent on retail drugs at outlets that serve patients directly and 28.1% was spent on nonretail drugs.

The AMA said that the new policy “seeks to blunt growing pharmaceutical spending rates by tying drug prices to an optimal balance of benefits and costs.” The adoption of the new policy supplements the association’s long-standing support for market-driven mechanisms to control drug costs, and acknowledges that improvements need to be made to ensure the efficient and effective operation of the prescription drug market.

The following principles will guide the AMA’s support of value-based pricing programs, initiatives, and mechanisms for drugs:

  • Objective, independent entities should determine the value-based prices of drugs
  • Value-based prices should be evidence-based, and the result of valid, reliable data that incorporate rigorous scientific methods, such as clinical trials, clinical data registries, comparative effectiveness research, and vigorous measures capturing short- and long-term clinical outcomes
  • Processes for determining value-based prices of drugs need to be transparent, easily accessible by physicians and patients, and provide practicing physicians and researchers with a central and significant role
  • Processes for determining value-based prices of drugs should limit administrative burdens that physicians and patients face
  • Processes for determining value-based prices of drugs should incorporate affordability criteria to help guarantee patient affordability and limit system-wide budgetary impacts
  • Value-based pricing of drugs should take into account patient variation and physician discretion.

In addition to these principles, the AMA supports the direct purchasing of drugs used to treat or cure diseases that pose exceptional public health threats (eg, hepatitis C). Direct purchasing will secure prices for prescription drugs, in addition to volume for manufacturers.

With the new policy also come calls for the AMA to support making it a requirement for pharmaceutical companies to grant generic manufacturers seeking to complete bioequivalence assays reasonable access to, and purchase of, appropriate quantities of approved, out-of-patent drugs upon their request.

“The AMA principles emphasize that efforts to price prescription drugs based on value should ultimately benefit patients and the health care system without stifling innovation in the pharmaceutical industry,” Dr Gurman stated in the press release.

“These initiatives should aim to ensure patient access to necessary prescription drugs and allow for patient variation and physician discretion,” he added.

Standards for Mobile Health Applications and Devices Have Been Approved

The AMA has approved an 8-part set of standards aimed at helping clinicians blend mobile health (mHealth) applications and devices into their practices, according to an announcement made at the 2016 AMA Interim Meeting. The association also called for better regulation of applications, especially of those that do not fall under federal review.

“While some mobile apps [applications] and devices are subject to FDA regulation, others are not, and do not undergo rigorous evaluation before deployment for general use, which raises quality and patient safety concerns,” the AMA’s Council on Medical Service stated in a report adopted by the House of Delegates at the interim meeting.

Without guaranteeing the clinical validation of mHealth applications and associated devices by strong, sufficient evidence, the report asserts that these applications will not be integrated fully by physicians into their practices, and that to demonstrate the accuracy, efficacy, safety, and security of the mHealth applications would require investing more into expanding the evidence base.

Despite the need for additional studies, the AMA stated in a press release that it believes the mHealth applications and associated devices that support safe and effective care “have the potential to be integrated into everyday practice.”

The principles adopted at the interim meeting encourage clinicians to choose mHealth applications that:

  • Maintain the continuation or establishment of a valid relationship between the patient and the physician
  • Ensure the safety and efficacy of mHealth applications by having a clinical evidence base
  • Ensure patient safety, quality of care, and positive health outcomes by following evidence-based practice guidelines
  • Support patient-centered delivery of care that promotes care coordi­nation and enables team-based communication
  • Encourage the portability and interoperability of data to promote care coordination via medical home and accountable care models
  • Follow the licensure and medical practice laws and requirements of the state in which the patient receives services that the application facilitates
  • Require that services delivered through the application be provided by physicians and health professionals who are licensed in the state where the patient receives services, or that the services be provided as otherwise authorized by that state’s respective medical board
  • Guarantee that services provided through the application are consistent with state scope of practice laws.

Legal Aspects of mHealth Applications

The AMA stressed that mHealth technologies must abide by laws addressing the privacy and security of patients’ medical information. Therefore, the association asserts that physicians and mobile application developers should carry out industry-wide outreach and give essential educational materials to patients to increase awareness about how privacy and security can vary among mHealth applications, as well as how their data may be collected and used.

The association also addressed potential liability issues related to the prescribing of mHealth applications, and advised physicians to consult their attorneys if they are uncertain about whether an application meets federal or state privacy and security regulations.

Partnering with Industry Leaders

The AMA reported that it is partnering with healthcare leaders who are intensely focused on technologies that work better for physicians and patients, and looking for ways to ensure that physician concerns are incorporated into the design of mHealth applications. These partners include Health2047, a technology incubator for health innovation products that is based in San Francisco, CA; MATTER, a Chicago-based health technology incubator; IDEA Labs, a student-run biotechnology incubator based in St. Louis, MO; and Omada Health, a San Francisco–based company that is working with Intermountain Health Care, Salt Lake City, UT, on an application that addresses issues facing the more than 86 million Americans with prediabetes.

The AMA has also assumed an advisory role in the SMART project, which promotes an Internet-based graphic user interface for applications that meet Fast Health Interoperability Resources standards. A key part of this effort is the development of a flexible infrastructure that permits the creation of plug and play applications that improve interoperability between healthcare technologies (eg, electronic health records) in a cost-effective way.

“The new AMA principles aim to foster the integration of digital health innovations into clinical practice by promoting coverage and payment policies that are contingent upon whether mHealth apps [applications] and related devices are evidence-based, validated, interoperable and actionable,” said Steven J. Stack, MD, Immediate Past President, AMA, Chicago, IL, in a press release by the association.

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