IPD Analytics' Jeffrey Casberg Says IRA, PBM Legislation Reshape US Drug Costs

In an interview with Jeffrey Casberg, RPh, MS, senior vice president of pharmacy at IPD Analytics, discussed policy changes and market forces that are impacting the cost of drugs. Casberg explained why he felt the Inflation Reduction Act (IRA) and pharmacy benefit manager (PBM) legislation are the most impactful.

He also touched on value-based pricing models. Although skeptical of value-based pricing being a universal solution, Casberg sees promise in its use for expensive drugs, like gene therapies, where outcomes can be more easily measured.

This transcript has been lightly edited for clarity.

Transcript:

Do you foresee any policy changes or market forces that could significantly alter the cost landscape for both branded and generic drugs in the near future?

So policy or legislation, everything is about politics. I guess I'll mention 2 things. I'll mention the IRA, the Inflation Reduction Act, and I'll mentioned PBM legislation. Those would be the 2 hot ones on the IRA side, we just had the first release of the negotiated drugs and which drugs they are. We'll be getting MFPs [maximum fair prices], a new acronym for drug pricing, those will be announced coming up soon.

We're going to have the out-of-pocket cost of Part D reduced to the max of an out-of-pocket cost to $2,000. That's big for patients, impactful to manufacturers, and payers. Now they're going to have to deal with different benefit designs and how they're going to market the drug and price the drug or how payers are going to make the benefits work with the new $2,000 max, so there is something for everybody there.

Then 2025 redesign, for the Inflation Reduction Act, there's also quite a few different benefit designs changing for 2025. There's price hike penalties so the manufacturers have to watch how much they're raising the prices of their drugs. If they go up too high, too quickly, then they get these penalties against them. The IRA has a number of different things, pretty complex, and everybody's paying attention to that.

Then on the second hand, it would be PBM legislation. I guess it depends on who you are and your feeling towards PBM legislation. I think it probably just comes down to more transparency. Every business has to make money and PBMs have done it. Somebody could argue they did it okay. Some say it was all smoke and mirrors but I think there's legislation now to have more transparency on PBMs. We'll see how that rolls out but a lot of discussion up in Washington on that these days.

Value-based pricing models are increasingly being explored. How do you think value-based pricing will impact the development, approval, and access to new drugs?

So value-based pricing, you hear a lot about it. You hear people trying to implement it, manufacturers bring proposals to payers on value-based pricing models. What we don't hear of are the results and if they are working or not.

I don't know in the long run, if value-based pricing will be the 'be all and end all' and change the way drugs are paid for in the United States. I'm going to say no but I think there's some value to value-based pricing and in how you look at drugs and evaluate them.

I think especially some of these high cost therapies have opportunities for some value-based models. As I was saying earlier, there's more and more of these high cost, really expensive products and looking at outcomes and measuring outcomes, that kind of thing are for these gene therapies and other expensive therapies.

I'm not saying value-based pricing will take over but I think there's opportunity in the future for use of them.