Physicians call for value-based drug pricing

Photo Credit: Bill Brooks/Creative Commons

The American Medical Association is the latest organization to take a critical view of drug pricing, with its endorsement of a value-based pricing policy that would allow third-party organization to set drug prices.

The AMA, which voted in favor of the proposal on Tuesday, said it believes that the prices of drugs should be determined by independent entities; prices should be evidence-based; and the process to determine prices should be transparent, limit the burden on patients and providers, and allow for patient variation and physician discretion in what drugs they use.a

See also: PBMs push forward toward outcomes-based pricing, despite challenges

Steven Pearson, president of the Institute for Clinical and Economic Review, which publishes reports that estimate the value of certain prescription drugs, said he was not surprised by the AMA's stance on this issue because drugs are an important part of how patients currently struggle with the cost of care. Drugmakers, in recent months, have sought to discredit ICER's analyses. “Hats off to the AMA, they're sending an important signal that no matter what administration is in DC, this is an important topic for patients and doctors,” he said.

However, Pearson noted that it may be a challenge to implement value-based pricing because of certain regulations, like the best-price provision of the Medicaid prescription drug rebate program that requires drugmakers to charge Medicaid the lowest price they offer in the U.S. market. He added that if the AMA's value-based pricing recommendation was implemented with that regulation still in place, it could hinder pharmaceutical innovation.

See also: Government watchdog finds that most but not all generic drug prices are falling

The American College of Physicians, which represents internists, also has said that it endorses approaches to value-based decision-making that include more transparent drug pricing.

AMA president Andrew Gurman said in a statement that 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.”