TABLE 1.

Policy Options for Addressing Affordability of Prescription Drugs

Modify supply

Speed approval or reduce investment costs FDA reform4 Make research and development more predictable4 Increase competition Accelerate approval of competitors3,4 Modify monopoly rules Patent buyout3 Modify patent duration27

Modify demand

Payment reform4,6 ACOs or shared savings and risk contracts with providers Episode-based treatment Patient-centered medical home Consumer/provider price transparency4,28 Consumer/provider value transparency (e.g., require cost-effectiveness information at launch)3 Update value and outcomes information via registries3 Educational measures Towards providers: academic detailing29,30 Towards patients: mass media interventions (radio, television, newspapers, posters, and leaflets)31 Utilization management7 Prior authorization Formulary Step therapy Specialist prescribing Quantity limits Budget: financial ceilings on health care expenditures (e.g., United Kingdom, Denmark, Italy)7 Global General practitioner level (e.g., Germany and United Kingdom) Incorporate cost into clinical guidelines32

Directly modify price

Reference pricing5,7 Reference other countries5 Reference a bioequivalent (i.e., generic) drug8 Reference a therapeutically equivalent drug8 Set profit ceilings7 Allow CMS to negotiate or regulate prices5

Increase budget

Toward patients Government-established funds for expensive drug purchases. Patient borrows from the funds to pay for out-of-pocket costs, and the loan is amortized over a repayment period as with other consumer loans, such as mortgages, credit card debt, and auto and student loans9 Securitization or government guarantees to reduce interest rates for loans10 Toward payers Federal government could guarantee or subsidize health care loans to payers to achieve lower interest rates Payments over time11,12 Risk-sharing payments over time13,14 Reinsurance of payers11,12

Reward value

Incentivize research and development for cost-effective treatments3 Indication-based pricing4,17,18 Performance-based risk sharing5,14 HealthCoin20,21 Incorporate value into evaluations and negotiations5,15,16

ACO = accountable care organization; CMS = Centers for Medicare & Medicaid Services; FDA = U.S. Food and Drug Administration.