Business Group on Health: U.S. pharmaceutical supply chain needs overhaul

The U.S. pharmaceutical supply chain must be remodeled to address long-standing conflicts and achieve a delivery model marked by transparency, affordability and access, a multistakeholder working committee created by Business Group on Health recently recommended to industry leaders and government regulators.

Business Group on Health is a nonprofit representing large employers’ perspectives on optimizing workforce strategy through innovative health, benefits and well-being solutions and on health policy issues

The committee, composed of employers, health plans, pharmacy benefit managers, pharmaceutical manufacturers, health systems, consultants, retailers, wholesalers and other stakeholders, worked to develop consensus-driven, disruptive solutions for a more patient-centered and financially sustainable pharmaceutical ecosystem. It is officially known as the Pharmaceutical Supply Chain Leadership Forum.

The forum convened during the past two years to study challenges within the pharmaceutical supply chain, culminating in 70 specific reform recommendations. Many of these proposed actions address the need for increased transparency in such specific areas as therapeutic alternatives and actual out-of-pocket costs.

“To a great extent, the contractual arrangements and business practices of stakeholders along the pharmaceutical supply chain have contributed to unaffordable and unsustainable drug prices, prompting calls for market- and policy-based reforms, including possible government intervention to regulate drug prices,” said Ellen Kelsay, president and CEO of Business Group on Health. “By drawing upon their deep expertise and working in consensus, forum members identified potentially disruptive, yet necessary changes.”

The committee agreed upon the following key tenets to guide the development and finalization of the specific recommendations:

• Individuals should have access to the right drug, in the right place, at the right time, and at an affordable price, as well as access to information on therapeutic alternatives, price and true out-of-pocket costs;
• Financial incentives must be realigned across the pharmaceutical supply chain to prioritize consideration of lowest-cost options to the system when clinical outcomes are similar, reduce artificial price inflation and eliminate conflicts of interest;
• Benchmarks for drug prices should be established by a transparent and independent third party, informed by a cost-effectiveness analysis and validated by real-world data evaluations; and
• Policymakers should promote policies that increase competition within the pharmaceutical market, enable market-driven reform, eliminate waste and mitigate overall cost.

To learn more about the forum’s call-to-action issued last week, please see the executive summary here.