Expensive new products ... potential government regulation … pharma-insurer talks
High prescription drug prices will be a top
tier political issue in 2016 as the expected introduction of many expensive specialty medications to treat chronic conditions threatens to drive up healthcare spending.
“With drugs in development for diabetes and hypertension, these are conditions that affect a very large number of people,” said John Rother, CEO of the National Coalition on Health Care. “The fiscal impact could be quite substantial on private health plans, government and individuals.”
Concerns about how pharmaceutical companies set prices on new and old drugs exploded into the public consciousness in 2013 when Gilead Sciences introduced its $84,000 hepatitis C treatment Sovaldi. Since then, specialty drugs have been introduced with prices well above $100,000 for a year’s worth of treatment, a trend that is expected to accelerate in 2016. In addition, drugmakers have jacked up prices for generic drugs that have been around for many years.
“It’s clear government must play some role because it pays for the majority of drug costs,” Rother said. “But I don’t think it’s clear yet exactly what steps will be taken and when.” Whether the federal government acts to control drug costs, and how it does so, will depend heavily on who wins the presidential election in November, he added.
Democratic candidates Hillary Clinton and Bernie Sanders have outlined plans to have Medicare negotiate prices with drugmakers, and Clinton wants to cap consumers’ out-of-pocket costs for drugs. In contrast, Republican presidential candidates generally favor easing the drug approval process to reduce drug development costs.
There will be discussion this year of basing prices on the cost-effectiveness of products, said Steve Knievel, an organizer for the consumer advocacy group Public Citizen’s Global Access to Medicines Program.
Two new cholesterol-lowering drugs, Praluent and Repatha, will prominently raise the costeffectiveness issue. Their list price of $11,500 for a year’s worth is projected to significantly increase drug spending. Critics question how much of an advantage they have over existing, much cheaper statin drugs for many patients.
The pharmaceutical industry will be closely watched to see if it shows willingness to work with other stakeholders on pricing. Stephen Ubl, the new CEO of the Pharmaceutical Research and Manufacturers of America, reportedly has met with Marilyn Tavenner, head of America’s Health Insurance Plans, to discuss possible solutions.
“We’ll have to see whether they decide to act more responsibly without being compelled to do so through government action,” Knievel said.