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AIS's Health Business Daily
Featured Story October 28, 2008 New Report Reveals Huge Increases in Cost of Specialty Drugs Reprinted from SPECIALTY PHARMACY NEWS, a monthly newsletter designed to help health plans, PBMs, providers and employers manage costs more aggressively and deliver biotechs and injectables more effectively. By Angela Maas, Managing Editor, (amaas@aispub.com) A recently released report shows that in every year since 2004, costs for the specialty drugs used most often by Medicare Part D beneficiaries have increased faster than the general inflation rate. AARP's Public Policy Institute looked at 144 specialty drugs commonly used by Part D beneficiaries, including ones for cancer, rheumatoid arthritis and multiple sclerosis. Rx Watchdog Report: Trends in Manufacturer Prices of Specialty Prescription Drugs Used by Medicare Beneficiaries, 2004-2007 showed a 5.0% manufacturer price increase from 2003 to 2004, a 6.8% hike in 2005 and another 7.9% in 2006. But 2007 had the biggest price hike over those years — 8.7%, or three times the 2.9% general inflation rate. Older Americans who take specialty drugs for chronic conditions saw an average annual increase of $1,000 in 2004 and $700 in 2005. But in 2006, the first year of the Part D benefit, per-year average costs increased $1,795, and then they rose another $2,297 in 2007. Manufacturer price hikes for these drugs also translate into higher out-of-pocket costs for beneficiaries who pay coinsurance rather than a copayment, says the report. It explains that between 20% and 33% of Medicare Prescription Drug Plans (PDPs) — as well as a growing number of commercial health plans - require coinsurance, both with and without a maximum out-of-pocket cost. "Specialty drug makers continue to raise the costs of drugs that have already been developed and tested," according to John Rother, AARP executive vice president of policy and strategy. "By doing so, they're increasing the burden on people with chronic conditions who can least afford it, as well as employer-sponsored health plans and even the American taxpayer through increased Medicare spending. If they have a good reason, we'd like to hear it." According to Ken Johnson, senior vice president of the Pharmaceutical Research and Manufacturers of America (PhRMA), the trade group that represents pharmaceutical and biotech companies, "Specialty medicines are typically used to help patients for whom alternative treatments have not been, or are no longer effective." In a prepared statement, he cites a 2008 Health Affairs study showing that specialty drugs make up less than 7% of total health care spending. "Part D is costing America's taxpayers far less than previously projected," he says. Johnson also notes that the AARP report "focuses on a small subset of prescription drugs available to Medicare prescription drug program beneficiaries and ignores rebates that Part D plans negotiate with prescription drug manufacturers on those drugs" that may be as much as 20% to 30%. The authors of the AARP report acknowledge that it does not take into account data on rebates, which "are typically confidential and not passed on in lower prices to the consumer.…Price increases are only one dimension of how much consumers pay" for a specialty drug, they say. In response to the report, the Generic Pharmaceutical Association (GPhA) contended that the findings mean that it's even more critical to create a regulatory pathway to approve follow-on biologics. "This study proves what we have consistently stated — generic competition creates substantial savings for patients," says Kathleen Jaeger, president and CEO of GPhA. "By creating a workable approval pathway for biogenerics, Congress could significantly cut costs for Medicare Part D beneficiaries." Follow-on biologics legislation, as well as allowing Americans to import drugs from other countries and promoting evidence-based research, are approaches that AARP says will make prescription drugs more affordable. "These policies can help millions of Americans better afford their prescription drugs by increasing competition and putting downward pressure on prices," contends Rother. "Congress has options — now we need results." View the AARP report
at http://assets.aarp.org/rgcenter/health/ |
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