WASHINGTON, DC — The increasing number of patients using specialty drugs has helped to drive a 12% increase in the nation's overall pharmaceutical spending so far in 2015, according to an analysis presented at a US Department of Health and Human Services (HHS) conference Friday.
As one of the biggest payers, the federal government has been acutely feeling the rise, said Centers for Medicare and Medicaid Services Acting Administrator Andy Slavitt. He said drug spending for seniors, the working poor, children, and the disabled who receive Medicare and Medicaid went up 13% in 2014 — "the highest rate of drug spending growth since 2001."
Beneficiaries — who are responsible for premiums, copays, and coinsurance — saw an 11% increase in per capita costs in 2014, "driven by increased spending on high-cost drugs," said Slavitt.
The increases are "making this a real kitchen table issue for working families and retirees," he said, noting that the squeeze on payers and consumers helped motivate HHS to convene what it called a "Pharmaceutical Forum."
Drug prices have been fodder for some presidential candidates, who appear to be responding to a real concern among voters, Bianca DiJulio, associate director for the public opinion and survey research program at the Henry J. Kaiser Family Foundation, said at the forum.
DiJulio said that a Kaiser poll in October of a random sample of 1200 American adults found that making high-cost prescription drugs for chronic conditions affordable was the top health priority for at least three-quarters of Democrats, Republicans, and Independents. The second highest priority was seeing the government take action to lower drug prices.
Debra Whitman, PhD, AARP's chief public policy officer, said at the forum that an analysis issued by the seniors' organization on November 20 found that specialty drug costs have become a major budget-buster, rising 11% in 2013. The average annual cost of a specialty drug for a chronic condition was more than $53,000 that year, more than twice the median income of $23,500 for Medicare beneficiaries, and almost three-and-a-half times higher than the average Social Security retirement benefit of $15,526 over the same time period, said Dr Whitman.
Hepatitis C Drugs Major Factor
One of the biggest drivers of the 12% overall drug spending increase both in 2014 and so far in 2015 has been new hepatitis C therapies, said Douglas Long, vice president of industry relations at IMS Health. But only 3% of the overall spending rise was due to price, he said at the forum.
Although Gilead Sciences' Sovaldi (sofosbuvir) — at roughly $1,000 a pill — became the single-biggest-selling pharmaceutical in 2014, it also drew thousands of new users because Sovaldi and the newer therapies like it represent a cure, said Long. The number of people treated today is six times what it was 5 years ago with the previous generation of therapies, he said.
But those pills are also straining government budgets. "This disease has become one of the main cost drivers for Medicare's prescription program," said HHS Secretary Sylvia Burwell, noting that hepatitis C affects some 3 million Americans, 75% of whom are Baby Boomers. "Impacts have also been significant in state Medicaid programs," she said.
The nation is on track to spend $400 billion on pharmaceuticals in 2015, with hepatitis C, diabetes, and oncology drugs the biggest drivers, Long said.
Specialty drug spending is growing at a 35% rate compared with 8% for traditional pharmaceuticals. By 2020, according to a new IMS report, specialty pharmaceuticals will account for only 2% of prescriptions, but 30% of drug spending in the United States, he said.
Going forward, IMS expects proprotein convertase subtilisin kexin 9 (PCSK9) inhibitors, anti-PD1s and anti-PDL1s, and therapies for autoimmune disorders to present budget challenges equivalent to those of hepatitis C drugs, said Long.
Despite the rising-cost trend, because drugs represent only 12% of the nation's overall health spending they are "one of the better values," Long said.
"Trying to come up with the money is a different thing," though, he said.
Feds Want Transparency on Price
Both Burwell and Slavitt said that the government was trying to balance the need for new therapies — and companies' ability to innovate and compete — with patients' access to affordable products.
Slavitt said that the feds wanted more transparency on how prices were set, and would seek more effectiveness data, also. "We must increase the transparency of the information available about drug pricing and value," he said.
And the government is also looking at creating incentives for drug makers to prove value — such as rewards for keeping patients out of hospitals, he said.
"How do we think in terms of episodes of effective treatment, rather than just the cost of a pill?" said Slavitt.
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Cite this: Specialty Drugs a Focus at HHS Forum on High Drug Costs - Medscape - Nov 23, 2015.