Feds call prescription drug price 2014 increase 'remarkable'

Fast-rising drug prices coupled with the use of costlier specialty drugs were the main reasons for a nearly 13% uptick in prescription drug spending in 2014, federal health officials said Tuesday.

The Department of Health and Human Services called drug growth in 2013 “subdued,” but said 2014’s increase was “remarkable” and that it remained elevated during 2015 based on preliminary estimates.

HHS estimated prescription drug spending in the U.S. was about $457 billion in 2015, or 16.7% of overall personal health care services.

That's far higher than the 10% of health care spending the pharmaceutical industry typically estimates it is responsible for, says Peter Bach, a physician and the director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center. Bach says drugmakers do that to suggest there is a "divine balance" in health spending as such a large portion of spending is attributable to factors beyond their control.

"If you look across healthcare,,,you won’t find another major sector that can set their own prices," says Bach.

The Centers for Medicare and Medicaid Services proposed a possible solution Tuesday to the high cost of drugs administered in doctors' offices or hospitals' outpatient departments, which are those the federal government covers as part of Medicare Part B.

The proposed rule would test ways to encourage doctors to prescribe the most effective drugs and reward the best results for patients. Among the options to be tested: Reducing or eliminating patient cost sharing to make it possible for more patients to get the drugs that will work best for them.

For drugs with very high costs, such as oncology drugs, and no good substitutes, the government should regularly disseminate information about the utility and safety of these drugs, says Linda Cahn, president of Pharmacy Benefit Consultants

"Doctors rarely tell their patients that many oncology drugs cost hundreds of thousands of dollars per person, but often do nothing but make people far sicker while extending life for only a  few short weeks or months," says Cahn, who also heads the National Prescription Coverage Coalition, which analyzes prices and encourages its members to use lower priced drugs.

Patient groups funded by drugmakers are largely mum on high drug prices

HHS said it doesn't expect prices to continue to rise as fast beyond 2015 as they have, but Bach says "I'm not sure that's right." He cites drug companies "maneuvers that will cause increased spending," such as repackaging existing drugs, and the new cancer drugs expected out this year.

Do drug benefit managers reduce health costs?

Cahn says her coalition reduced prescription costs or kept them flat for all of its members in 2015. She says all insurance plans and federal and state governments could do the same.

"The federal government’s conclusion that national drug spending rose 12.6% in 2014 and remained elevated in 2015 reflects that those paying for the bulk of drugs’  costs are not taking the appropriate steps to control drug costs, says Cahn.

At a Johns Hopkins University symposium on solutions to drug pricing Tuesday, experts discussed possible solutions to the soaring pharmaceutical costs. Tricia Neuman of Kaiser Family Foundation said polls by Kaiser show people blamed pharmaceutical companies, rather than insurance companies, for the high prices.

And no matter what their political party, people overwhelmingly said the federal government should be able to negotiate Medicare drug prices with drug makers.

But former House Energy and Commerce Committee Chairman Henry Waxman, D-Calif., now a visiting policy scholar at Hopkins' Bloomberg School of Public Health, said "competition is one of the best cures for the over pricing of drugs."

"I don’t think the government would have any better luck" than the pharmacy benefit managers corporations use for their drug plans, he said.  
"We’ll just have to keep looking for some things we can try out," said Waxman. "Every solution you get will lead to other problems."