10 new 'breakthrough' drugs to cost $50B for Medicare, Medicaid over next decade

Medicare and Medicaid will have to spend almost $50 billion to cover just 10 new specialty medications in the next 10 years, according to a new report from Avalere Health.

The drugs, which are currently in the development pipeline, are considered "breakthrough" medications because they can significantly improve treatments for conditions such as hepatitis C and breast cancer.

Avalere's report, commissioned by America's Health Insurance Plans (AHIP), projected that Medicare will spend the bulk of the money--more than $31 billion. Medicaid will pay roughly $16 billion for the drugs. The remaining $2 billion will be spent on subsidies for consumers with plans sold on health insurance exchanges.

"These 10 drugs represent a small subset of the more than 5,400 medications in the drug pipeline," AHIP said in a statement. "With many more drug manufacturers seeking breakthrough status and more than half of the total pipeline in later stages of clinical development ... total prescription drug costs are expected to dramatically increase in the coming years."

That's why AHIP Interim CEO Dan Durham told CNBC that the healthcare industry is "witnessing a return to dramatic increases of year-to-year drug spending."

As a result, he said prescription drug costs must be more transparent and called for "a sustainable pricing solution that will ensure patients can access the medications they need."

Pharmaceutical Research and Manufacturers of America pushed back on the report, claiming that it "just selects a few select medicines to look at to advance a narrative that doesn't match reality," PhRMA spokeswoman Holly Campbell told The Hill.

To learn more:
- here's the Avalere report
- read the AHIP statement
- check out the CNBC article
- read The Hill article

Suggested Articles

A commonly used format for formulary submissions has been updated to enable drug companies to share information with payers on unapproved products.

NextGen Healthcare's Rusty Frantz sounded off about hospitals opposing proposed federal data-sharing rules while also sharing data with tech giants.

Welcome to this week's Chutes & Ladders, our roundup of hirings, firings and retirings throughout the industry.