'Unsustainable' drug prices put the squeeze on Medicaid, patients

There is no shortage of concern to go around about the "unsustainable" rise in prescription drug costs, but it is less clear what exactly can be done to stop it, according to a briefing from the Campaign for Sustainable Rx Pricing (CSRxP) Thursday at the U.S. Capitol building.

"We've had high drug costs in the past, but nothing like what we are now going to see," said John Rother, president and CEO of the National Coalition on Health Care. Thus the CSRxP seeks to preserve healthcare innovation while engaging the industry in a "serious discussion" about these spiraling costs, he said.

Cancer drugs have been especially egregious examples of the "diminishing returns" trend, said panelist Pete Bach, M.D., director of the Memorial Sloan Kettering's Center for Health Policy and Outcomes. Prices for these drugs rise faster than the quality gains they offer, he said, which means each patient or insurer dollar ultimately buys less health. The same is true of hepatitis C drugs--thanks to massive price increases, it "costs more to get less," he said.

The high cost of treating hepatitis C is a particular concern of the federal government, as a new class of drugs caused Medicare spending on the disease to experience an unprecedented 15-fold increase between 2013 and 2014--from $286 million to $4.5 billion, FierceHealthFinance previously reported. And Medicaid spent $1.33 billion on hepatitis C treatments in the third quarter of 2014 alone, according to FierceHealthPayer.

Indeed, because hepatitis C affects so many Americans, these drugs offer "a mainstream cure that still has an orphan drug price," said Matt Salo, executive director of the National Association of Medicaid Directors (NAMD). "It's that combination that was just a massive shock to the system," he said, noting that trends like this can threaten the sustainability of the Medicaid program. "This is problem that we are very concerned will continue to happen as all of these new developments come out."

In addition to driving up Medicaid costs, high drug prices also disproportionately affect older Americans, whether they rely on Medicare or have private insurance, said Leigh Purvis, director of Health Services Research for the American Association of Retired Persons (AARP).

 "Medical advances are absolutely meaningless if no one can afford them," Purvis said.

David Fleming, M.D., president of the American College of Physicians and chairman of the Department of Internal Medicine at the University of Missouri Health System, said he's particularly concerned about the effect of high drug prices on HIV-positive patients, many of whom have to pay $600-$800 out-of-pocket costs for medication and thus seek treatment past the point at which they can be effectively treated. "It's a question of access to effective healthcare, and fairness," he said.

While the healthcare industry looks for solutions to the problem, it's important to walk a fine line between controlling costs and promoting a regulatory environment that stifles the pharmaceutical industry's ability to develop new treatments, said Cary Sennett, M.D., president and CEO of the Asthma and Allergy Foundation of America. "Engaging patients at all levels" is one way to improve outcomes and thus help offset the high cost of drugs, he added.

But other countries have had far more success with maintaining patient access to drugs while promoting informed decisions about which drugs to cover and how, Purvis said, noting that AARP has singled out Germany as an especially strong example for the United States to follow.

NAMD, on the other hand, wants Congress to review its drug payment and reimbursement regulations to ensure that the innovations proposed in the 21st-Century Cures initiative, or similar proposals like President Barack Obama's Precision Medicine Initiative, are "appropriately balanced with equitable pharmaceutical pricing and payment strategies that create a sustainable and fiscally responsible competitive market," according to a letter issued by the group Wednesday.

"Innovation and cures are a good thing--but we have to keep in mind the impact of the costs," Salo said.

The recent outrage over hepatitis C drug prices also may serve as a breaking point for the issue of cost control, FierceHealthFinance has reported, and the existence of large drug purchasers like Express Scripts has helped create more competition in the industry.

Ultimately, if the market continues as it has, the trend of flat--or even dropping--healthcare spending will not continue, Rother said, concluding, "the more we can measure, the more we can reward value, I think the better off we'll be."