Health Care Business

By Harris Meyer  | October 1, 2016

Patients are complaining their drugs are unaffordable. Insurers are protesting that specialty drug costs are forcing them to jack up premiums. State Medicaid directors say spiking pharmacy costs are forcing them to make painful coverage trade-offs.
Congress has been grilling drug company executives over their big price hikes.[..]

Yet the issue of how to make drugs more affordable for individual patients and society is so complex and sensitive—and drug industry opposition so formidable—that a comprehensive, politically viable approach to solving the problem has yet to emerge.
The impasse has left patients, insurers and healthcare provider groups pushing for immediate relief from the most egregious price spikes, like Mylan's 550% list price increases over eight years on EpiPen epinephrine auto-injectors, a must-have product for counteracting allergic reactions. [..]

Public opinion clearly backs quick action. A Kaiser Family Foundation survey last month found 77% of Americans say prescription drug costs are unreasonable, with 82% backing giving Medicare the power to negotiate drug prices.
And the mounting public pressure has produced some results. One drugmaker, Allergan, recently promised to voluntarily limit price hikes on its products to once a year and keep them to single-digit percentage increases.
But those are the exceptions—not the rule. Other drug companies are shifting the blame to insurers, arguing that health plans are pushing excessive costs on members through high deductibles and copayments.[..]

Making policy action tricky is that rising prices for generic, brand-name and biologic products each have different causes, and each requires a different set of policies to bring under control. And each category has its own set of stakeholders ready to thwart decisive action that would bring down prices.
With brand-name drugs, many stakeholders have bought into the idea that lower prices will reduce the financial incentives for developing new breakthrough products. With biologics, patient and physician groups worry that potentially cheaper biosimilars may not have the same efficacy as the brand-name biologics they replace. [..]

Despite all the talk about the need for action, when someone proposes or implements even relatively modest measures to address drug costs, there's often a furious backlash. [...]

Emotional criticisms like this suggest that the American public may be unprepared for explicit efforts to evaluate whether a drug or other type of treatment is worth the cost—unlike in other advanced countries such as Great Britain that openly weigh costs versus benefits in making coverage decisions. [...}

While strengthening generic competition could be the low-hanging fruit in tackling drug costs, ICER's Pearson cautioned that in pharmacy policy and politics, nothing is ever simple. “Even the no-brainers end up being more complicated than we think they are,” he said.