Prescription Insurance: Why Are Costs Rising?

MedCost pharmacistBy Zafeira Sarrimanolis, PharmD, MedCost Clinical Consultant

Prescription insurance has become an increasingly major cost for employers. New drug approvals by the US Food and Drug Administration (FDA) are expected to escalate this year with multiple innovative drugs already being approved for cancer, multiple sclerosis and other conditions.

As researchers discover more treatments, costs will continue to climb. For this reason, smart management of pharmacy plans will be even more vital for employer health plans.

2017 Drug Pipeline

2016 saw a below average number of drug approvals. 2017 is expected to bounce back with 30+ new specialty drugs.

Specialty medications are high-cost prescription drugs used to treat complex conditions. The blue bar (below) shows specialty medication drug approvals. The green bar represents traditional brand and generic drugs. Technology, innovation and new scientific discoveries have caused specialty medication drug approvals to rapidly increase over the last few years.

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Growth of Novel Drugs in Prescription Insurance

In 2016, 22 novel drugs were approved, which was the lowest number since 2010. A novel drug is an innovative product with a unique chemical structure that has never been approved by the FDA before.  Typically novel drugs meet an unmet medical need.

prescription insurance As of May 5th, 20 novel drugs have already been approved this year. It’s an exciting time for healthcare as we treat more complex conditions and improve member health and quality of life.

But it comes at a cost – literally.

 

Summary

When 1% of prescriptions drive 40-45% of an employer’s pharmacy spend, avoiding wise management is no longer optional. Part of my role as a MedCost Pharmacist is to emphasize the importance of cost-management strategies to our employers and consultants.

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I also work closely with our clients to help employers understand the importance of educating their employees about these changes and why they are needed.

It’s all about making sure each employee gets the right drug for the right medical condition at the right time. That’s how we control pharmacy costs.MedCost


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US Senate Passes 21st Century Cures Act

21st Century Cures ActA sprawling health bill that passed the Senate Wednesday and is expected to become law before the end of the year is a grab bag for industries that spent plenty of money lobbying to make sure it happened that way.

Here are some of the winners and losers in the 21st Century Cures Act:

Winners

Pharmaceutical and Medical Device Companies. The bill will likely save drug and device companies billions of dollars bringing products to market by giving the Food and Drug Administration new authority and tools to demand fewer studies from those companies and speed up approvals.

The changes represent a massive lobbying effort by 58 pharmaceutical companies, 24 device companies and 26 “biotech products and research” companies, according to a Kaiser Health News analysis of lobbying data compiled by the Center for Responsive Politics. The groups reported more than $192 million in lobbying expenses on the Cures Act and other legislative priorities, the analysis shows.

Medical schools, hospitals and physicians. The bill provides $4.8 billion over 10 years in additional funding to National Institutes of Health, the federal government’s main biomedical research organization. (The funds are not guaranteed, however, and will be subject to annual appropriations.)

The money could help researchers at universities and medical centers get hundreds of millions more dollars in research grants, most of it toward research on cancer, neurobiology and genetic medicine.

21st Century Cures ActThe bill attracted lobbying activity from more than 60 schools, 36 hospitals and several dozen groups representing physician organizations. They reported spending more than $120 million in disclosures that included Cures Act lobbying.

Mental health and substance abuse advocates. The bill provides $1 billion in state grants over two years to address opioid abuse and addiction. While most of that money goes to treatment facilities, some will fund research.

The bill also boosts funding for mental health research and treatment, with hundreds of millions of dollars authorized for dozens of existing and new programs.

Mental health, psychology and psychiatry groups spent $1.8 million on lobbying disclosures that included the Cures bill as an issue.

Patient groups. Specialty disease and patient advocacy groups supported the legislation and lobbied vigorously. Many of these groups get a portion of their funding from drug and device companies. The bill includes more patient input in the drug development and approval process, and the bill is a boost to the clout of such groups.

More than two dozen patient groups lobbied the bill, and reported spending $6.4 million in disclosures that named the bill as one of their issues.

21st Century Cures ActHealth information technology and software companies. The bill pushes federal agencies and health providers nationwide to use electronic health records systems and to collect data to enhance research and treatment. Although it doesn’t specifically fund the effort, IT and data management companies could gain millions of dollars in new business.

More than a dozen computer, software and telecom companies reported Cures Act lobbying. The groups’ total lobbying spending was $35 million on Cures as well as other legislation.

Losers

Preventive medicine. The bill cuts $3.5 billion — about 30 percent — from the Prevention and Public Health Fund established under Obamacare to promote prevention of Alzheimer’s disease, hospital acquired infections, chronic illnesses and other ailments.

Consumer and patient safety groups. Groups like Public Citizen and the National Center for Health Research either fought the law outright or sought substantial changes. Although they won on some points, these groups still say Cures opens the door for unsafe drug and device approvals and doesn’t address rising drug costs.

Hair growth patients. The bill says federal Medicaid will no longer help pay for drugs that help patients restore hair. The National Alopecia Areata Foundation spent $40,000 on lobbying disclosures this cycle that included Cures.

The FDA. The bill gives the FDA an additional $500 million through 2026 and more hiring power, but critics say it isn’t enough to cover the additional workload under the bill. The agency also got something it opposed: renewal of a controversial voucher program that awards companies that approve drugs for rare pediatric diseases.

(Kaiser Health News, Sydney Lupkin and Steven Findlay, December 7, 2016)