Transcript Title to Come - Michigan Association of Health Plans

Continuing Trends and Impact of
Specialty Pharmaceuticals
The Michigan Association of Health Plans
John Rother, President and CEO
National Coalition on Health Care
Rx Spending Growth
 In 2015, Rx spending
total $457 billion, 16.7%
of total health
expenditure.
 During the 1990s, Rx
drugs accounted for only
7% of NHE.
 Rx spending is growing
faster than any other
medical category.
14%
Annual Growth in Expenditures
12%
Prescription
drug spending
annual growth
10%
8%
National
health
expenditure
annual growth
6%
4%
2%
0%
2006 2007 2008 2009 2010 2011 2012 2013 2014
Source: CMS, National Health Expenditures by type of service and source of funds, CY 1960-2014
Recent acceleration
 Increases in list prices of branded medicines (5-7% net)
 Lower impact from patent expirations
 New brands
Spending Growth Drivers (USD Billions)
Per Capita Drug Spending
Source: Health Affairs
What’s behind higher US drug spending?
 Analysis shows that relative increase in US prices
compared to other countries was driven largely by
biologics (Health Affairs)
 Over a ten year time period, the US saw a 181% increase
in the average price of prescribed biologics
 In UK, these prices rose “only” 61%
 US physicians were also quickest to prescribe biologics
when they arrived on the market
Specialty drugs are a major driving
force.
Blockbuster Specialty Drugs
 In 2014, Sovaldi was launched for
$1000 a pill or $80,000 for a course of
treatment  represents new norm.
 Median price for cancer drugs released
in past 5 y exceeds $10,000, up from
$4500 a decade earlier (AHIP).
 8 of the 10 top-selling drugs in 2016
will probably be biologics, some of
which are 22x as expensive as
traditional drugs (AHIP).
Blockbuster Specialty Drugs
 Specialty drugs account for 1%
of prescriptions and 32% of Rx
spending (AHIP).
 Specialty Rx spending increased
11% per year from 2009 to
2015 (HHS).
Price Hikes for Existing Drugs
 Turing CEO Martin Shkreli made headlines for marking up Daraprim from
$13.50 to $750 per pill (↑5,556%) overnight, but he is NOT an outlier.
 Pharma companies increased drug prices by >10% in 2015. This is the 3rd
year in a row with growth >10% (Wash Post).
 Brand name drugs – 14.8% growth
 Specialty drugs – 9.2% growth
 Generic drugs – 2.93% growth
Price Hikes For More Common Rxs
• Average prices of some
heavily used drugs have
increased astronomically.
Lack of transparency in pricing
 Pharmaceutical industry has said that list prices not accurate
reflection of what consumers pay for drugs, because they do not
take discounts into account.
 Bloomberg analysis of 39 medicines with global sales of more than
$1 billion a year showed that 30 of them logged price increases of
more than double the rate of inflation from 2009 to 2015, even
after estimated discounts were factored in.
 Only 6 drugs had price increases in line with or below inflation.
Price Hikes & Medicare Population
 Average price for
400 widely used
Medicare drugs rose 81%
over 8 years (AARP).
 Average annual cost for
specialty drug products
was $53,384 for
Medicare beneficiaries.
 Social Security
retirement benefit
averages $15,526.
Rx Crisis: Impacts on Americans
 Over 500,000 Americans had annual drug costs >$50,000 in 2014, a 63%
increase over 2013 (Pew).
 Specialty drugs account for ½ of care costs for many chronic diseases
(United Health).
 8% of adults stopped taking a drug because of costs and another 19%
asked doctors for lower-costs drugs or tried alternative therapies (CDC).
 After starting expensive drugs, people forgo other medical services like
physician visits or procedures (Joyce et al., 2008).
 Sustainable Rx pricing is the top health care concern for voters in 2016.
72% of Americans believe drug prices are too high (KFF).
Future projections
 HHS expects growth rate to remain high: 7.3% in 2016-2018.
 There are reasons to worry that growth may be even higher.
o Fewer blockbuster drugs are going off patent in the near future.
o 42% of drugs in FDA pipeline are specialty (AHIP).
o Biologics in the pipeline could have 6-figure price tags.
 Rx spending is an important contributor to long-term growth in health care
costs.
Achieving a balance is crucial
 Increasing costs born by consumers
 Prohibitive – or at least discouraging – prices mean lower use of life-saving
therapies
 Why are prices so high? Policy should help achieve better balance between
innovation and affordability.
AFFORDABILITY
INNOVATION
Campaign for Sustainable Rx Pricing
The Campaign for Sustainable Rx Pricing (CSRxP) is a nonpartisan coalition of organizations informing the debate on
drug pricing and finding bipartisan, market-based solutions
to lower drug prices in the United States
Our partners include:
Where do we go from here?
 CSRxP Proposals for Change:
 Transparency
 Competition
 Value
The Need for Transparency
 Drug manufacturers regularly justify pricing decisions by
citing industry-funded research that it costs billions to
bring a new drug to market
 No evidence or way to determine whether this is true
 Lack of evidence regarding factors that guide pharma
companies’ decisions in setting launch prices or deciding
to raise prices for drugs on the market
Transparency: Proposals for Change
 Releasing details of a drug’s unit price, cost of
treatment, and projection on federal spending before
FDA approval
 Annually reporting increases in a drug’s list price
 Disclosing true R&D cost for drugs
Competition: Proposals for change
 Speeding FDA approval of generic drug applications—especially for




lifesaving drugs
Reducing drug monopolies by incentivizing competition for
additional market entrants
Strengthening post-market clinical trials and surveillance
Target exclusivity protections to most innovative products
Promote uptake of biosimilars
Value: Paying for what works
 Insufficient evidence as to how new (and often
expensive) drugs compare with older interventions
 Other countries require data comparing various
treatments to help reach a value-based price
 The US market allows drug manufacturers to set the
price without asking manufacturers to justify the cost
Value: Proposals for Change
 Increase funding for private and public research on drug
pricing and value
 Require drugmakers to compare cost and outcomes of
new versus existing drugs
 Expand value-based pricing
What we’ve done so far
1. Raised visibility of the Rx price and cost issues using multiple
media outlets
2. Raised issue directly with Presidential candidates through voter
questions and polling in early primary states
3. Identified policy proposals that add transparency, competition and
market factors to Rx pricing
CSRxP Ad in Iowa, NH, and SC
Our work going forward
• Focus on six “battleground”
states in upcoming election
for events to increase
engagement with the issue:
FL, NC, OH, NV, IA, PA
• Continue to lay groundwork
for the next administration
John Rother
President & CEO
National Coalition on Health Care
1825 K Street NW, Suite 411
Washington, DC 20006
(202) 638-7151 | [email protected]
www.nchc.org | www.csrxp.org