Rising pharmaceutical prices have been the subject of conversation for a while now. There were many conversations during the recent Presidential race and many ideas around how to curb these costs. It appears that the current administration plans to take an aggressive stance on pharmacy cost control and with good reason. It has been projected that overall pharmaceutical spending will encompass over 50% of the total medical spending within the United States within the next 5-6 years. That is a staggering number when you consider total healthcare spending in the U. S in 2015 was $3.2 trillion. If, in the year 2020, half of these costs are projected to be pharmaceutical, it’s easy to why this trend is top of mind.
There have been many ideas targeting ways to control these costs, including:
- Limiting drug makers’ ability to raise costs without providing data to support an increase, as well as limit their ability to end deals with generic manufacturers that would delay or keep their lower cost options from reaching the market.
- Offering Americans the opportunity to import medications from other countries, as proposed by Bernie Sanders and Amy Klobuchar.
- Allowing the government to negotiate prices on behalf of Medicare.
Most recently, the 21st Century Cures Act was signed into law to help expedite medications getting to market. On average, it takes 12 years for a medication to reach the market. As mentioned in a recent New York Times article, “Scott Whitaker, president and chief executive of the Advanced Medical Technology Association, a trade group for device makers, hailed the new law for creating “an expedited pathway for breakthrough medical technologies – those that offer the best hope for patients with life-threatening diseases” and few treatment options. In reviewing new devices, the law says, the FDA shall consider the “least burdensome” means of showing their safety.”
There appear to be two dominant priorities as people fight to rein in pharmaceutical costs: bringing lower cost options to the market through market reform and ensuring these changes aren’t jeopardizing consumer/participant safety.
A significant trend in the medical insurance market over the last year or two has been to evaluate pharmacy formularies to try to reduce costs. Insurers are taking harder looks at ways to control these pharmacy costs as they try to keep medical premiums in check. As long as pharmaceutical costs continue to rise at levels that we can’t sustain, 11% last year alone, we will continue to see individuals and insurers push to try to reduce costs.