Spending On These 10 Drugs Could Cost Taxpayers $50 Billion – Is That Bad For Patients?
That’s a pretty provocative headline coming from an Avalere report sponsored by America’s Health Insurance Plans (AHIP), the national trade association that represents the health insurance industry. At a time when many Americans are getting worried about rising healthcare costs and the impact of the Affordable Care Act (“Obamacare”) on their pocketbooks, such a headline is going to get noticed. Furthermore, given the current negative views people have about the biopharmaceutical industry, such a headline is only going to reinforce these conceptions. The initial takeaway will likely be that, once again, these companies are gouging the public and pricing drugs at unaffordable levels.
It is helpful, however, to dig into the facts. First of all, the $50 billion spend is an estimate for a 10 year period. The estimated annual spending for these drugs are $3.13 billion by Medicare, $1.58 billion by Medicaid and $0.21 billion for health insurance exchange subsidies. This comes to about $5 billion/year which, while not trivial, doesn’t make as good a headline as the $50 billion figure.
But the 10 drugs are important ones. They have all been designated as “breakthrough drugs” by the FDA. They include drugs that cure hepatitis C, such as Viekira Pak (AbbVie), drugs to treat breast cancer like Ibrance (Pfizer) and Vertex’s cystic fibrosis drug, Orkambi. For decades researchers have been seeking drugs to treat these major diseases and we are finally seeing the payoff from these efforts. However, these drugs are expensive. The hepatitis C cures, notably, have generated a lot of publicity as the price per patient is on the order of $84,000. However, nowhere in this analysis does there appear the ultimate SAVINGS to the healthcare system that these drugs will engender. For example, curing hepatitis C will result in elimination of the downstream costs that are generated by these patients resulting from liver disease and ultimately liver transplants. Ironically, the overall benefits that these drugs bring to cancer patients, cystic fibrosis patients, etc., are rarely mentioned. Shouldn’t that be a priority as well?
However, of note is that 7 of the 10 breakthrough drugs highlighted in this report are NOT YET ON THE MARKET. Thus, the authors are guessing how the new drugs will be priced. Of course, this is what led the AHIP to fund this report. It is lobbying against the potential price of drugs that won’t be available to patients until the end of this decade, drugs that, if approved by regulators, will deliver value to the healthcare system and will save people’s lives.
Unfortunately, the AHIP is not providing a service by trumpeting that “Spending on These 10 Drugs Could Cost Taxpayers $50 Billion”. The AHIP is simply looking to protect its future earnings and profits.
Source: Forbes
