Increase in Rx costs surpasses inflation rate
Increases in the prices of prescription drugs have far outpaced the rate of general inflation over the years, as increases in the prices of branded and specialty drugs have offset decreases in the prices of generics, according to a new report by AARP’s research arm.
The study, conducted by AARP’s Public Policy Institute, found that the cumulative change in drug prices from 2005 to 2009 was almost double the rate of inflation. As a result, the average annual cost of drug therapy continued to rise.
The study was based on examinations of retail prices for the 514 drugs most used by Medicare beneficiaries. In 2009, while the rate of general inflation was -0.3%, the drugs increased in price by an average of 4.8%. Branded drugs increased in price by 8.3%, while specialty drugs rose by 8.9% and generic drugs decreased by 7.8%.
“For the people who rely on these drugs, such relentless price increases have serious implications,” AARP SVP public strategy Cheryl Matheis said. “Despite price reductions for generics, it’s evident that the considerable increases in brand-name and specialty drug prices are still leaving Americans with overall costs that are growing far faster than the rate of inflation.”
The report found that the “marked” decreases in prices of generic drugs between 2005 and 2007 dropped the rate of increase to slightly below the rate of general inflation for almost six years, but since 2008, continued growth in specialty and branded drugs have “more than offset” the lower costs of generics. The report called the finding striking because generics already had lower prices and represented slightly more than one-fifth of total drug expenditures by Medicare Part D plans in 2006.
For the 469 drugs on the market since the end of 2004, prices increased by 25.6% from 2005 to 2009, while the general inflation rate was 13.3%. Consumers taking drugs to treat chronic diseases found that their average annual cost increased from $2,160 to $3,168.
The report received praise from the country’s largest trade group representing generic drug manufacturers. “The AARP report offers an important reminder of the vital role generic medicines play in reducing costs throughout the healthcare system, while providing patients access to safe, effective and affordable treatment options,” Generic Pharmaceutical Association president and CEO Ralph Neas said. “With evidence of the dramatic savings generic drugs can achieve becoming more prevalent every day, we urge lawmakers to ensure that efforts to reduce spending do not in any way dampen the availability and use of lifesaving and life-enhancing generic medicines. The future of the U.S. healthcare system and the national economy depend on it.”
Readers’ PBM perspectives
A guest column in the March 12 issue of DSN, “Let me tell you what PBMs do,” by Republican Utah State Rep. Evan Vickers, really set off a firestorm of debate on DrugStoreNews.com and on DSN’s social media sites. Check out this snippet from two online users with VERY different perspectives on all of this. For Rep. Vickers’ complete column and to add your own views to the debate, click here.
This article is hopelessly hypocritical, biased and unfair. It’s not supported by facts in most cases. In cases where accusations are supported by facts, they are half-truths. There are many clever implications that the author does not actually explicitly state. Here’s a point-by-point of the accusations.
Accusation: As proof of these claims, the ad campaign cites conclusions of a study by Visante that was prepared for the PCMA, the trade group for the PBMs, which is a bit like a defendant hiring his own expert witness.
Comment: The author implicitly accused Express Scripts (ESI) of paying Visante, but offered no attempt whatsoever to support that accusation.
Accusation: PBMs profit at the expense of consumers.
Comment: So what? Doesn’t the author like capitalism? By definition, profit comes at the expense of customers. … It seems there’s another implicit message in this accusation — that PBMs profit at the expense of consumers and that amount of profit is unfair and greedy. That’s false. PBMs are aligned in their interest with the interest of plan sponsors.
Accusation: PBMs eliminate competition from smaller pharmacies.
Comment: Um, I’m … flummoxed. … A market-based economy means there will be winners and losers, unfortunately.
Kurtwz, your response is hopelessly hypocritical and biased. I bet you work for PCMA or some PBM.
1) Express Scripts is a member of PCMA, and PCMA would not print anything that was unfavorable to ESI. …
2) PBMs are supposed to make a profit via the plan sponsors, since they’re the ones paying the PBM. But a PBM that takes a rebate from a drug company is costing consumers. Especially consumers that are not aligned with that PBM. …
3) PBMs eliminate competition from smaller pharmacies. It’s one thing to be eliminated competing against another pharmacy — that’s the free market — … [but] the small independents aren’t being allowed to compete. They’re being handed a contract and told [to] take it or we’ll take away your customers. Sounds more like a mafia protection business than health care.
RxImpact Day: Now it’s your turn
The fourth annual National Association of Chain Drug Stores RxImpact Day on Capitol Hill wrapped up March 22 on a high note. With pharmacists and pharmacy students from around the country able to secure more than 350 meetings with members of the U.S. House and Senate and their staffs last week, most lawmakers who serve on congressional committees with jurisdiction on healthcare issues got to hear pharmacy’s position on prescription reimbursements, fair payment for pharmacy services and the proposed merger of pharmacy benefit management giants Express Scripts and Medco.
These kinds of outreach efforts to those in power are critical to the future of pharmacy as a profession and a viable industry. Having sat in on congressional hearings and at press conferences with many members of Congress, I can tell you that many of the most influential lawmakers on Capitol Hill still only have a dim understanding of the realities of the pharmacy profession, and of its untapped ability to contribute more fully to the nation’s frayed healthcare network, serve patients more effectively and save billions in healthcare costs.
Pharmacy certainly has its champions on the Hill. But let’s keep in mind that members of the House and Senate are bombarded every day with a slew of national and international concerns and priorities, not to mention a barrage of competing messages from other healthcare stakeholders.
Sometimes, those messages run directly counter to the interests of community pharmacy. One prime example: the pharmacy benefit management industry’s continuing effort to promote the cost-saving benefits, real or imagined, of shifting patients covered by Medicare, Medicaid and the military’s Tricare program into mandatory mail-order pharmacy benefit programs.
There’s also constant pressure to downplay the benefits that pharmacists provide to patients through disease management services, medication therapy management, immunizations and other interventions beyond basic dispensing and counseling. By the same token, the concept of reimbursing pharmacists adequately for those services is under steady assault under the guise of cost-cutting efforts.
Some senators and members of Congress believe them. And many more don’t quite know what to believe. With health costs rising to unsustainable levels, the temptation to cut short-term Medicare and Medicaid costs willy-nilly – by cutting reimbursement rates for generics or for MTM, for instance – must be hard to resist in budget negotiations.
Lawmakers have to be convinced that spending for those and other pharmacy services pays off big in long-term benefits and cost savings. What’s more, they need to be reminded that branded and generic pharmaceuticals remain one of the best bargains in health care, by helping patients manage their conditions and keeping them out of acute-care centers and hospitals.
It’s up to pharmacy professionals and the companies they work for to deliver that message. RxImpact Day is one effective, high-profile way to lobby Congress directly on pharmacy’s behalf, but the campaign to tell pharmacy’s story can’t end when the white coats disappear from Capitol Hill for another year.
If you’re a pharmacy student or a newly minted professional, it’s not too early to get engaged in that campaign. This is a long-term, profession-wide fight for professional standing, a fair reimbursement and a viable future for pharmacy.
To download a copy of the DSN special supplement that went to members of Congress, “Rx Impact: Community pharmacy brings innovation to patient care,” click here.