Dr. Gregg Meyer participated in a panel on pharmaceutical cost growth at the annual Health Policy Commission cost trends hearing on October 18th. Here are his thoughts on the topic.
No one can deny the important role that pharmaceuticals play in today’s health care system and in the lives of patients every day. In Massachusetts, we also know the significant contribution that the pharmaceutical and medical device industries make to our economic growth. However, such progress is not without costs. Pharmacy spending contributes disproportionately to the growth in healthcare spending.
The Center for Health Information and Analysis (CHIA) recently reported for Massachusetts in 2015:
- prescription drug spending grew by 10.2% to $8.1 billion;
- growth in pharmacy spending accounted for one third of the overall growth in total health care expenditures; and
- pharmacy spending grew the fastest of all service categories on a per member per month basis for commercially insured members (i.e., pharmacy 8.8%, inpatient 2.2%, outpatient 2.1%, and physicians 1.9%).
At Partners we experienced a similar trend among our own employees. In 2015, our growth in total medical spending was 2.4%—medical expenses accounted for only 0.1% of this amount, while pharmacy expenses accounted for 2.3%.
What we have right now is a tale of two cities. The one city, largely located around Kendall Square, is our biotechnology innovation hub, which is really important to our regional economy. The other is here, in Boston, and is represented in these struggles of everyone trying to get access to medications at a reasonable cost.
To address this cost growth challenge, Partners is educating providers on clinical guidelines, implementing tools to assist with patient adherence, monitoring prescribing patterns of individual providers and intervening where needed, and, developing inpatient and ambulatory formularies and preferred drug lists. Cross-institution committees monitor this work and assure consistent implementation. We may also create our own specialty pharmacy to manage the utilization of existing and new high-cost drugs. Our goal is to reduce overall pharmaceutical spending while still ensuring high quality care for our patients.
This trend in pharmaceutical cost growth is not limited to brand name drugs. Savings derived from prescribing generics are dwindling. Insulin prices have increased 1,000% in the last decade as we have moved to get more patients with diabetes on insulin sooner. Digoxin, a heart medication first described in the medical literature in the 1780s, has experienced a 700% price increase per pill over the past several years.
The public sector, payers, and providers need to work together to restrain unjustified growth in pharmaceutical spending. Both the federal and state governments can help by encouraging transparency, competition, and the utilization of data on comparative effectiveness in addressing drug pricing. And Partners is committed to working with the government and payers on new strategies that can help control drug pricing so that they do not continue to eat a larger piece of the medical spending pie than they already do. Our patients deserve it.
Image credit: CommonWealth Magazine