By Martin Burruano
One of the prescriptions for transforming health care in the United States is finding a cure for skyrocketing drug costs. These costs continue to increase at an alarming and unsustainable rate, driven largely by expensive specialty medications, the random repricing of generic drugs and an overall lack of transparency in pricing.
The recent decision by Humana, a large for-profit health insurer, to adopt a policy to not cover the generic versions of certain drugs (“Out of control cost of prescriptions is a ripe target,” The Buffalo News, Aug. 10) is the latest wake-up call for our elected leaders to act.
Prescription drug expenditures represent nearly 20 percent of our nation’s health care costs. A recent study by Consumer Reports found 28 million Americans experienced a spike in the cost of their prescription medication in the past 12 months and for 4 million of them, the price was so high they walked away from their prescription altogether.
Specialty drug pricing alone is far outpacing the Consumer Price Index and is expected to increase to 44 percent of overall drug spending this year. The retail cost of widely used specialty drug therapies – those requiring special handling, administration or monitoring – averages nearly $54,000 annually, more than the median U.S. household income.
Another key factor driving the rising cost trend is the arbitrary repricing of drugs, in particular generic drugs. While generics have historically provided a lower-cost alternative to brand-name drugs, in the last two years one-fifth of established generic drugs saw prices at least double.
To manage prescription drug costs, Independent Health uses a clinically driven, value-based formulary, determined by our pharmacy and therapeutics committee composed of community physicians and pharmacists. Thus, formulary decisions are based on clinical effectiveness, safety, need and value, but more needs to be done legislatively.
The proposal by Gov. Andrew M. Cuomo earlier this year to prevent pharmacy price gouging is a good effort to cut prescription drug costs that drive up premiums. On the federal level, future efforts to replace or repair the Affordable Care Act must include legislation to curtail drug price gouging.
Greater transparency in drug pricing can also shed light on what factors into the cost of drugs and how a medication compares with other treatment options, helping consumers and patients make better choices about their health care and where their money goes.
At Independent Health, we have our own pharmacy benefit manager, Pharmacy Benefit Dimensions, and unlike most national PBMs used by other health plans, we utilize a transparent pricing model so all savings and rebates are passed through to employers, ensuring they know the exact cost of their prescriptions.
If we want a sustainable and affordable health care system that works for patients, employers and the government, we have to address the rising cost of drugs.
Martin Burruano is a registered pharmacist and vice president of pharmacy at Independent Health.