Let’s talk about drug costs

In the spirit of the pharmaceutical industry’s advertising campaign slogan, “Let’s Talk about Cost,” let’s do just that. More specifically, let’s talk about the skyrocketing costs of prescription drugs and what they mean for patients and our health care system.

Two recent analyses within the span of as many weeks revealed the extent to which drug prices have soared. A recent Pharmacy Benefits Consultants review of average wholesale drug prices from January 2017 to March 2018 found “twenty prescription drugs saw their prices rise by more than 200%.”

{mosads}Days later, a comprehensive review by the Senate Homeland Security and Governmental Affairs Committee Minority revealed that “prices for each of the 20 most-prescribed brand-name drugs for seniors have increased dramatically every year for the past five years” at a rate that is “approximately ten times higher than the average annual rate of inflation.”

More specifically, from 2012 to 2017, “twelve out of the 20 most commonly prescribed brand-name drugs for seniors had their prices increased by over 50 percent” while six out of the top 20 had prices increases of more than 100 percent.

Unfortunately, such findings are hardly new — AARP’s Public Policy Institute has been documenting skyrocketing prescription drug prices for well over a decade. There is also little evidence that the situation will change any time soon. Recently released projections from the Centers for Medicare & Medicaid Services indicate that retail spending on prescription drugs will be the fastest growing category of health spending over the next decade, primarily as a result of faster growth in drug prices.

What is the end result of these price hikes? More money for drug companies — $8.5 billion in increased revenue, to be exact. However, the picture is a bit less rosy for the people who are actually using their products. High prescription drug prices often lead to higher health care premiums and cost sharing that can make it increasingly difficult for patients to access the health care that they need.

Hospital and health systems also bear a heavy financial burden of Big Pharma’s drug price increases. Back in 2016, an American Hospital Association study found that inpatient hospital drug costs soared on a per-admission basis by nearly 39 percent between 2013 and 2015. For hospitals, managing these costs means having to choose between being able to provide adequate salaries for staff, upgrade and modernize facilities, purchase new technology, and pay for drugs.

Nevertheless, it is important to acknowledge that pharmaceuticals save lives and cure disease. Without these extraordinary breakthroughs, America’s hospitals would not be able to meet our mission of advancing the health of individuals and communities and seniors’ health would undoubtedly suffer. However, the reality is that such innovation will become meaningless if no one can afford to use it.

Drug costs are out of control precisely because drug companies are in control — from the launch price to each increase thereafter. Big Pharma must be held accountable for its role in rising health insurance premiums and out-of-pocket costs.

Hospitals will continue to do their part to control costs by streamlining patients’ care, utilizing new technology and time-tested home visits to prevent unnecessary admissions and readmissions, forming accountable care organizations, and embracing new reimbursement models. Big Pharma could join this effort by working towards real solutions like removing barriers to competition and bringing more biosimilars and generics to the market sooner.

With nine out of the ten leading pharmaceutical companies spending more on expenditures like advertising and marketing than on developing new drugs, the industry should work as hard at lowering the price listed outside of a medication bottle as it does trying to sell the product within it.

Ultimately, the current system of exorbitantly-priced drugs is unsustainable for everyone — patients, employers, insurers, and taxpayer-funded programs like Medicare and Medicaid. We stand ready to work together to find commonsense and innovative solutions that will help make drugs affordable for everyone. It’s time.

Rick Pollack is the president and CEO of the American Hospital Association and Jo Ann Jenkins is CEO of AARP.