Prescription drug prices singled out as health care cost driver
The president and CEO of Harvard Pilgrim Health Care made perfectly clear who he thinks bears significant blame for health care spending that is growing faster than state policymakers would like.
"Our focus is all about pharmacy costs," Eric Schultz, who was hired to run the insurance carrier in 2010 after Gov. Charlie Baker stepped down in 2009, said as he introduced himself to the Health Policy Commission on Monday.
Schultz displayed a chart showing the total amount spent on two of the world's top selling drugs -- Humira and Enbrel -- and a "remarkable increase" in the cost of those drugs since 2012.
"What you can see is the charge has gone from $2,300 per patient per month to now almost $5,000," he said, referring to the average wholesale price of the drugs used to treat arthritis.
Total health care spending in Massachusetts increased 4.1 percent in 2015 to $57.4 billion, growing at a rate more rapid than the state's official benchmark of 3.6 percent, according to the Center for Health Information and Analysis (CHIA). Prescription drug spending of about $8.1 billion accounted for about 36 percent of the overall growth.
If prescription drug spending growth had been held at the 3.6 percent benchmark, the state's overall health care spending would have increased at a rate less than the goal last year, according to David Auerbach, the HPC's director of research and cost trends.
Schultz's testimony at the HPC's annual health care cost trends hearing confirmed what the commission found when it gathered information from 11 health care payers ahead of Monday's hearing: that insurance carriers and health plans see pharmaceutical spending as the top area of concern for meeting the benchmark.
Tuesday's session of the HPC's cost trends hearing is slated to feature a presentation from Attorney General Maura Healey's office on prescription drug costs as well as a panel of industry experts that will discuss strategies to address pharmaceutical spending growth.
Earlier this month, Healey released a report that found drug costs continue to grow despite attempts to manage pharmaceutical spending, and that spending on specialty drugs -- higher-cost medications that treat chronic, complex conditions like cancer and Hepatitis C -- is the "primary driver of total growth in pharmaceutical spending."
The report analyzed the cost of prescription drugs for major health plans after factoring in discounts and manufacturer rebates, which Healey's office described as a first-time endeavor in Massachusetts. Healey recommended requiring that "aggregated, standardized information on drug rebates" be reported to CHIA to allow greater understanding of actual spending on prescription drugs.
During a panel on the provider market Monday afternoon, Tufts Health Plan president and CEO Thomas Croswell referred to pharmaceuticals as "the elephant in the room in terms of the price issue."
"I mean, it's killing all of us, whether you're in the hospital business or whether you're trying to cover it as an insurance program," he said.
HPC Chairman Dr. Stuart Altman said he understands the frustration insurance carriers and health care providers have over pharmaceutical costs, but pressed Schultz and others to work on solutions to the problem.
"We've been working the utilization angle by rounding up the usual suspects, you know, physician-driven prescribing guidelines, therapeutic substitution, pharmacy benefits managers," Andrew Dreyfus, president and CEO of Blue Cross Blue Shield of Massachusetts, said. "The thing that's maddening to us is that these are not just the magical cures, some new drug. Sometimes they're drugs that I was prescribing as an intern 30 years ago where they just bought up all the generic manufacturing capability ... I mean, it's ridiculous to see the bumps in these drugs."
Schultz said he doesn't want to harm a pharmaceutical drug industry that develops life-saving drugs, but does want to work on federal and state "common sense" legislation that would identify the 10 or 15 largest drug price increases and make the pharmaceutical company justify their prices.
"We do want to put a spotlight on those gougers -- and that's what they are -- there are gougers out there that are behaving very poorly and hiding under the veil of a statement that they're saving lives so that they can increase prices as dramatically as these companies have," he said. "If we don't legislate something that demands appropriate transparency for the bad players ... we're going to see these trends continue and I believe the slopes are increasing."
On Beacon Hill this session, a bill (S 1048) that sought to rein in rising prescription drug costs through pricing disclosure mandates failed to emerge from a legislative committee. Supporters said the bill would let the state and individual consumers know exactly what they're paying for pharmaceutical products at a time when rising health care costs account for a growing portion of the state budget. But critics said it would have stifled the state's pharmaceutical industry and scared away potential investors.
Altman said he is "sort of getting tired of the visuals of prescription drug prices going up," and lamented that so many of the proposed solutions require action at the federal level.
"We don't have a silver bullet, but a few more bullets in our armament would be good," he said.
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