Report: Sharp spike in Mass. pharmaceutical spending
Expensive new prescription drugs, steep climbs in the costs of some medications and a low rate of expiring patents drove a sharp increase in pharmaceutical spending in 2014, according to preliminary data presented Wednesday by the Health Policy Commission.
Early findings from the commission's 2015 Cost Trends Report show that last year's $7.3 billion in pharmacy spending in Massachusetts is a "pressing issue," accounting for 13.5 percent of total health care expenditures.
Senior Manager for Research and Cost Trends Sara Sadownik told the commission's Cost Trends and Market Performance Committee that the 13 percent growth in per capita pharmacy spending in Massachusetts from 2013 to 2014 was "just a tremendous spike after years of relatively low growth."
"2014 was clearly not a good year," Sadownik said. "The question was, 'Was that an anomaly, or is this a new trend?' The trends point towards ongoing increases in drug spending."
A report released this fall from the Center for Health Information and Analysis found that higher pharmaceutical costs contributed to the 4.8 spike in health care spending in 2014, which brought the state's total to $54 billion and exceeded the benchmark set under a 2012 cost containment law.
Sadownik said that the factors driving drug spending in Massachusetts mirror what is happening on a national level. She said drug prices have gone up overall, and that while brand-name drug prices have the greatest impact on total spending, some payers have seen generic drugs double or triple in price as well.
Such increases are not unusual, Sadownik said, but in past years have been offset but patent expirations allowing for new generic drugs. Last year, "a particularly low number" of drugs went off-patent.
Additionally, several hepatitis C drugs entered the market at extremely high prices in late 2013 and early 2014, the report found. The drug sofosbuvir, known by the brand name Sovaldi, costs $84,000 for a 12-week treatment.
Sadownik referenced two polls that she said showed support was "quite high" for government intervention or other possible solutions to rising drug prices. A recently released STAT/Harvard T.H. Chan School of Public Health poll found 84 percent of respondents favored the Medicare program negotiating with drug companies to lower the prescription prices for seniors. Eighty-six percent of the respondents in the Kaiser Family Foundation Health Tracking Poll, conducted in August, supported requiring drug companies to release information on how they set prices.
"These poll numbers are so remarkably high compared to what you would typically see, and very high numbers across both Republicans and Democrats," Sadownik said. "I think these numbers really speak to interest in action at a federal level and possible intervention at the state level."
Several bills before the Legislature seek to address health care cost issues, including some that deal with drug pricing and the powers of the Health Policy Commission. A bill filed by Sen. Mark Montigny would develop a list of "critical drugs" and require their manufacturers to report associated costs and prices (S 1048). The commission would also be able to cap prices on those drugs if members found them too expensive.
Senate President Stanley Rosenberg called the price increases identified in the report "deeply troubling" and pledged that the Senate would examine the recommendations offered in response.
"If left unaddressed costs for these drugs, which are used to treat diabetes, cancer, neurological disorders, hepatitis and other viruses, will make them unaffordable and endanger lives. This report underscores the need for action to curb unsustainable growth in drug costs," Rosenberg said in a statement. "The Senate will continue to pursue a proposal that we proposed in our FY'16 budget to strengthen the Commonwealth's purchasing power and further maximize prescription savings."
The report's preliminary findings also highlighted selected efforts to slow price growth, including value-based benchmarks, in which a third-party quantifies the value of a drug, based on its expected clinical benefit, medical savings result and price. That value can then be used in price negotiations.
Also mentioned was group purchasing, in which payers pool their purchasing power for greater leverage with drug manufacturers. Examples provided to the committee include a prescription consortium open to Oregon and Washington residents, and the Minnesota Multi-State Contracting Alliance for Pharmacy, which includes all states except Massachusetts, Connecticut and Illinois.
David Cutler, who serves on the commission as a health economist, said he is often asked what the state can do to control costs.
"I've never had a good answer for what a state could do, but it seems to me that if one answer is lots of states together could negotiate prices, maybe that's something we could push more consideration of," Cutler said. "I hate not having an answer."
The commission's full Cost Trends Report is scheduled to be presented on Dec. 16.
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