Your Drug Costs Are Going Up
Friday, November 20, 2009 | 0
By Joe Paduda
The chances of some variety of health insurance reform passing are looking more likely and big pharma is getting ready.
By raising branded drug prices 9% (so far) this year, and this at a time when the Consumer Price Index fell by 1.3%.
You may recall the big press event when pharma and the White House announced their 'agreement' whereby pharma would agree to not fight reform in exchange for reductions of about $8 billion a year in pharma costs. That deal is either off the table, or it wasn't carefully enough crafted on the front end, because drug companies have been steadily raising prices for brand drugs this year, evidently in anticipation of big changes in the future. In fact, it looks like the increase so far this year more than compensates for the agreed-upon 'cuts' announced earlier.
Readers will remember the last time drug prices jumped significantly was just after the Medicare Part D program went into effect, when the largest quarterly increase in years just happened to coincide with the beginning of the program.
There are political as well as practical implications of these price increases. From a political perspective, pharma may be doing to itself exactly what healthplans did with the disastrous release of the PwC 'report'. Health plans thought they had a deal with the Administration, only to infuriate the White House and Congressional Democrats with the flawed and incomplete 'analysis' (even though the concept was right and conclusions accurate, the presentation killed any chance of objective consideration).
With the release of this analysis, Congressional Democrats have yet more evidence of the profit-driven mentality that many believe is directly responsible for our dysfunctional health care system. Do not be surprised if the reaction from Congress is loud, fast and brutal.
What does this mean for you?
This is more of an issue for group and Medicare/Mediccaid operations than for workers' comp, as comp has a greater percentage of generic fills. But there's no doubt all payers' drug costs are going up significantly this year.
If you're a PBM, get ready to explain higher drug prices.
Joe Paduda is principal of Health Strategy Associates in
Connecticut. This column was reprinted with his permission from his
blog, http://www.managedcarematters.com
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