Advances in pharmaceutical technology are helping millions of Americans in ways never thought possible before, but development of new products is an expensive undertaking. A new study for the Blue Cross Blue Shield Association of America and the Health Insurance Association of America concludes that new drug development will help lead U.S. prescription drug expenditures to double by 2004, and that 40 percent of the increased spending on prescription drugs will be for those now in development. Some pipeline drugs will be breakthrough products — for conditions for which no effective treatment exists — while others will compete with current treatments.

The researchers predict annual prescription drug-expenditure increases of 15–18 percent, a steeper rise than the 10–13 percent annual rate projected by the Health Care Financing Administration. By 2004, the report concludes, annual prescription drug spending will be $212 billion; by HCFA's reckoning, that figure will be $168 billion.

Estimates of annual U.S. prescription drug expenditures, in billions

Researchers at the School of Pharmacy of the University of Maryland based their projections on price and utilization data published in American Druggist for all prescriptions filled between 1989 and 1998. The implication for health plans, they write, is that payers need to take a more comprehensive look at the cost and benefits of new drug therapies, compared to those of existing pharmaceutical and medical interventions.

SOURCES: BLUE CROSS BLUE SHIELD ASSOCIATION, WASHINGTON, AND HEALTH INSURANCE ASSOCIATION OF AMERICA, WASHINGTON, 2000; HEALTH CARE FINANCING ADMINISTRATION, WASHINGTON, 2000

Managed Care’s Top Ten Articles of 2016

There’s a lot more going on in health care than mergers (Aetna-Humana, Anthem-Cigna) creating huge players. Hundreds of insurers operate in 50 different states. Self-insured employers, ACA public exchanges, Medicare Advantage, and Medicaid managed care plans crowd an increasingly complex market.

Major health care players are determined to make health information exchanges (HIEs) work. The push toward value-based payment alone almost guarantees that HIEs will be tweaked, poked, prodded, and overhauled until they deliver on their promise. The goal: straight talk from and among tech systems.

They bring a different mindset. They’re willing to work in teams and focus on the sort of evidence-based medicine that can guide health care’s transformation into a system based on value. One question: How well will this new generation of data-driven MDs deal with patients?

The surge of new MS treatments have been for the relapsing-remitting form of the disease. There’s hope for sufferers of a different form of MS. By homing in on CD20-positive B cells, ocrelizumab is able to knock them out and other aberrant B cells circulating in the bloodstream.

A flood of tests have insurers ramping up prior authorization and utilization review. Information overload is a problem. As doctors struggle to keep up, health plans need to get ahead of the development of the technology in order to successfully manage genetic testing appropriately.

Having the data is one thing. Knowing how to use it is another. Applying its computational power to the data, a company called RowdMap puts providers into high-, medium-, and low-value buckets compared with peers in their markets, using specific benchmarks to show why outliers differ from the norm.
Competition among manufacturers, industry consolidation, and capitalization on me-too drugs are cranking up generic and branded drug prices. This increase has compelled PBMs, health plan sponsors, and retail pharmacies to find novel ways to turn a profit, often at the expense of the consumer.
The development of recombinant DNA and other technologies has added a new dimension to care. These medications have revolutionized the treatment of rheumatoid arthritis and many of the other 80 or so autoimmune diseases. But they can be budget busters and have a tricky side effect profile.

Shelley Slade
Vogel, Slade & Goldstein

Hub programs have emerged as a profitable new line of business in the sales and distribution side of the pharmaceutical industry that has got more than its fair share of wheeling and dealing. But they spell trouble if they spark collusion, threaten patients, or waste federal dollars.

More companies are self-insuring—and it’s not just large employers that are striking out on their own. The percentage of employers who fully self-insure increased by 44% in 1999 to 63% in 2015. Self-insurance may give employers more control over benefit packages, and stop-loss protects them against uncapped liability.