Drug Price Hikes Are “Unsustainable,” Medicare Chief Says

CMS aims to make medications more affordable

While Mylan’s EpiPen scandal may have made national headlines, the highly priced product didn’t earn a place on the Centers for Medicare and Medicaid Services’ (CMS) list of worst offenders, according to remarks by Andy Slavitt, the CMS’ acting administrator. In a presentation before the Biopharma Congress in Washington, DC, Slavitt warned that recent price hikes for certain medications have become “unsustainable.”

“Drug costs have become the health policy issue Americans are most anxious to see us act on, and we have a responsibility to them to explore all the options available to us to make their medications more affordable,” Slavitt said.

He noted that Part B Medicare spending doubled from 2007 to 2015, whereas Part D costs increased 8.4% in the years between 2013 and 2015. The CMS predicts average annual price increases of 6.7% to 2025.

The cost of specialty drugs is a key factor. Based on 2014 data, specialty drugs accounted for 32% of drug costs but only 1% of prescriptions, Slavitt said. He also pointed out that of the 20 drugs with the highest per-unit cost increases in Medicaid, seven were generics, with price hikes ranging from 140% to nearly 500% between 2014 and 2015.

“Cost increases are pervasive. Despite all the attention it has generated this year, Mylan’s EpiPen is not even on our top 20 list for either high price increases or spending overall in 2015,” Slavitt remarked.

He added that state governors often tell him that they can’t sustain the rising cost of drugs in their Medicaid programs.

“I was in Oregon just last week with Governor Brown, where they told me that pharmacy spending rose from 16% of costs in 2012 to 19% in 2015,” Slavitt said. “They anticipate those numbers to rise for 2016. They cannot plan for it, and now worry about being able to adequately fund their mental health system.”

In September, Democratic presidential candidate Hillary Clinton revealed what she intends to do about the drug-pricing problem if she is elected. That includes establishing a drug-price oversight group to ensure patient access to lifesaving medications and to scour for “outlier” price increases, accounting for a treatment’s production costs and its value to patients. Clinton said that she intends to push for enforcement tools that include fines on companies that take excessive price jumps, emergency importation of competing products, and other measures to spur competition.

Sources: CMS; November 4, 2016; and FiercePharma; November 7, 2016.