Despite efforts to control costs, the tab for American healthcare continues to climb, and pharmaceuticals take up about 15% of the total.
Healthcare costs reached $3.2 trillion in 2015, according to CMS. Prescription drug sales accounted for $448.8 billion of total health costs in 2016—a 5.8% increase over 2015 totals, half of which came from price hikes rather than increased prescriptions, according to a 2017 report on drug prices, published in the American Journal of Health-System Pharmacy. The report reveals that another 6% to 8% increase is expected before next year, with researchers warning hospitals to carefully watch pricing and utilization to protect their bottom lines.
This isn’t news to most pharmaceutical watchdogs.
“It’s like playing a game of whack-a-mole,” says Scott Knoer, PharmD, FASHP, chief pharmacy officer at the Cleveland Clinic. “The brand name drugs have gone up on average at least 10% a year, and when you look at the consumer price index, incomes are not keeping up.”
The life cycles of generic medications have led to monopolies on certain drugs, and the constant outpacing of inflation of drug prices compared to incomes and overall economic growth is making the problem even worse. Novel therapies cost hundreds of thousands of dollars, Knoer says, and life-saving therapies could exceed maximums of benefit plans well before the end of a patient’s life.
“It’s a combination of opportunism with sole source generics, brand names far outpacing inflation, and ridiculous prices for new novel therapies,” Knoer says.
But hospitals can fight back. Here’s how.