Four things executives need to know to combat rising drug spend
Executives need to ask themselves four key questions to mitigate the negative impact of rising drug costs.
In today’s healthcare landscape, few things better define the role of a managed healthcare executive than managing the industry’s constant changes. This year, the rapid growth in drug spend has proven to be among the most challenging of these changes, and experts expect the trend to continue into 2017. More than ever before, healthcare executives must set their sights squarely on understanding and developing strategies to mitigate the potentially devastating impact of rising drug costs on their organizations and their patients. To succeed in this effort, leaders must consider the following key questions.
1. What’s driving the rise in drug costs?
Drug spend has risen steadily over the past 50 years, but in recent history, it has spiked dramatically. According to the Bureau of Labor Statistics’ Producer Price Index, the average price of pharmaceuticals rose nearly 6%-well above the current U.S. inflation rate of 1%-in 2015. Specialty drugs, often used to treat chronic or complex health conditions, were the primary culprit, accounting for 73% of increased U.S. spending on medications; however, the prices of generic drugs, which typically decrease over time, also rose, according to IMS Health. While there’s little debate that these price increases will compound in the coming years, there are some competing thoughts as to why. In truth, it’s likely a combination of many factors, including:
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