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Blaming Pharma Won’t Lower Health Care Costs

October 19, 2017

This week, the USA Today Editorial Board took aim at the pharmaceutical industry in a new piece: Stop Big Pharma from 'getting away with murder'. After digging into the data, we found several factual inaccuracies that must addressed. Let’s take a look:

First, the editorial falsely claims that prescription drug costs for individuals under the age of 65 are expected to rise by 11.6%. But the authors of the study cited by the Editorial Board note that this number does not represent the actual costs paid by individuals or health plans. A more telling data point is from the Centers for Medicare & Medicaid Services (CMS) which estimates prescription drug spending to grow by less than 6% in 2017.

The reality is that spending on medicines had the largest decline in growth when compared to all other healthcare categories between 2015 and 2016 – and so far, this trend has continued in 2017.Newly released mid-year data from Prime Therapeutics – a large pharmacy benefit manager for many Blue health plans and survey respondent in the study cited by the Editorial Board – found that drug spending growth has been undeniably low across both commercial and government plans. For example, Prime’s commercial clients saw only a 0.8% increase in drug expenditures compared to the first half of 2016, and spending has actually decreased for Medicare Part D and Medicaid clients by 0.1% and 1.8%, respectively.

This trend of low or negative growth in drug spending is largely attributable to discounts and rebates negotiated between innovative drug companies, insurers and PBMs (unfortunately, those savings realized by insurers and PBMs are often not shared with patients and instead some of those savings are used to pad insurer and PBM profits). And as we look long-term, we can expect to see drug spending grow in line with overall healthcare expenditures through at least 2024.

Finally, to state that “price hikes … run well above inflation” is simply not true, especially when CMS projects pricing growth to be near 1.6% for 2017. That’s the lowest inflation rate for drugs since 2007.

Using flawed data to blame the pharmaceutical industry for rising healthcare costs is careless and will certainly not benefit patients in the long run.