Should drug costs be controlled by regulating industry as a public utility?
October 19, 2016 12:00 AM
Sue Ogrocki/Associated Press
According to the National Academy for State Health Policy, states spend more than $20 billion yearly on prescription drug coverage for public employees, Medicaid beneficiaries, higher education and incarcerated individuals.
By Steve Twedt / Pittsburgh Post-Gazette
No one this side of Medicare struggles with prescription drug costs more than state governments.
On Tuesday, a group of state health policy experts gathered in Pittsburgh offered wide-ranging options for throttling those costs — from options as simple as bulk purchasing of drugs to something as dramatic as regulating the pharmaceutical industry as if it were a public utility.
What clearly came through for the more than 700 attending the 29th annual conference of the National Academy for State Health Policy at the Wyndham Grand Pittsburgh, Downtown, is that something must be done.
According to the academy, states spend more than $20 billion yearly on prescription drug coverage for public employees, Medicaid beneficiaries, higher education and incarcerated individuals. While dwarfed in comparison with Medicare’s $300 billion in prescription drug spending, the costs are formidable for cash-strapped states.
Pennsylvania alone spent $181.8 million on prescription drug benefits for 73,606 state employees for the fiscal year that ended June 30, plus another $11.2 million for 4,365 state troopers who have separate health benefit coverage.
And that does not include state prescription drug medical assistance spending, where the bill for just treating beneficiaries for hepatitis C liver infections with new, highly effective drugs, went from $33.7 million to $138.1 million in two years.
Pennsylvania’s Department of Corrections spent $54.4 million on prescription drugs last year.
To address what has become the fastest growing health care cost, the National Academy for State Health Policy formed a work group of 17 members in May that included pharmacists, state health policy officers, Ohio’s Medicaid director, Maine’s attorney general and state Rep. Norman Thurston, R-Utah.
It was Ameet Sarpatwari, a consultant with Brigham and Women’s Hospital and Harvard Medical School in Boston and work group member, who addressed the option of a public utility-style regulation of the pharmaceutical industry in which a review board would approve prices, and price increases.
The justification, he said, would be that drugs are an essential good, necessary “to promote the health and welfare of citizens.”
Other suggestions that came out of the panel discussion included increased transparency on drug pricing, using consumer protection laws when high prices force people to forego treatment, and having states purchase drugs from Canada or other nations that can offer lower prices but also assure they meet drug quality standards.
“It can be done,” said Mr. Thurston. “The laws are in place. We just need to move forward.”
Contacted after Tuesday’s meeting in Pittsburgh, Holly Campbell, spokeswoman for the Pharmaceutical Research and Manufacturers of America in Washington, D.C., wasn’t swayed by some of the ideas, saying many of the group’s proposed solutions “would harm patients and limit their access to life-saving treatments.”
While acknowledging that cost issues related to Medicaid “are real and need to be addressed,” she cautioned, “We need to look at these cost drivers holistically and ensure we maintain a health care system that supports patient access to treatments and fosters the development of tomorrow’s treatments and cures to address significant unmet medical needs.”
She also suggested pragmatic solutions such as addressing the backlog of generic drug approvals, looking at financial and regulatory incentives to encourage the generic market, and updating regulations “that pose challenges to innovative payment arrangements, while preserving important patient protections.”
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