2. Drug prices keep going up
Yesterday's federal report on rising Medicare Part D drug spending led to a very clear conclusion: Giant price hikes are costing taxpayers and the government a lot of money.
ICYMI: HHS’ Office of the Inspector General found a 62% spike in federal spending in Medicare Part D — even after accounting for rebates and discounts, and even though the total number of prescriptions declined over the same time period.
“It’s a pretty damning indictment" of drug pricing practices, Niall Brennan, executive director of the Health Care Cost Institute, told Axios’ Bob Herman. “The OIG is not known for doing sloppy work.”
- Brennan’s group found similar patterns when it looked at multiple sclerosis drugs — MS prescriptions and use were down, but prices rose and more than made up for any shortfalls.
Between the lines: The OIG report gets at two big issues with the country’s drug pricing system, Bob reports:
- Pharmacy benefit managers and other middlemen are getting their fill from rebates and other means. This was implied in Sanofi’s recent report showing the drug company had an 8.4% decrease in net price for its products in 2017.
- But drug companies still control a lot of the health care system’s wealth, and any meaningful changes would have to target their pricing or the U.S. patent system.
What they’re saying: PhRMA, the industry’s leading trade group, argued the OIG’s report “paints a misleading picture of medicine spending in the Part D benefit,” but did not offer any responses to why drugmakers hiked prices on drugs at six times inflation or why overall spending still outpaced growth in rebates.