Prescription drugs driving health care costs in NH

Nov. 05--CONCORD -- Skyrocketing prescription drug prices are the major driver of increased health-care costs in New Hampshire, according to data for 2015 presented by the state Insurance Department at its annual meeting.

More than $1 billion was spent on prescription drugs by patients and insurance companies in the state last year, with 15 scripts per person on average, according to Insurance Commissioner Roger Sevigny, who introduced the presenters at Friday's day-long presentation.

The cost of in-patient services in the state declined by 4.9 percent from 2014 to 2015, but the cost of prescription drugs rose 8.7 percent in the same period. Insurance companies are predicting that 2016 will see a 14 percent increase.

"This is during a time when medical pricing trends are decreasing," said Jenn Smagula, a health care actuary who presented data provided by insurance companies based on actual claims paid in 2015, "thus demonstrating the continued impact of increasing pharmacy costs on overall claims and premiums."

New Hampshire is certainly not alone. "These pricing trends are consistent with what we've seen in other states," said Smagula.

"The 8.7 percent increase is driven solely by changes in unit costs," she said. Some factors cited by insurers included reduced savings from the use of generic drugs along with new and costly specialty drugs.

The top 50 priciest drugs cost an average of $17,544 per prescription.

"These high-cost brand drugs make up a very small number of total prescriptions, less than 0.1 percent," said Smagula, "but because of their high average cost per script, more than $17,000, they make up 9 percent of the total spend."

Some of the more common drugs in that category are new treatments for hepatitis C, cancer and cystic fibrosis. The average price for a generic drug prescription is in the $30 to $40 range, but those prices are rising as well.

The story of statins

John Abramson, M.D., a national expert on drug costs, described how drug manufacturers can arbitrarily raise or lower prices, while controlling the research that determines how widely drugs are prescribed.

He pointed to popular generic drugs used to control cholesterol, known as statins, which pharmaceutical companies are promoting for broader use among the population even as the price increases.

"Almost all the research on statins has been commercially funded, and the reason that research is undertaken is not to find out how to lower the risk of cardiovascular disease in our population, it's to sell more drugs," said Abramson.

Drug companies defend the pricing structure, unique to the United States, as necessary to fund research and cover high development, field testing and regulatory costs.

"That we accept that fiction as a normative way to run a health care system is our bad," said Abramson, author of a book and several scientific papers on the subject. "We can't let it go on. New Hampshire can't change the world, but New Hampshire as a payer can have a lot of leverage."

The Institute for Clinical and Economic Review, which recently received a $5.2 million grant to transform the way drugs are priced and evaluated in the U.S., sent chief operating officer Sarah Emond to the Insurance Department event. She called drug pricing "a black box."

"Why can't we have a public discussion around how these drugs are priced?" she said.

Sentiment shifting

Republicans in the U.S. Senate have opposed Democratic proposals to allow Medicare to negotiate lower drug prices, framing the issue as a choice between government-run health care and a benefit managed by the private sector.

But the tide may be shifting, especially in the wake of recent high-profile controversies involving dramatic and apparently arbitrary increases in life-saving drugs and treatments.

The Wall Street Journal reported on Thursday that federal prosecutors are "nearing possible criminal charges for price-collusion in the generic drug industry."

The latest Kaiser Health Tracking Poll reports that Americans rank addressing high prescription drug costs as one of their top health-care priorities.

"Making sure that high-cost drugs for chronic conditions are affordable to those who need them is viewed as a top priority by 74 percent of the public, including large majorities of Democrats, Republicans and independents," according to the survey.

"In addition, nearly two-thirds of the public say government action to lower prescription drug prices is a top priority."

Given the inability of Congress to act, states could begin to take action on their own.

"Unless the Legislature gives us a particular mandate to put a law in place, we can't regulate what's being charged," said Sevigny.

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