Specialty drug prices continue to pressure Medicaid

Dec. 30--The rising cost of drugs for rare and complex conditions that come from pharmaceutical companies' newest research continues to squeeze Virginia's Medicaid program, two new state reports suggest.

The average spent on specialty drugs for people covered by Medicaid's traditional "fee-for-service" coverage rose by more than 14 percent last year, to $12,938 per recipient, the state Department of Medical Assistance Services' annual review for the General Assembly reported. Medicaid, a joint federal-state program, provides health coverage for low-income children, seniors and people with disabilities.

There is more to come, according to the department's pharmacy manager, Donna Proffitt.

"Many of the drugs in the pipeline treat diseases that affect small numbers of patients. It is expected that specialty drugs will soon comprise over 50 percent of the drug spend," Proffitt said in an email.

That would be a big change. In 2015, Medicaid spent $37.8 million, or just less than 8 percent, of a total prescription drug bill of $511 million on these specialty drugs, the latest Secretary of Health and Human Resources report showed.

Those medications went to just 1,625 of the more than 900,000 people covered by Medicaid in 2015. Most were in managed care plans, which pay commercial insurance firms a set monthly amount for the care of Medicaid beneficiaries. That's supposed to be enough to cover all their costs, including specialty drugs. If not, the insurance company's profit takes a hit, and it can make a case for a higher monthly payment when it is time to renew its Medicaid contract.

The cost for a prescription of just one received, a multiple sclerosis drug, was $99,531. Fourteen people received a $63,592 prescription for a drug that treats a disorder that causes concentrations of ammonia in the blood, three received a $61,968 prescription for a drug that treats hemophilia. A total of 50 drugs cost more than $10,000 per prescription.

Virginia's Department of Medical Assistance Services dropped nine figures worth of bad news on state budget writers Tuesday.

Virginia's Department of Medical Assistance Services dropped nine figures worth of bad news on state budget writers Tuesday.

Medicaid, the state-and-federally-funded health insurance program for the poor, needs a $281 million infusion from the state, department administrators said. This two-year...

The more recent review by the smaller number of Medicaid recipients in the fee-for-service program covers the 12 months that ended June 30. Its report of a 14 percent rise in the average cost for the 298 individuals it covers who received specialty drugs during that period gives an early glance at where prices have headed since last year.

It shows that some of the costlier drugs and fastest growing bills are for treatment of hepatitis C, an infection of the liver caused by a blood-borne virus. The disease can eventually lead to cancer or cirrhosis of the liver.

The number of Medicaid fee-for-service recipients treated with specialty drugs for hepatitis C more than doubled, to 42, and a 3 percent increase in the average spent for each, to $50,890, boosted the spending on those drugs to more than half the total that the fee-for-service program spent on specialty drugs last year.

The trend of increasing spending on hepatitis C drugs is likely to keep rising, too.

A recent Centers for Disease Control and Prevention recommendation that everyone born between 1945 and 1965 be tested for the hepatitis C virus has revealed numbers of people who have no symptoms but who are candidates for treatment, Proffitt said.

Proffitt said she is not aware of any drugs in the pipeline that will have the same impact as the new hepatitis C drugs. She also said Medicaid recipients don't need to be afraid rising drug costs will price them out of the market for needed medication.

"Price is not a factor in prescription or treatment," she said. "The increase in average drug spend does not increase the risk of Medicaid recipients not getting medical necessary drugs."

Concern about high-priced specialty drugs sparked a clash between two powerful groups of lobbyists -- drugmakers and insurers -- in the last General Assembly session. It put on ice a bill that ill requiring pharmaceutical companies to tell the commissioner of health what they spend to develop, advertise and make drugs that cost more than $10,000 for a course of treatment. But insurers' reports that the state's spending on specialty cancer drugs rose 84 percent during the three years ending in 2014, to hit nearly $72 million that year, prompted a promise by two senior state senators -- Steve Newman, R-Lynchburg, and Emmett Hanger, R-Mount Solon -- to take a harder look.

Ress can be reached by phone at 757-247-4535.

Specialty drugs, by the numbers

In 2015, Medicaid spent $37.8 million on 50 specialty drugs costing more than $10,000 per prescription.

The costliest was $99,531 to treat multiple sclerosis.

The biggest bill was $13,155,547 for 428 prescriptions at $30,737 each to treat pulmonary arterial hypertension.

Source: Virginia Secretary of Health and Human Resources

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