Some promising breakthrough medicines on the market and horizon are going to come with a steep price tag that public payers especially will have to meet head on.
Pharmaceutical spending grew more than 13 percent last year--half of it thanks to new, speciality medicines--with year-over-year drug spending at its highest level since 2001. This is likely to continue, absent major government price controls or changes in drug reimbursement, because of a litany of breakthrough drugs in the pipeline.
Ten of these medicines are set to treat large health needs in the areas of cystic fibrosis, diabetes and cancer, but they could also come with costs to government-funded health plans of almost $50 billion over the next decade, according to an analysis by Avalere Health.
The bulk of that will be some $31 billion in Medicare costs, for drugs treating hepatitis C, diabetic retinopathy and breast and lung cancer, Avalere estimates. The drugs will cost another $15 billion in state and federal Medicaid spending and $2 billion in subsidies provided through exchange plans--with billions more to be covered collectively by private health plans and patients.
One of the highest selling drugs to win the federal breakthrough designation, the hepatitis C treatment Sovaldi, portends the opportunities for curative therapies and the challenges in paying for them.
"For years, expensive, innovative therapies did not engender the same criticism as Sovaldi because of their relatively small patient population," Avalere analysts write in the report, which was commissioned by America's Health Insurance Plans. "Looking ahead, therapies that come with a high cost and serve a large patient population are most likely to have an impact on government costs and consumer premiums."
Avalere highlighted ten medicines that are set to have a large impact, offering both hope to a significant number of people but also major budget strains.
Three of the drugs are already on the market: Viekira Pak, a Sovaldi alternative for hepatitis C with a list price that is not too much lower; Ibrance, for ER-positive/HER-negative breast cancer; and Eylea for diabetic retinopathy.
The others are in late clinical trials, though likely to be available within the next few years: Kalydeco for cystic fibrosis; Keytruda for EGFR-negative lung cancer; Rociletinib for EGFR-mutant lung cancer (present in 10 percent of non-small cell lung cancer cases in the U.S.); Mk-5172 for hepatitis C; Entinostat for breast cancer; Daclatasvir for hepatitis C genome 1b; and CTL019 for relapsed acute lymphoblastic leukemia.
The drugs are likely to affect different health plans based on their membership, the Avalere report noted.
Kalydeco, for cystic fibrosis in patients over the age of 12, will primarily be used by adolescents in Medicaid and CHIP plans, while paying for Keytruda will be a concern among commercial and Medicare Advantage plans covering baby boomers and seniors with lung cancer.
(Source: IMS Health and Avalere Health.)