Drug prices expected to rise nearly 8% next year
Health systems can expect drug prices to increase by 7.61% next year, largely due to the surging prices of branded, specialty medications, a group purchasing organization said Tuesday.
Vizient said in its drug pricing forecast that it's seen a spike in purchases for products not offered on its contract, most of which are patented, branded pharmaceuticals. Those specialty drugs also see sharper price increases, which force providers to find alternatives to optimal treatments and cause patients to avoid taking costly medication.
"Access to affordable drugs is one of the most critical challenges facing healthcare today," Dan Kistner, senior vice president of pharmacy solutions at Vizient, said in a statement. "For the last few years, drug shortages have plagued hospitals and providers. In addition, recent headlines have been dominated by stories of drug price spikes."
The drug classes that will likely see the highest price spikes include those treating rheumatoid arthritis, such as AbbVie's Humira at 14.8%; multiple sclerosis drugs, including Biogen's Tecfidera at 9.1%; and certain cancer drugs, such as Genentech's Rituxan at 4.8%.
Vizient based its forecast, which aligns with the recent trajectory, on drug price changes over the last three years across its member organizations.
The forecast highlighted several factors behind rising pharmaceutical prices including the manipulation of the orphan drug classification and a lack of competition among suppliers that can lead to drug shortages.
Increasing generic competition has been the primary focus of regulators and lawmakers. The Food and Drug Administration outlined its efforts to increase competition in the generic-drug market at its hearing last week on the Hatch-Waxman Amendments, where healthcare experts discussed how to close regulatory loopholes drug companies use to thwart competition. The CREATES Act and FAST Generics Act also look to scale back an FDA program that branded-drug manufacturers sometimes use to bar generic competitors from accessing product samples and performing bioequivalence tests. The FAST Generics Act could potentially save up to $5.4 billion a year in reduced drug costs, lawmakers said.
"We know that branded companies are using our rules that are intended to protect consumers, or meant to make the regulatory process more predictable, and taking advantage of these rules in order to deliberately forestall the entry of expected generic-drug competition," FDA Commissioner Dr. Scott Gottlieb said at the agency's hearing.
Orphan drug classifications provide another potential loophole for developers, who can seek approval for their drugs to treat a rare disease and then benefit from exclusivity rights.
"We must make sure we support drug manufacturers who treat rare diseases and are not using orphan drug classifications as a gateway for premium pricing and blockbuster sales," Dr. Richard Bankowitz, America's Health Insurance Plans' executive vice president for clinical affairs, said at the hearing.
Although short-term projections of orphan drug expenditures are more modest—at 9.5% of total drug spending in 2018, up from 4.8% in 2007—the rate of growth may be unsustainable, Vizient researchers said.
"Growing evidence suggests that the orphan drug market has become a profitable business and the (Orphan Drug Act) unintentionally caused rarity to be profitable," researchers wrote in the forecast. The return on investment is 1.89 times greater for an orphan drug than a nonorphan drug, data show.
Vizient called on policymakers to amend the act's market exclusivity provision, which bars the FDA from approving any new or abbreviated application for the same drug for the same indication to facilitate more competition.
The FDA has taken some steps to curb drug prices, including posting a list of branded drugs that are not protected by a patent and don't face looming generic-drug competition in an effort to increase transparency and encourage generic development. It plans to eliminate the existing orphan drug request backlog, of which there are about 200, and create a system for timely response deadlines for all future requests. It is also looking to fast-track its review of applications for generics, known as abbreviated new drug applications, for drugs with less than four competitors—a policy move that the FDA called the first of its kind.
Less expensive biosimilars are being approved at a faster rate, signaling that a viable and sustainable environment for these products may be near, according to the forecast.
Future opportunities for generic savings will be fewer and potentially less significant than in the past, given the prevalence and influence of complex and expensive biologics across the drugs with the biggest sales, the GPO's forecast said.
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