Skip to main content
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Current News
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Digital Health
    • Transformation
    • ESG
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Opinion
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
  • Events & Awards
    • Awards
    • Conferences
    • Galas
    • Virtual Briefings
    • Webinars
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Excellence in Governance
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top Innovators
    • Diversity in Healthcare
      • - Luminaries
      • - Top 25 Diversity Leaders
      • - Leaders to Watch
    • Women in Healthcare
      • - Luminaries
      • - Top 25 Women Leaders
      • - Women to Watch
    • Digital Health Transformation Summit
    • ESG: The Implementation Imperative Summit
    • Leadership Symposium
    • Social Determinants of Health Symposium
    • Women Leaders in Healthcare Conference
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Diversity Leaders Gala
    • Top 25 Women Leaders Gala
    • - Hospital of the Future
    • - Value Based Care
    • - Hospital at Home
    • - Workplace of the Future
    • - Digital Health
    • - Future of Staffing
    • - Hospital of the Future (Fall)
  • Multimedia
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
  • Data Center
    • Data Center Home
    • Hospital Financials
    • Staffing & Compensation
    • Quality & Safety
    • Mergers & Acquisitions
    • Data Archive
    • Resource Guide: By the Numbers
    • Surveys
    • Data Points
  • Newsletters
  • MORE+
    • Contact Us
    • Advertise
    • Media Kit
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Supply Chain
January 29, 2020 04:24 PM

Drug price inflation slows, but problems persist

Alex Kacik
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Modern Healthcare Illustration / Getty Images

    Drug prices will rise an estimated 3.59% through next year, continuing a recent trend of moderate increases, although the high cost of some pharmaceuticals still rankle health systems and patients, according to research by one group purchasing organization.

    Advocacy and awareness as well as a more competitive market have contributed to more modest price increases over recent years, according to Vizient's outlook from July 2020 through June 2021. Its two previous outlooks, which analyzed what the group's member hospitals pay for drugs after discounts and rebates, projected increases of around 4%.

    Still, biologic therapies, oncology drugs, disease-modifying antirheumatic pharmaceuticals and other products that can carry $1 million price tags are disrupting treatment regiments.

    "Hospitals and patients are still getting killed by new million-dollar drugs that won't see any competition for decades," said Dan Kistner, group senior vice president of pharmacy solutions for Vizient.

    Specialty drugs are the main drivers of rising prices. They account for about half of total spending even though they only make up 2.2% of total prescription volume, Vizient's analysis shows.

    Cleveland Clinic, for instance, set up an entire supply chain and treatment protocol to ensure it didn't waste any of Biogen's Spinraza, the first Food and Drug Administration-approved drug for spinal muscular atrophy that runs about $750,000 for a full-year's supply.

    "These drugs are curing diseases that were uncurable," Kistner said. "But it is coming to a head where we need to have a balance in understanding the cost and quality and pricing mechanisms as they come to market."

    There are some positive signs, he said. A dozen biosimilars are on the market, which can lower prices by up to 30% when there are two or more competitors. But biosimilar development and adoption have been slow given application issues, spotty coverage by insurers and providers' hesitancy to prescribe them.

    The FDA has also approved a record number of generic drugs and expedited approvals for ones with minimal competition. But some bad actors are still inflating prices when competition wanes, Kistner said.

    There are also unintended consequences associated with policies like the Drug Efficacy Study Implementation review, where the FDA removes an unapproved, but often longstanding drug, and ultimately fewer manufacturers remain in the market. This can enable price increases and cause drug shortages, Kistner said, pointing to vasopressin, a drug used to increase blood flow that saw its price surge 1000% after the FDA granted a subsidiary of Endo Pharmaceuticals exclusive rights to sell it.

    "Competition is the No. 1 thing that lowers drug pricing. It's transparency that really allows that," he said. "We need to get away from the bogus patent loopholes that drive away new competitors."

    Relatively few blockbuster drugs are losing patent protection, and branded manufacturers have exploited creative loopholes to extend their exclusive market control, which continue to buoy price inflation.

    One of those loopholes is addressed by the Creates Act, which stops drugmakers from blocking access to samples of brand and biologic drugs that are necessary for generic and biosimilar drug development.

    While that was passed in December, the House Democrats' bill that would allow Medicare to negotiate drug prices was dead on arrival in the Senate. The bipartisan drug pricing legislation from Senate Finance Committee Chair Chuck Grassley (R-Iowa) and ranking Democrat Ron Wyden of Oregon has stalled.

    Meanwhile, hospitals are still grappling with weekly, if not daily, drug shortages. Vizient recently published a list of "essential" drugs susceptible to shortage. This represents a hidden cost as clinicians and staff spend hours to mitigate shortages and source alternatives.

    "There is no bigger issue related to drugs than helping ensure that our patients have uninterrupted access to their life saving and life sustaining medications in this era of non-stop drug shortages," Scott Knoer, chief pharmacy officer at Cleveland Clinic, said in prepared remarks.

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    Copy of supply chain_i.jpg
    Coming up short: Why drug shortages are occurring
    supply chain image man in storage facility
    Premier exploring alternatives that could include its sale
    Most Popular
    1
    More healthcare organizations at risk of credit default, Moody's says
    2
    Centene fills out senior executive team with new president, COO
    3
    SCAN, CareOregon plan to merge into the HealthRight Group
    4
    Blue Cross Blue Shield of Michigan unveils big push that lets physicians take on risk, reap rewards
    5
    Bright Health weighs reverse stock split as delisting looms
    Sponsored Content
    Daily Dose Newsletter: Sign up to receive a late afternoon weekday roundup of that day’s breaking news and developments in healthcare.
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Digital Health
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • ESG
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Opinion
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Excellence in Governance
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top Innovators
        • Diversity in Healthcare
          • - Luminaries
          • - Top 25 Diversity Leaders
          • - Leaders to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Digital Health Transformation Summit
        • ESG: The Implementation Imperative Summit
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Hospital at Home
        • - Workplace of the Future
        • - Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • Data Center
      • Data Center Home
      • Hospital Financials
      • Staffing & Compensation
      • Quality & Safety
      • Mergers & Acquisitions
      • Data Archive
      • Resource Guide: By the Numbers
      • Surveys
      • Data Points
    • Newsletters
    • MORE+
      • Contact Us
      • Advertise
      • Media Kit
      • Jobs
      • People on the Move
      • Reprints & Licensing