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Tuesday Dec 22, 2015

Poll: Drug Costs Top List of Public's Health Care Concerns

Prescription drugs have emerged as one of the leading health policy issues for the 2016 election. Regardless of party affiliation, polling shows growing concerns about the costs and availability of pharmaceutical and biologic treatments.  

An October Kaiser Family Foundation Health Tracking Poll(kff.org) found that the public's top two health care priorities for the president and Congress were:

  • making sure that high-cost drugs for chronic conditions, such as HIV, hepatitis, mental illness and cancer, are affordable to those who need them; and
  • government action to lower prescription drug prices.

Concern about medications for chronic conditions was mentioned by 77 percent of respondents (85 percent of Democrats, 75 percent of independents and 73 percent of Republicans), while the need for government action was cited by 64 percent (74 percent of Democrats, 60 percent of independents and 56 percent of Republicans).

It is interesting that 56 percent of Republicans think that the government -- yes, the government -- should take action to lower prescription drug prices. The bipartisan concerns demonstrate why the issue of prescription drug access and pricing has emerged as such a dominant political issue.

The contributions of the pharmaceutical industry to our country and the world are countless and indisputable. As a result of pharmaceutical and biologics we have eradicated diseases, turned what were once fatal diagnosis into chronic conditions, improved the quality of life for millions, and provided hope to those who face the most daunting challenges of their life. At this time of year, millions of people will be able to gather with their families for the holidays because of a pharmaceutical intervention. We cannot and should not overlook the value pharmaceuticals and biologics play in the delivery of health care.

We also should not overlook the simple fact that many pharmaceutical treatments are out-of-reach for a growing portion of the population -- even if they have insurance. Family physician Kyle Jones, M.D., recently wrote a blog on this specific issue and how costs of pharmaceuticals are hindering his patient population. We also should not overlook the impact escalating pharmaceutical costs are having on purchasers of health care, whether they are individuals, employers or governments.    

The true costs of pharmaceuticals to individuals, employers, and government programs are honestly impossible to determine due to the variation in deductibles, co-pays, formularies, and other policies that influence the negotiated price of some products.  However, it is possible to determine how much of the overall health care spend is devoted to pharmaceuticals and, not surprising, it is sky-rocketing. The CMS Office of the Actuary(www.cms.gov), in its recent report on health care spending, determined that increased costs associated with prescription drugs were a major driver of the overall increase in health care costs from 2013 to 2014. This impact was also outlined in a recent Wall Street Journal article(blogs.wsj.com), which showed spending on pharmaceuticals represents 10 percent of total health care costs.  

The same article showed that pharmaceutical costs represent 19 percent of the costs for employers in their health insurance programs. To put this in perspective, the article notes that in-patient hospital care represents 23 percent of total costs for employers.  

Finally, the impact on government health care programs is alarming. According to the Medicaid and CHIP Payment and Access Commission(www.macpac.gov), (MACPAC) spending on pharmaceuticals in the Medicaid program increased 14.1 percent between 2013 and 2014 in non-expansion states and an alarming 24.6 percent in expansion states. MACPAC also found that significant increases in the costs of generic drugs.

The factors that determine the costs of pharmaceutical products are numerous and complicated. It is irresponsible to think that the costs are a simple factor of corporate executives maximizing return-on-investment. Well, for one executive that is exactly what they are doing (see Shkreli, Martin(www.bloomberg.com)) but for the rest of the industry there are many factors that influence price with profit being one of those factors. Pharmaceutical companies may not always be pure of heart in the minds of some, but they do have to operate inside a complex and intertwined set of regulations and manufacturing standards -- which increase costs of production. They also must generate capital that can be invested in the next generation of pharmaceutical and biologic products. Without some level of profit, the ability to conduct research and development is limited, which results in a decrease in new discovery and new products.

One of the leading "cost-drivers" that continues to draw criticism is direct-to-consumer (DTC) advertising. DTC has always drawn the ire of some physicians, and it is rapidly becoming a policy issue that is drawing increased scrutiny from consumer advocates, physicians, and policymakers. According to Kantar Media(kantarmedia.us), the industry spent $4.5 billion on DTC in the past year and has increased its DTC spend by more than 30 percent in the past two years.   

The AAFP policy on DTC reflects the complexity of the issue. Our policy states that, "The AAFP supports efforts by manufacturers … to provide general health information to the public. At the same time, the AAFP urges that any direct-to-consumer advertising of prescription drugs … be based on disease state only, without mention of a specific drug by name." In other words, we see value in raising awareness, but we see detriment in traditional advertising tactics that drive consumer consumption.

Despite a high level of scrutiny, most legal experts believe that legal precedent has determined that such advertisements are protected speech and any such ban would violate the First Amendment. However, at the recent AMA Interim Meeting, a resolution calling for an outright ban on DTC(www.ama-assn.org) passed with overwhelming support. The AAFP delegation, during reference committee deliberations, discussed the value of DTC in raising awareness among patients and caregivers, but in the end agreed with the intent of the resolution and supported its passage.

Although it may not be legal to ban DTC outright, there are examples of how DTC advertising is regulated in a manner that is adherent to the First Amendment, yet mindful of social responsibility. The most prominent examples are tobacco, firearms and alcohol. Each of these industries is allowed to advertise their products, but they all face restrictions on how, when and where they are allowed to do so. I would suggest that this model of regulation may have some applicability to the pharmaceutical industry.

Policymakers have proposed a variety of solutions to this issue ranging from allowing the federal government to negotiate prices in the Medicare program -- as it does in the VA and DOD programs -- to allowing the importation of drugs from Canada and other countries. There also is an increased focus on the appropriateness of one treatment versus the others, largely being driven by comparative-effectiveness research. Each of these solutions has merit, and they all face political challenges. The one thing that seems certain is that people are paying attention to the issue and are eager to identify ways to lessen the economic impact on individuals and payers. How remains unclear.

This is my last posting of 2015. As we conclude the year, I wanted to acknowledge the talented and hardworking staff at the AAFP. They work tirelessly and selflessly to make the health care system a better place for patients and for you, our members. I am proud to be their colleague and to have the opportunity to share with each of you their amazing work. So on behalf of the entire AAFP team, I wish each of you a happy holiday season and a healthy and prosperous New Year. 2016 will be a busy year! Rumor has it we get to elect a president!

Posted at 07:00AM Dec 22, 2015 by Shawn Martin

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Shawn Martin, AAFP Senior Vice President of Advocacy, Practice Advancement and Policy.

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The opinions and views expressed here are those of the authors and do not necessarily represent or reflect the opinions and views of the American Academy of Family Physicians. This blog is not intended to provide medical, financial, or legal advice. All comments are moderated and will be removed if they violate our Terms of Use.