The Rising Costs of Medications

News reports are full of stories about rising costs of prescription drugs these days. Last month Southcentral Foundation reported that prices overall increased by about 10-11% annually. Medications that were once affordable are procured by drug companies and have skyrocketed in cost. In some cases, producers are bought by investors who then drive up cost dramatically, taking advantage of the critical need for that medication and the fact that no one else produces it. One example is a critical HIV medication that had its price raised from $13 to $750 for one pill. Another exorbitant increase is quite famously the cost for Epi-Pens — the lifesaving emergency injections for severe allergic reactions — was raised from $100 to $600. Unfortunately, we continually see story after story about companies buying up generic medications and then dramatically increasing the cost or severely limiting the supply that hospitals must bid against each other to get access to the artificially restricted supply of these necessary medications.

New medication costs are also getting attention and seen sometimes doubling or tripling in cost. Some examples of recent changes in costs include; new cancer drugs often cost $100,000 to $300,000 per treatment cycle. A new muscular dystrophy drug entered the market recently with a cost of $300,000 per year, and treating Hepatitis C which was initially $75,000 and rose to $150,000 per person to complete the treatment. Overall, costs are rising. AARP reports a 208% increase cost for the most popular brand name medications between 2008 and 2016.

A common trend in recent reports indicate drug prices in the United States are significantly higher than the same medications in other countries with multiple reports showing that Medicare has to pay 80% more than in other countries. Laws restrict the possibility of health care organizations purchasing medications across international borders; additionally, the federal government doesn’t allow systems such as Medicare to fully use its purchasing power to drive down costs. You might be wondering why such laws are in place — many point to the fact that the pharmaceutical industry has spent $2 billion lobbying in Washington D.C. from 2003 to 2018. Medications represent $550 billion of business in the U.S. This is unfortunately summed up in one simple fact: medical costs are a significant contributor to personal bankruptcies in the U.S.

At the Alaska Native Medical Center, outpatient medication costs — the pills that are prescribed to take home — have increased 11% per year on average which means the $26 million ANMC spent in 2015 increased to $36 million in 2019. Costs at ANMC would be significantly higher if we weren’t able to take some important steps to keep our costs down. Some of the many steps that have been taken include:

  • Purchasing medications with somewhat favorable pricing through federal affiliations.
  • Purchasing and prescribing generic medications when they meet the same quality as brand name medications.
  • Pharmacists are co-located in almost all clinical locations to partner with prescribing providers, which helps inform prescription choices and limit length of use and over-use.
  • A pharmacy and therapeutics committee evaluate every medication to recommend, or not recommend, for inclusion in the medications provided to customer-owners. Almost all commonly available medications are available to customer-owners.
  • Pharmaceutical representatives are prohibited from soliciting on the ANMC campus.
  • Finance professionals are co-located in many clinics to assist customer-owners in signing up for third-party insurance plans, which helps ensure services can be billed allowing ANMC to recoup costs associated to the prescribed medications.

As a result of these efforts, overall medication costs have been managed by matching increased costs with more comprehensive billing which supports increased revenue. By taking this approach, there has not been a need to limit which medications are available to customer-owners. Most importantly, the biggest impact has been accomplished by listening to what Alaska Native people say they want — only performing tests when necessary and pursuing alternatives to medications when possible. The voice of customer-owners is clear, the system of care that they want should be rooted in customer-ownership, relationships, and partnering on health plans.

by Dr. Doug Eby

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