Feds To Spend Nearly $50B on 10 Breakthrough Drugs Over a Decade

The federal government will spend nearly $50 billion over the next decade on 10 breakthrough medications, according to an Avalere Health report released Monday, The Hill reports.

Report Details

The report was commissioned by America's Health Insurance Plans (Sullivan, The Hill, 6/8). For the report, Avalere researchers spoke with financial analysts and examined industry reports and trade publications to estimate anticipated annual sales figures for the drugs. The researchers then determined how some federal programs would pay for the treatments (Young, CQ HealthBeat, 6/8).

The evaluated medications included new treatments for conditions such as breast cancer and hepatitis C.

Report Findings

According to the report, the federal government is expected to spend $49.3 billion on the drugs over the next decade, including:

• $31.3 billion through Medicare;
• $15.8 billion through state and federal Medicaid dollars; and
• $2.1 billion in subsidies under the Affordable Care Act.

Still, the report notes that overall spending on prescription drugs will likely remain the same, accounting for about 13% of total health care spending in the U.S. over the next 10 years. The share of spending on specialty medications, however, is anticipated to increase to between 15% and 20% next year, according to the report.

Comments

AHIP in a statement said, "Despite claims by pharmaceutical manufacturers that new therapies offset other health care costs, the exorbitant price tags lead to significant increases in health care spending." The group added, "In fact, these latest estimates add to the growing financial strain facing patients and the health system as a result of prescription drug costs" (The Hill, 6/8).

Interim AHIP CEO Dan Durham said the findings show that "more needs to be done to increase transparency around prescription drug costs and to advance a sustainable pricing solution that will ensure patients can access the medications they need" (CQ HealthBeat, 6/8).

However, the Pharmaceutical Research and Manufacturers of America dismissed the report, noting the analysis only considered the prices for 10 developing treatments.

PhRMA spokesperson Holly Campbell said, "This is another report that just selects a few select medicines to look at to advance a narrative that doesn't match reality. The report itself acknowledges that spending on medicines has remained consistent in recent years." Further, Campbell said that in most cases, insurers negotiate lower drug prices with manufacturers and do not pay the total cost of the treatments (The Hill, 6/8).