BIO accuses insurer report of shifting blame on drug prices
- BIO, a major biotech trade group, is pushing back against a new report showing steady prescription drug price increases over the past seven years, claiming the "cherry-picked" findings don't accurately reflect market dynamics.
- "Today's report from Blue Cross Blue Shield is merely the latest tired exercise in which the insurance industry seeks to shift the blame for rising healthcare costs," BIO President and vocal defender of the industry Jim Greenwood said in a statement Wednesday.
- Trade groups like BIO and its industry counterpart PhRMA have increasingly sparred with insurers and other payers over the extent of drug price increases in the U.S. and who holds responsibility for driving a trend that has sparked political and public outrage.
Another report showing rapidly rising prices for branded drugs. Another statement from a biopharma trade group dismissing the data as missing the mark.
Such back-and-forth has become routine in a drug pricing debate that continues to boil over with each new controversy.
Blue Cross Blue Shield's report documents a 10% average annual increase in prescription drug spending for the insurer's roughly 30 million commercial plan members between 2010 and 2017. Cumulatively, spending has risen by 73% over the seven-year period.
That steady rise in spending has been driven by sharply higher costs for a subset of branded, patent-protected drugs, the report found, which has washed out the impact of greater utilization of generic drugs.
"This upward trend is due to a small fraction of emerging, patented drugs with rapid uptake and large year-over-year price increases that are more than offsetting the continued growth in utilization of lower-cost generic drugs," said Maureen Sullivan, chief strategy and innovation officer for Blue Cross, in a statement on the report.
Many of the drugs in this smaller group are well-known market leaders, such as AbbVie's Humira (adalimumab), Novo Nordisk's Victoza (liraglutide) or Novartis' multiple sclerosis med Gilenya (fingolimod).
But Blue Cross' findings don't account for one important factor. Cost trends were calculated from prescription claims data, which includes the impact of network discounts but not of any drug rebates. Drugmakers routinely negotiate rebates with payers to secure coverage of their products, and this practice is an often-used defense of annual list price increases.
BIO's Jim Greenwood didn't hesitate to note this discrepancy in his response:
"Most notably, the report fails to account for the substantial impact of manufacturer rebates in lowering net prices for prescription drugs. In 2015, these rebates and other price concessions reduced spending on prescription drugs by more than 27%," Greenwood said, citing data from an April 2016 report from the IMS Institute for Healthcare Informatics.
Blue Cross' report, and BIO's response, follow clearly drawn battle lines. As public pressure on drugmakers has mounted, industry groups have accused insurers of shifting costs to patients through higher deductibles and co-insurance plans.
PhRMA, for instance, recently commissioned a report which showed half of out-of-pocket spending is based on a drug's list price, rather than the lower price negotiated by drugmakers and insurers. The implication? Payers have pocketed rebates and discounts from drug companies but fail to pass those savings on to the end user.
Payers, on the other hand, have roundly dismissed this claim, arguing the only party responsible for higher prices are the companies hiking the price of their products.
Some pharmas such as Allergan have taken steps to limit average annual price increases, while others are putting out more data showing the gap between list price growth and net price growth. But with the Trump administration and Democratic members of Congress weighing legislative approaches to the issue, it's clear the drug industry hasn't managed to put the pricing controversy behind it.
Follow Ned Pagliarulo on Twitter