High specialty drug prices help drive renewed spike in 2014 healthcare spending
- Although overall healthcare spending increased by 5.3% in 2014, the rate of growth was still much slower than in previous years, according to a report from the Centers for Medicare and Medicaid Services (CMS).
- In 2013, growth in healthcare spending hit a 55-year low—2.9%. This trend towards lower costs was driven in part by implementation of Affordable Care Act initiatives, such as more restrictive gate-keeping in terms of accessing certain drugs, as well as better coordination of care, according to CMS. Other studies have implicated less healthcare use in the wake of the global economic recession as a major factor putting a ceiling on health inflation.
- Specialty drugs and a large number of baby boomers in the system are identified as two major factors contributing to 2014's hike, with high-cost hepatitis C treatment helping drive an overall increase in spending in the last year.
Healthcare spending growth is, in essence, still relatively low since implementation of the ACA began in 2011, shortly after the law was passed in 2010. However, CMS' new analysis suggest that the impact of specialty drugs and an influx of newly-insured patients into the healthcare system has compromised this trend, although prescription drugs still represent a relatively low percentage of overall spending.
Take, for example, Gilead's hepatitis C drugs Solvadi and Harvoni. In 2014, the two drugs together generated $10.5 billion in revenues, and Harvoni was not on the market until the fourth quarter.
It seems that every report that shows any increase in healthcare-related costs comes back to the drug-pricing debate. While hepatitis C drugs have been a major area of contention, so have the PCSK9 inhibitors for hypercholesterolemia.
Specialty drugs are still being priced at levels that some detractors consider too high. But the market continues to be hungry for new, innovative, and effective medications.