Expert Forum: Rising Pharmacy Costs Continue to Cause Headaches

Marty Burruano, Independent HealthBy Martin Burruano, R.Ph., Vice President, Pharmacy Services, Independent Health

Pharmacy costs across the nation have rapidly risen over the past few years, which in turn has been one of the biggest drivers behind increasing health care premiums. Data from the federal government shows prescription-drug spending rose 12.6% in 2014 and is expected to rise 7.3% a year through 2018.

Although it remains uncertain how skyrocketing pharmacy costs will be addressed under the new Trump administration, recent developments in Albany could have a significant impact on prescription costs in New York state.

  • “Anti-Step Therapy” Bill – This new law took effect on January 1 and threatens health plans’ ability to continue to provide a clinically sound, evidence-based, affordable drug formulary for their members.

With step therapy, health plans may require a member to first try a certain medication to treat his/her medical condition before another new medication is covered.  This usually means that an equally effective generic medication is prescribed before a more expensive brand-name medication. Step therapy is a way to promote the best quality and value from the prescription benefit.

Although numerous studies have shown there often was no clinical data to support prescribing the newest, and often more costly, drugs, this new law allows prescribing physicians to bypass step therapy protocol. The New York Health Plan Association estimates this law will increase pharmacy costs among the state’s health plans by up to $530 million.

  • Pharmacy Price Protections – This month Governor Andrew Cuomo proposed a plan in hopes of reigning in skyrocketing pharmaceutical costs. The plan calls for price caps on the amount Medicaid will pay for certain high-cost medications; this “price ceiling” would then apply to sales in the private, commercial marketplace. Drug manufacturers would be required to pay a surcharge if they sell the drug at a price above the government-set level. In addition, the Governor’s plan also seeks to place new rules, including transparent pricing, on pharmacy benefit management companies (PBM).Independent Health

Efforts to protect patients and payers from some of the egregious business practices by pharmaceutical companies are welcomed, especially greater transparency on PBM pricing. Pharmacy Benefit Dimensions® –  Independent Health’s affiliate PBM Company – prefers a transparent pricing model which passes pharmaceutical manufacturer rebate revenue and 100 percent of network and mail service discounts back to its clients, and simply charges a single, flat administrative fee.

While higher level efforts to curb the staggering cost of medications are essential to bringing down the overall cost of health care, it’s also important that steps be taken at the local level, too. For example, Independent Health has partnered with the Pharmacists’ Association of Western New York (PAWNY) to help address the issue of medication nonadherence, which costs the U.S. health care system nearly $300 billion a year in unnecessary expenses. To learn more about this unique partnership, visit www.independenthealth.com/ihpawny.

Disclaimer: The above commentary entails the views of the author and not necessarily the views of the Buffalo Niagara Partnership.