Behind the 2017 numbers on drug spending

At first it seems like good news.  Retail drug spending slowed substantially to 0.4 percent, but hidden in another category, Physician and Clinical Services, spending increased. Drugs which are infused in a clinical setting are included in this category, such as cancer drugs and drugs for MS.

There are over 450 cancer drugs in development and while some new cancer treatments do look promising drug makers are also developing “me too” drugs to take a slice of the lucrative pie.  Insurers usually won’t say no to new cancer drugs because of the possible PR nightmare of denying cancer patients drugs, but eventually an insurer is going to have to say “no”.

Then there is the generic drug cartel.  According to the Washington Post ” The unfolding case is rattling an industry that is portrayed in Washington as the white knight of American health care”.

“This is most likely the largest cartel in the history of the United States,” Nielsen said. He cited the volume of drugs in the schemes, that they took place on American soil and the “total number of companies involved, and individuals.”

The alleged victims were American health-care consumers and taxpayers, who foot the bills for overcharges on common antibiotics, blood-pressure medications, arthritis treatments, anxiety pills and more, authorities say. The costs flowed throughout the system, hitting hospitals, pharmacists and health insurance companies. They hit consumers who lack prescription drug coverage and even those with insurance, because many plans have high deductibles and gaps on prescription drug benefits.

Among the 16 companies accused are some of the biggest names in generic manufacturing: Mylan, Teva and Dr. Reddy’s. Mylan denied wrongdoing in an emailed statement. Sun, Teva and Dr. Reddy’s did not respond to requests for comment. In a court filing, Teva said allegations of a price-fixing conspiracy “are entirely conclusory and devoid of any facts.

So here we go again. PhRMA will surely talk about the slow rise in retail Rx spending while the high costs of other drugs get little notice because of the way they are reported.  This, of course, is going to give politicians more ammunition and fan the flames of resentment by a public who feels the drug industry is enemy number one.  Is there anyone who doubts that major changes are coming?

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