pharmaceutical costs have been growing faster than most other types of health care expense for years. Except for the odd year when unusual factors (eg demise of the cox-2s) slow things down, drug costs go up year after year.
Then there are the years (2006) where other factors push costs up even faster (part d).
PBMs, formularies, tiered plans, all reduce trend a bit, but only a bit, and not for long.
We have to something fundamentally differenrt if we are to control costs, something that takes into account utilization, price, generics and efficacy. It has to address every payers’ costs.
I propose a national cap on pharmaceutical expenditures, defined as dollars spent by all payers public and private. Before my conservative friends start howling, hear me out.
The cap amount, trend rate, formula and calculation basis is all up for discussion. But here’s how the enforcement would work.
If the national cap was exceeded, it would automatically trigger a provision in the legislation requiring CMS to negotiate drug prices with manufacturers. The negotiated prices would go into effect for all governmentally-funded health insurance programs.
And, any and all private payers would be able to buy their drugs via the CMS program if they so desired. This would not be mandatory; any payer could keep their current program or use another private entity to negotiate on their behalf.
We could call this the plan to avoid the tragedy of the commons; if the companies in the pharmaceutical supply chain were able to work together and regulate themselves they would be left alone. If someone got greedy, their colleagues would suffer, and extract retribution.
No one would be forced to buy at the CMS price, and if the ‘market’ could beat CMS, buyers could take advantage of their competence.
This isn’t a pipe dream. Oregon has a similar program in place today (well, the ODPS is sort of like this in that the state negotiates prices and folks can opt to use their program). The pricing is competitive and it has just been opened up to workers comp patients.
There are anti trust issues, definitional issues, actuarial and other challenges. But what were doing today isn’t working – something different and radical is required.
Pharmaceutical pricing has been known to be extraordinarily high for years. For that matter, nearly kind of equipment, etc. with medical value can generally be said to be over-priced. Acknowledging the validity of your claim (and in my heart I tend to agree), it should not be forgotten that capitalism is the true driving force behind innovation. Taking away or impeding this incentive too much would probably all but kill the difficult and expensive pursuit of new treatments.
Pharmacy costs have escalated for years. There have been several initiatives to curb costs (generics, etc) but they only hint at solving one end of the equation. In a true consumer economy, market demands would control the costs. This is one industry were someone “else” typically has the bill. Until we have the ability as consumers to make market based value decisions on our healthcare and live as decision makers for our spending the equation never fully changes, it just moves the costs onto another party. I don’t see how a national cap solves the equation of the need for market dynamics and consumerism.