It likely comes as no surprise to anyone trying to manage a household budget that the cost of health care in Massachusetts continues to outpace personal income. What may be less well known is the fact that much of that increase is being driven by drug companies raising prices on popular drugs simply because they can.
A report released Tuesday by the state Center for Health Information and Analysis showed total spending on health care in the Bay State rose 3.1% in 2018 to $60.9 billion. Out-of-pocket and premium costs, the center noted, have risen at twice the rate of both inflation and wages over the past two years.
Yes, Massachusetts is faring better than most other states in this regard. But that doesn’t mean the news is good, as the gap between the health care people need and what they can afford continues to grow.
Tuesday’s report points to the rising cost of prescription medicine as the cause of the “majority of the growth” for overall rising costs.
“Gross pharmacy spending totaled $9.9 billion in 2018, a 5.8% increase from 2017,” the center’s report said. Factoring in rebates for prescription drugs, pharmacy spending was $8.1 billion, an increase of 3.6% from the prior year.
Those hoping to discover why prescription prices continue to rise would do well to read a second report released this week, this one from the Boston-based Institute for Clinical and Economic Review. The study from the nonprofit drug price watchdog listed seven top-selling prescription drugs that increased in price between 2017 and 2018 for no apparent clinical reason. That is to say, the drugs were the same; only the cost was different.
The drugs on the ICER list have familiar names and include the arthritis drug Humira, the HIV treatment Truvada and the popular, highly advertised medication for erectile dysfunction, Cialis. These are not the medications meant for extremely rare, one-in-a-million diseases. Rather, they’re aimed at the mass market, their brand names made familiar by TV advertisements run between plays on a Sunday afternoon NFL game or after a weekday cooking segment on “Good Morning America.”
The price increases of the seven medications were not backed up by research that showed the drugs were more beneficial than originally thought, ICER said in its study, titled the “Unsupported Price Increase Report.”
“The norm in the United States has been for most pharmaceutical manufacturers to increase prices year after year — even accounting for the discounts they give insurers, and even for drugs that already sit at the top of the chart of spending for drugs in the U.S.,” David Rind, ICER’s chief medical officer, told The Boston Globe.
Take Humira, for example. The net price of a 40-milligram dose went from $1,452 to $1,683 over two years, an increase of 15.9%. That’s an extra $1.8 billion coming out of the pockets of consumers across the country.
And ICER is no fly-by-night group. They invited the nation’s top pharmaceutical firms to weigh in on the study, along with patients and insurers. While the drug companies disputed the findings, their objections were generic, almost dismissive. Why make a big deal about the report, after all, when there are no real limits on how much companies can charge for life-altering medication?
ICER and groups like it, though they are few, have an important role to play as the country grapples with the rising cost of health care. It’s one thing for the makers of, say, a shovel to raise their prices by 5% every year. If you can’t afford the increase, you can always buy a different brand of shovel. There is no different “brand” of Truvada. Patients are the very definition of a captive audience.
The ICER report should be required reading on Beacon Hill and in Washington, D.C., where it’s fashionable to talk about reining in health care costs.
As Rind told the Reuters news agency earlier this week, “If manufacturers weren’t raising prices if they haven’t shown a new, important benefit, I think that would help.”