CMS’ Slavitt Signals Tough Stance on Drug Costs

11935368_lDive Brief:

  • As the U.S. faces increasing drug costs, pharmaceutical companies and investors can either continue to fight reality or to face it, CMS acting Administrator Andy Slavitt told attendees at last week’s Biopharma Congress in Washington, DC.
  • As things stand, the cost increases are putting excessive pressure on the Medicare program, as well as state Medicaid programs, resulting in questions around how to plan for the anticipated ongoing growth while also adequately funding the rest of the programs, including efforts toward mental health.
  • Slavitt conceded the industry may indeed need to tell its “value story” better, as its advocates say, but they also need to look at the math. “If something is growing by 11%, unless it’s causing something else to decrease by 12%, it’s not going to last forever,” he argued.

 Dive Insight:

Drug cost increases have been in the spotlight in recent years as major spikes have collided with changes from the Affordable Care Act making those spikes more visible to consumers, as many are now shouldering a higher cost-sharing responsibility.

Mylan’s EpiPen proved a classic and headline-grabbing example, but despite all the attention it received, as Slavitt noted, it’s barely the tip of the iceberg. EpiPen did not even make CMS’ top 20 list for either price increases or spending overall in 2015. Of those top 20 drugs, seven with the highest increases were generic drugs, indicating increases are “pervasive,” Slavitt added.

According to CMS’ math, total prescription drug spending for 2015 was about $457 billion, or 16.7% of healthcare spending. Based on current trends, analysts expect to see average annual increases of 6.7% through 2025, with specialty drugs driving much of the change.

Slavitt held nothing back, noting that while he defended the industry following last year’s price scandal sparked by Turing, the new data are revealing too many “bad actors” to keep them from defining the industry.

The goals of innovation and affordability shouldn’t be in opposition, Slavitt argued, pointing toward success in other industries, and hinting at “plenty of policy options” depending how companies choose to respond. “CMS wants to be a partner in innovation. For those of you who look at data, find solutions, and pay for value, we want to partner with you,” he said.


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